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C. Raja Rajeshwari

The October futures on the CNX IT had increased trading interest. With quarterly results for most of the tech stocks to be announced, almost all tech options have high IV.

WITH the indices on an uptrend, volumes in stock futures surged higher than other contracts. All futures barring a few such as Tata Tea, BSES, L&T and BSES traded at a premium to spot indicating bullish sentiments.

Nifty: The October futures, which were at a discount of Rs 2.6 to spot the previous week, closed this week at an Rs 5 premium to spot. About 6 per cent of the open position decreased due to closing out of short positions on the first three trading days of the week.

In the latter half of the week, the futures added new positions.

However, on a week-on-week basis, open interest on the October futures were marginally lower. Among the index options, though there was spirited buying in the call options, open positions in put options has not been closed still. Due to this, the put-call open interest ratio closed at 1.1, indicating weakness in the weak ahead.

Volatility check: Implied volatility (IV) for the calls are about 27 per cent and for put 26 per cent. The IV for the calls jumped from the 21 per cent level to 27 per cent levels on Tuesday when the Nifty had a 30-point increase.

# The IV for calls has remained at this level, indicating that players are expecting the index to make further sharp moves.

# Taking into account the increased intraday volatility, options are trading at a high premium.

# In the case of the index futures, the cost-of-carry has also increased from 3.6 of past week to 4.1

ACC: The stock future added 10 per cent more open interest. Though there has been a price decline, the steady increase in the open interest suggests that buyers are aggressively buying into the stock.

# The October futures closed the day at Rs 1.5 to the spot.

# Options on ACC have been unusually active with 210-strike, 220-strike and 215-strike (out-of-the-money) calls.

# The put-call open interest ratio stood at 0.17, indicating positive sentiments.

# Market wide position limit's on the futures and the options contracts are more than 80 per cent of the allowable limits and margins are set to increase in the week ahead.

Tata Steel: The October futures quote at Rs 2.1 for spot, the futures have gained Rs 38.4 to Rs 320.5 on a week-on-week basis. However, the open interest has declined substantially, which suggest that many of the short positions have been closed out.

# Calls are in favour than puts. But the put-call open interest ratio stood at 0.37, indicating strength in the stock.

# Market wide position limit's on the futures and the options contracts are more than 75 per cent of the allowable limits and margins are set to increase in the week ahead.

Tata Motors: The October contracts of Tata Motors had a lot of buying interests.

# The increase in both the futures price and the open interest suggest that the uptrend would continue.

# However, the put-call open interest of 0.65 does skew the picture. Historically, Tata Motors has touched put-call ratios of more than one per cent levels before weakness sets in the stock.

Contracts on Tech stocks: The October futures on the CNX IT had increased trading interest. With quarterly results for most of the tech stocks to be announced, almost all tech options have high IV. This increase in IV is reflected in the option premia, which are expensive.

The October Infosys futures had a Rs 177.95 jump in price. The IV of Infosys closed the week at more than 50 per cent levels but post announcement of stock the IV would decrease in the week ahead. The October futures closed with a Rs 8.2 premium to spot. The put-call open interest ratio for Infosys options stood at 0.41 and that of Satyam Computers at 0.48.

MTNL: The last two trading days had closing out of short positions with the stock crossing the 120 level. With calls being heavily traded than puts, the put-call open interest ratio closed at 0.13, which indicates bullish sentiments in the underlying stock.

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