Buy the Sell-Off. The pin is at 24,000

A very good morning, welcome back to The Tanmay Edge. Today is Nifty expiry, Tuesday 5th of May, and this is the audio podcast. India's first systematic terminal that I am building. Before I tell you what to do today, let me tell you what happened yesterday at the desk that runs the option chain. A desk had a choice. The market had run from 23,997 on Wednesday to 24,290 by Monday lunch. Three sessions of green. Headlines were hot. BJP swept the state polls.

Vol popped. Money was on the table. The desk could either lock in profits and go home or it could write the next move. It wrote the next move. That desk is what we call Pro, or proprietary books. These are proprietary books of members who trade in own accounts. The smartest money on the screen. And here is what Pro did in one session. Sold 1,20,000 contracts of calls. Held 15,000 contracts of futures bullish. Trimmed long puts by 63,000 contracts. Read that again slowly.

Pro reduced its downside hedge. Pro held its bullish futures and Pro wrote the calls into the rally. Most desks on the street read this as distribution. The desk is selling the rally. The top is in. I read it completely differently and the difference between the two reads is what today's episode is all about. So this is Tanmay Kurtkoti. You are listening to The Tanmay Edge. Today is episode 32. Let's go. If you want to lock in profits and exit, you sell futures.

You don't sell calls and keep futures long. That is contradictory. Unless you are not exiting. You are not exiting the trade if you are not selling the futures. You are setting up the pin trade. That is what expiry is all about. Here is what pin means. A pin is when a strike has heavy calls and heavy puts written at the same level. Both writers want the price to settle at that strike. Both writers keep the premium if it does. The chain becomes a magnet.

The price gets pulled to that strike at expiry. 2 lakh calls. Pros also locked in on the put side. The 24,000 strike already had 8 million contracts of put open interest present. 7 million over there. 47 million puts. 2 million present at 24,100. Now think about it. 25 lakh contracts of calls in that range, where does Pro want this to close? Yes, that's right, 24,000. And that is the magnet. Today is weekly expiry. Today is when the magnet pulls. But the magnet does not pull in a straight line, and the morning tape proves it.

Three things changed overnight from yesterday. 2 right now. The Iran peace talks unwind that we saw last week is reversing. The macro tail is back on the menu. Branch trigger of 120 dollars on crude is almost 7 to 8 dollars away now. Two, the rupee broke 95. 08 against the dollar, first close above 95 on the record. 09. Rupee is breaking down. Rupee tail is still pricing in. Three, the Hang Seng flipped. 58. 33. Asia leadership turned. US records also snapped on Monday.

41. 20. Europe sold off harder. 26 yesterday. So global is risk off softer. Not flight to safety. Just soft. What does that mean for today's expiry? It means open is going to be soft. GIFT Nifty is currently trading around 24,035 right now. 11 points below yesterday's close. Small gap down that we are seeing. First hour you will see a sell-off. India VIX will pop up. 27 maybe to 19 to 21. People will get scared. They will buy puts. They will sell longs.

That is the entry we are looking at. So the buy zone for today comes to around 23,950 to 24,050. Keep that in mind. That is where you will start building long. That is where the wing buyers panic and the magnet starts pulling in. Second half, the vol crushes, magnet wins, bounce towards 24,000 to 24,100. Settlement in that zone is what we are looking for today. Cap is at 24,200. That is the secondary wall. Then 24,300 that is the hard wall. Above that the trade is wrong and you are out.

Wing you have to buy is 23,800 to 23,900. 23,800 is where the pin breaks and the wing fires. You are out of the trade. So five predictions for today you have to keep a watch on. Nifty settles around 24,000 to 24,150. Probability of that currently stands around 60 to 65%. Two, 24,300 holds as ceiling. No clean break above that. Three, India VIX does a round trip. Pops first and crushes by the close. Four, day low between 23,950 and 24,050. The buy zone hits.

The 23,800 wing does not break. Five, RupeeCase Nifty alpha holds in. We finished day 1 with plus 33 basis points yesterday. We need a green print versus the index again today to keep that momentum on. A quick word on the domestic flows as well. They are with us. Yesterday foreign investors bought 2835 crore. Domestic investors bought 4764 crores. Both buying. Second straight day that we are seeing. And FNO index all the bucket is plus 3300 crores on the first flow. So first net positive in the last 10 sessions we are seeing.

The April handoff from foreign selling to foreign buying is started. Foreign desk pair is still shrinking. Stock long book at 8 lakh 5000 contracts. 18 to 1. 83 to 1. Both legs are getting trimmed. That is not a crash setup. That is a desk getting lighter going into the expiry. So educational point today. Pin trade mechanics in one line. When a chain stacks calls and put open interest at the same strike, the strike acts as a magnet. When only calls are heavy, the strike is a wall.

The wall is where the price gets stopped or it gets restricted. The magnet is where the price gets pulled towards. Yesterday, writers built both at 24,000 and 24,100. The 24,300 strike is the wall. The 24,000 strike is the magnet. And 23,800 strike is the floor. Two different trades from the same chain that we are looking at. Yesterday, the 76,800 put I told you about on Thursday. Today, the pin pays. Both came from the same desk. You just have to know which strike works for you.

One last thing before we close. Yesterday, I told you T10, RupeeCase Nifty 10, was rebalancing. I would talk about it today. So, here it is. Four out, four in. Coal India, SBI, Sun Pharma, Dr Reddy exited. Adani Enterprise, Adani Ports, Nestle, JSW Steel entered. Day 1, alpha almost 33 basis points. 86%. 53%. 41% on the entry day itself. 2%. The system rebalances on momentum, not on yesterday's pain. Next rebalance date is almost four weeks out. So we'll talk in the month of June.

com. You can always go and check it out. So the market always telegraphs guys. You just have to know where to look for. So you just got earlier. Have an extremely happy trading day. Have a happy expiry guys. See you all once again tomorrow.