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Preferred instrument to ride high volatility ahead of results
Commentary
After a choppy December series, the Nifty maintained its positive stance in the January series and managed to test its highest Call base of 18000 twice in the current month. FIIs turned positive after the sharp sell-off in December and the volatility index remained elevated ahead of the Budget 2022 and result season.
Major Stock OI activity (Change):
Stock options activity has increased significantly during the January series ahead of results and broader market participation. Midcap and Small Cap indices have shown significant resilience and outperformed the Nifty in the recent market move.
Outlook:
Volatility remained high for the December series where the Nifty witnessed a move on both sides. Average premium turnover in stock option segment for the December series was Rs 2826 crore whereas in the January series it is more than | 3400 crore till now. This is clearly showing that turnover in the stock option segment has risen and traders are preferring this segment due to high liquidity, lower investment and expectations of higher returns (as underlying stock volatility is still higher). We feel that for coming weeks, traders should focus on the stock option segment as due to result season, stock specific high volatility may continue and stock options provides avenues of higher returns with limited investment amid proper stop loss.
Disclaimer – I ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. I-Sec is acting as a distributor to solicit bond related products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
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