Expiry trade setup: Will NIFTY50 hold support of 22,300 on Wednesday? Here's all you need to know

Asian Markets

GIFT NIFTY: 22,391 (-0.9%)

NIkkei225: 31,940 (-3.2%)

Hang Seng: 19,409 (-3.4%)

US Markets

Dow Jones: 37,645 (-0.84%)

NASDAQ: 15,267 (-2.45%)

S&P500: 4,982 (-1.5%)

NIFTY50

Max call OI:23,000

Max put OI:22,500

(Ten strikes to ATM, 09 April Expiry)

NIFTY50 shrugged off Monday’s losses to close more than 300 points higher on Tuesday ahead of its weekly expiry on 09 April. The relief rally from the tariff war-led drawdown was largely driven by buying in Banking, PSU, and IT stocks. TCS, the top-most IT company by market capitalisation, will announce its results on Thursday. In addition, optimism around rate cuts and the RBI's accommodative stance in upcoming policy outcomes cheered the markets.

On technical charts, the NIFTY50 retraced more than 60% of Monday’s fall by gaining 374 points on Tuesday. Monday’s low will now act as a strong support for the medium term. More pain may be experienced if the index closes below the 21,743 level on a closing basis.

Options buildup

On the options front, 23,000 remains a crucial resistance, with the highest open interest on the call side. Similarly, 22,500 may act as a critical support with the highest open interest on the put side.

Bullish outlook

Traders anticipating a bullish outlook for tomorrow’s expiry can consider doing a long call strategy to capitalise on the bullish trend. Buying an ATM (At the money) call option of 22,500 would set the breakeven at 22,716, which means an 1.1% upside move in the NIFTY50 on the upside could turn the strategy profitable.

Bearish outlook

Traders anticipating a bearish outlook for tomorrow’s expiry can consider doing a long put strategy. Buying an ATM put option of 22,550 would set breakeven at 22,386. This means a 0.5% downside move from the current level could turn the strategy profitable.

Conclusion

Despite the current setup tilting towards the bullish side, extreme volatility cannot be ruled out on the expiry day. Traders are advised to make a note of this.In simple terms, a long call strategy allows traders to take advantage of rising prices, while a long put takes advantage of falling prices. Options offer the flexibility to navigate different market conditions - bullish, bearish or range-bound. However, past performance isn't a guarantee of future results. Before implementing any strategy, it's important to assess the risks and have a clear plan for managing potential losses.