What the markets did last week ?
After the neutral expiry close on thursday, Nifty corrected significantly on friday to retest the support below 5400 levels and closed the week exactly at the july expiry close of 5409 levels.
What does the options data indicate ?
Though it is too early to read options data for the september series, the main thing to note is that the accumulation in near strike puts and calls have already reached a very huge number, with 5400 puts topping at 89 lakhs in OI. The PCR stands at 1.31, still favouring bulls to a certain extent and the implied volatility of calls is low at 14 and that of puts at 21.
What can be expected this week ?
Overall it looks like markets will still be confined to a range, a larger one with volatility increase seen going forward. Any strong correction is likely to be neutralized by an equally strong up move.
How to trade for the week?
It is better to trade the range for the week with a buy at lower support levels and a sell at higher resistance levels.
Weekly resistance levels : 5469, 5531, 5587
Weekly support levels : 5394, 5352, 5296