Decoding Option Chain - Karnataka Elections


Can any experts analyze the NIFTY option chain right now and give their suggestions what they feel the option chain is telling about the impact of elections on markets?

I am sure many traders must already have eyes on it.

Can anyone help the newbies to get some insight how to read into the option chain with their prediction if market will move UP, DOWN or SIDEWAYS until May expiry.

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Well that’s almost like crystal ball gazing by predicting move based on only option chain. These tend to change their bias many a time.
Still for any easy answer it looks bullish as pcr is abv 1.38
Also highest call oi is at 11k. So breaking of 10830 will cause rapid move in that direction.
Fii have suddenly become all of sudden bullish with 1k cr buying in index futures. So unless some very bad outcome in election (total rout of Bjp) it won’t fall till 10500. If majority is achieved by Bjp… 11k in 2 days… Happy inception dream :smile:

PS: Mkt is completely ignoring cos dismal earnings, npa woes, macroeconomic factors like crude oil prices at multi yr high, rupee depreciation as USD, retail inflation… May b they shall realize at 11k


Doesnt high PCR means bearish sentiment?

Also totally agree with the part you mentioned after “PS”

Also why are puts so highly priced than calls (equidistant from ATM ones)

@Newbie420 Because there is more risk associated with selling a put option than a call option. That is the same for almost all the option chains.

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Pcr is a contra indicator… Pcr below 0.7 is bearish and above 1.2 is bullish…
Retailers r mostly “buying” puts… Deep pockets / smart traders mostly sell them… They can influence d movement of d underlying to their desired direction unless some black Swan occurs… See d heavy index futures buying by fii out of nowhere…

But puts will not change as fast as calls

Yes I also felt as per my logic since only option writers make money, I would think more puts means buyer of puts are the GOATS, so it should mean bullish

But on googling few weeks back, it was given High PCR means bullish.

But definitely understand your point, the option buyers are GOATS strategy was clearly evident in April Nifty expiry

I used to rely a lot on option chain earlier…it’s deceptive bcoz it sets ur mood to one direction only to reverse suddenly wen u in…better we switch to either price action or chart.

See d numerous support that nifty has and has only 1 virtual resistance I.e 10829 which upper end of bb. Breakout abv that will expand bb… So breaking of 10830 is very important for Bulls…


Very good analysis

To my understanding … The game is already over - as per option premiums which are all in red. It wasn’t a race to the results but the exit polls. Unless there is a huge surprise volatility will keep going down and you won’t have a 2% move on NIFTY. Though market is still pricing in a 1% move either ways.
Disclaimer - Just my views … No recommendations here.


Hey @Newbie420

This answers your question

The Implied Volatility is always higher in the direction of risk/fear. So for equities, the lower puts trade at higher IV than equidistant higher calls.

USDINR will show you the reverse. Calls have higher vols than puts

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In Nifty option chain, option chain analysis through Open Interest build up is one of the biggest bogeys. If you closely follow the Nifty option chain for at least 6 months intraday and end of day, you will quickly realize that OI across strikes keep changing as Nifty keeps moving. It’s not the OI build up that determines whether “Nifty won’t cross so-and-so strike” rather it’s the Nifty movement that determines where OI build up may happen as per where the Big boys want to maintain their leg’s Delta/Theta/Vega as they are always hedging with multiple strikes. You will see that for example if today 10700PE has highest OI then if tomorrow market goes up by 90 points then OI is reduced from 10700PE and moved to 10800PE which will now have the highest OI in a day’s times. But having noticed all this again and again I must say that in the last 7 day before expiry the highest OI or OI build up analysis may be somewhat significant as a range till expiry might get created, apart from the last 7 days don’t bother to decide your strikes based on max OI as you don’t know what multi strike strategies the big boys are doing!


Absolutely agreed! It changes with a blink of an eye and the data is not even worth a penny if you are looking at a snapshot of it. But you yourself mentioned the key herein. The key is to differentiate “significant build up” from just a “build up” - and that my friend creates all the difference.


Thats true , in my experience " significant buildup " migrate to " just buildup"

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Yup … And one needs to be nimble enough to recognise the change and act accordingly.

Mood swing… Oi data…pcr becomes neutral (near 1) from bullish
Nifty breaks crucial supports and forms immediate top of 10928. It has broken daily supertrend support (10,2 setting). Also huge put unwinding at strikes of 10800 and 10700 will keep pressure on Bulls…Floor test has become more important than elections. 50 day ema at 10550 levels cud b support…
Monday wild swing possible … :grinning: let’s see

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