Call Open Interest hits an All Time High

After working the last time on 18 Jan times the option writers ended up getting the upper hand this time. The high Call OI has been left behind as an overhang of longs to unwind into today's expiration. But the impact of yesterday's decline has been to add further to that position and now we have a new all-time high record of Call Options over Put options at 67544 crore. This has never happened before. So it may show record buying the dip but also record options selling by bears. And to square up those calls you have to sell the underlying stock that was bought as a hedge so if the buying support in the cash market is not enough it unwinds on the market as it did here.

But what large Call OI also means is that that PCR or Open Interest put/call ratio has dropped to near the lowest levels and as per the 10-day PCR chart below near where it can get oversold. The arrows show previous readings. Yes it does not mean so more decline cannot happen but we are in the late stages of the decline. 

The Participant wise data also reflects the above as the client-side data for Options plotted as a percentage of total OI is also near the lower end of the range and falling. Lowest reading since June.

And the Nifty 500 [below] or Midcap/Smallcap indices are flirting with the lower Bollinger band and 40dema, which are important support levels. So it is a good level again for a bounce back. Today being expiration the pressure may remain but should exhaust by the end of the day. After that the big event that will play on sentiment will be the budget.