Client trapped both sides. Squeeze first. Relief second.

Good morning traders. It's Thursday, 23rd April. Sensex expires today. Infosys reports after close. GIFT Nifty is already down more than 200 points before we have even opened. The question I want you to sit with for the next seven to eight minutes is this. What happens when Client is trapped on both sides of the book and the morning gaps exactly into their pain. Yesterday I said the default bias was defensive. Sell on rallies. Hold puts. Buy on dips with hedges. Okay. Today I am taking the other side of that.

The overnight gap just did some of the work for us and the setup I see on the chain says the first hour and the second half are completely different trades. So let's look at what happened yesterday. 85. Intraday low was 24,353. 24,400 was supposed to hold. It didn't. Sensex closed at 78516, broke the 79,300 weekly flip by 784 points. The 78,500 magnet owned the close. Pro flipped clean bear in one session. Futures plus 222, essentially flat. Calls 2 lakh sold. Puts bought 1 lakh 18,000.

FII pressed deeper short. Futures are now minus 1 lakh 83,000. Added around 9000 shorts on that day. Did not cover. Put book added around 3,45,946. That was the biggest put flow of the day by any participant. Client did what Client always does on a day like this. Long around 7,33,000 calls into the fade. Shorted around 5,19,000 puts into the breakdown. Maximum wrong side exposure on both legs. On the cash tape, the first dual sell day in April. FII sold around 2000 crore.

That's regular. DII sold another 1050 crore. Month to date FII have sold almost 85,000 crore. DII cumulative stands at almost 81,000 crore. DII have been the buyer of last resort for four weeks. Yesterday they sold as well. US closed strong. 05 pct. 64 pct. Real follow through from Tuesday's risk on. Europe was mixed. 31. 21. CAC was also minus 1 pct. This morning is a split board. 77. Hang Seng minus half a pct. But Taiwan plus almost 2 pct. 2. Not a trend, but showing some bounces in the Asian markets.

GIFT Nifty 24,190. Minus 180 points from yesterday. 7 pct priced in before the bell rings. India is diverging south of the US cues. 39 pct overnight. There was a spike near 5am IST that almost ran higher before reverting fast. Treat that as noise, not a signal. 40 gate. Both legs of the wrong side tell are live into the expiry day. Brent above 96, that's bad news. Rupee above 93, that's bad news. First time in April both fired at close and they are still firing into the open.

The rally to sell exists on the tape. But after a 180 point gap down, you don't sell the gap. You wait for the cover to finish. Here is the part I want to internalise. Client ended yesterday with long calls into a broken floor and short puts into a breakdown. That is a forced unwind book. Both legs are losers the second we gap down. First hour opens. Gap down. Client short puts start screaming higher. So the loss isn't on paper. It's margin.

Somebody has to cover and they don't have a choice. They cover prints into the chain where Pro already owns puts. FII is max short on futures and puts. And nobody of size is sitting there as an offering. Puts get slaughtered in the first hour. That is what I see. Not because they were the wrong trade. Because they were forced to trade into no offer. Once the covering finishes, usually by 10:30 to 12, the bid under puts disappears. Nobody needs them anymore.

Pro and FII already own theirs. Client just covered theirs short. So then the tape has nobody left to hold it down. Now you get to the second half. After 12. The mean reversion. The drift back towards the magnet of 78,500 on Sensex. The recovery into 24,300 to 350 on Nifty. This is the squeeze then relief mechanic on a trapped Client book. Morning is violent. Afternoon is quiet. Close is a mean reversion into the magnet. My bias has shifted overnight. Yesterday's defensive becomes today's buy dips with hedges.

Not buy the open. Buy the dip after the forced covering happens during the first half. Sensex today. Spot is trading around 78,516. ATM straddle is around 679. One standard deviation is equal to almost 850 points. So the expected range would be 77,700 on the bottom side to almost 79,300 on the upside. Real wall on the chain stands at 79000, which is a major hurdle. I don't see that getting broken today. 3 million. Gamma is almost 3466 over there. This is the single heaviest wall on the board.

78,500 is the magnet. ATM OI stands at almost 9 lakh. Negative gamma pin zone, which is a high likelihood. 78,000 is another level I'm looking at very strongly. 14 million. 4. Gamma is minus 2423. That is the real floor I am seeing. Any dip towards 78,000 to 77,800 should be bought into, for a covering towards 78,200 to 78,300. My path expectation. First half Sensex tests 78,000. Panic from Client short put covers. 78,000 holds or is broken. Second half drift back between 78,200 to 78,500 is what I am looking at, depending on how clean the relief is.

Trade on the chain. Holding 78,500 on open, sell the 78,000 strangle along with 77,500 strangle. Nifty 28 April ATM straddle stands at 360. One standard deviation stands at 451 points. Expected range is 23,900 on the bottom end to almost 24,700 by next Tuesday. Biggest call wall is at 24500, which is now acting as resistance. 88 million. 58 million. Psychological floor is around that 24,300 to 400 zone. Levels that matter today. Nifty 24,350 is the intraday line. Back below that, 24,200 is the real target.

Reclaiming 24,500 is going to be very difficult. 88, making the hedges cheap if you want to run this longer than today. When Client is max trapped on both sides, the expiry mechanic is squeeze then relief. Short puts squeeze first because they carry unlimited loss in the gap. Long calls fade second because they were on the wrong hedge from day one. The trap most retail traders fall into is thinking the first hour is the day trade. On a trapped book day, the first hour is forced covering.

It's not the direction. The direction shows up after the panic ends. Write this down. Morning squeeze. Midday silence. Second half mean reversion into the settle. The fade of the fade is where the edge lives. When the participation chain shows Pro plus FII on one side and Client alone on the other side, that is what is going to happen today. Bias still remains buy dips with hedges. That's the pivot from yesterday. The overnight gap does the work of the sell rally for you.

78,000 Sensex into the magnet. Nifty above 24,300 is the line on the weekly cycle. Above 24,300 at close means mean reversion worked and one. Infy post close is Friday's story, not today's story. Don't anchor your trade into it. Five point prediction set going on record for tomorrow's grade. 1. 78,000 tests but holds 2. Second half relief prints 3. Nifty settles above 24,300 4. Brent stays above 96 5. Pro trims some shorts into the relief You already know where to find the data.

com slash podcast. You don't need more information. You need the right information. See you all tomorrow with a grade. Have a good expiry guys. Thank you.