Nifty Fin Service Expiry today: Options market considers 22,750 as crucial level on expiry

Equity markets opened higher on Tuesday and continued their positive momentum through noon after Monday’s global meltdown. The benchmark Nifty 50 and the Sensex were trading 0.75% higher by Tuesday noon.

The Nifty Financial Service index, which has its expiry on Tuesday, was trading flat at 22,762.10 at 12:01 p.m. The options market is currently factoring in resistance at the 23,000 level with the open interest on this strike amounting to 1.23 crore. The change in open interest for the strike stood at one crore at the time of writing.

On the downside, the options market is factoring in support at the 22,500 level with the open interest on this strike amounting to 69.3 lakh. The change in open interest stood at 46.6 lakh. With volatility continuing to remain high, traders appear to be anticipating support and resistance levels at a reasonable gap from the current trading level of the index.

At the time of writing, Nifty Financial Services' max pain stood at 22,750. The max pain theory shows the level at which option sellers are likely to have the least loss on expiry. On a 15-minute chart, the index was trading below its 21-exponential moving average (EMA) and the 50-EMA.

India VIX, an index that reflects the anticipated volatility in the market over the next 30 days, fell 11.68% on Tuesday to 17.99.

The index reflected a put-call ratio (PCR) of 0.58, which indicates the market may consider the current levels to be oversold. PCR is the ratio of the number of puts to the number of calls of an asset. It is noteworthy that in extreme downward and upward market movements, the PCR may hit as low as 0.5 or as high as 1.8, respectively.

HDFC Bank was trading 0.07% lower on Tuesday, while ICICI Bank was trading 0.10% lower. Axis Bank was trading 0.45% higher, while State Bank of India was trading 0.43% higher on Tuesday noon. Kotak Bank shares were trading lower by 0.10%.