>WEEKLY OPTIONS REPORT (HDFC SECURITIES)

Options Open Interest Activity – Overall
The week ended July 08, 2009 saw the market break its important support level of 4200 & the Nifty is now trading below the same. The total open interest has seen a rise of 28.41% in terms of value and 44.21 % in terms of number of shares (where the Nifty showed a fall of 8.08% vis-à-vis previous week). The stock options saw a rise of 33.22% and 47.93% in terms of value and shares respectively. The Nifty options OI saw a rise of 27.79% and 35.99% in terms of value and shares respectively. The Index options other than Nifty also saw a comparable rise in the OI due to increased participation in Nifty Mid cap 50 index segment. Due to the sharp fall in the market, traders seem to be focusing on trading more in call & put options as compared to futures. This has resulted in increase in option OI & value.

Options Volumes Activity
The total volumes saw a significant increase in the number of contracts (up by 47.43%) and the turnover saw a rise of about 45.04%. The rise in volumes is higher this week as compared to the last week as the traders being cautious after the sharp fall are choosing to stay away from the futures market & taking fresh positions in Index option segment. The Stock Options have seen a rise in volumes in terms of the number of contracts & fall in turnover due to a fall in the stock prices of the all stocks as compared to the last week. Volume in contracts has increased in the stocks option segment by 21.03% on a week on week basis. In Index Options segment volumes saw a significant increase in the number of contracts (up by 48.61%) and the turnover saw a rise of about 48.16%. This shows increased participation in Index options segment.

Nifty Options Strike - wise Volumes Analysis as on July 08, 2009
During the week ended July 08, 2009, maximum volumes were observed in Nifty July Call 4500, as traders are expecting Nifty to face resistance at this level. In Nifty July series, maximum put volumes were observed in Nifty July 4000 Put. From last week, traders had
built up fresh positions in 3800 & 4000 Put in anticipation that Nifty could take support between 3800 – 4000 range in the coming weeks, which got reflected in an increase in volumes in these strike prices. In the August series traders are building up fresh positions at 4000 Put & 4500 Call option.

Trading Ideas
1. Buy Unitech 80 Call Option between Rs. 2.50 – Rs. 3.50 for a Target of Rs. 7 in 3 - 4 days. Stop Loss = Rs.1.75 CMP = Rs.3.10.

The Unitech 80 Call Option saw a significant build up in OI (up by about 9.83%) on Thursday. The Implied Volatility is about 78%, which is significantly lower than the HV of 93. Thus we feel that the value of this call option is likely to go up in the coming sessions and thus recommend a “buy” between Rs. 2.50 and Rs. 3.50 for a Target of Rs. 7 in 3-4 days. Stop Loss = Rs. 1.75 CMP = Rs.3.10.

To see full report: WEEKLY OPTIONS REPORT