Sell the spike. Buy the dip. Sensex holds 76,000 expiry day

This is The Tanmay Edge. You are listening to episode 48. I am Tanmay Kurtkoti. Let's go. A very good morning guys. Today is a stacked day. Sensex monthly expiry, Sensex weekly expiry. Same session, same strike pulling both chains at one. And tomorrow the market is closed. Asia has opened hot overnight. 25 percent, the US closed at fresh record again and yet GIFT Nifty is sitting flat at 23,888, down 25 points. So why is India not joining the party? The answer lies in the option chain.

Let me show you what I am seeing right now. Starting with the offshore overlay. S&P 500 closed 7519. Fresh all-time highs. 19 percent also fresh highs. Dow futures is positive 56 points. The US tech rip is real and it kept running last night. Iran ceasefire framework is the driver. Three sessions of US records in a row. Europe was mixed Tuesday's close. 81. Europe is not the engine. US and Asia are. And on the commodities front, the peace pivot is still extending.

86, below that $99 mark. Fourth straight session sub 100. 92. Both technically bearish now. Gold is flat at 4518 dollar per ounce. Silver gave back another 5000 to 6000 rupees on MCX. 09, drifting weak. 68. That is the one piece that does not match the global risk on tape. INR remains the lone red flag for India. Rest all is positive. So you have US at records. Asia is ripping. Oil is sub 100. Gold is soft. INR is weak. GIFT Nifty is flat.

The disconnect is local. The chain knows why. Three desks did three different things yesterday on Sensex expiry. Pro, FII and Client. Watch each one one of them and listen to it carefully. Pro is the smart money. They came into yesterday with plus 40,432 net long futures. They closed at minus 6320. That is flat. But that is a 46,752 contracts reversal in one session. They didn't stop there. They cut 1 lakh 13,029 calls as well. Then they added 46,642 fresh long puts.

Three legs flipped in one session. Futures bear, calls cut, puts have been booked and stacked. This is the cleanest profit taking pattern we have seen. They rode the Monday rally. They booked at the top. And FIIs, the foreign money, they are still net short index futures at minus 1,52,865. But they covered 62,000 contracts of that short yesterday. Day 2 of the cover. Sounds bullish. But look at the options side. FII added 1,56,521 fresh short calls. Okay, that is them building the wall, not chasing the upside.

And they added 79,284 fresh long puts as well. So FII is doing the opposite of directional. Covered the futures cover that hurt them. Sold more calls on the top of the ceiling. Bought puts at the wings to protect the downside. Client is the crowd. They flipped from minus 1,13,796 short calls on Monday to plus 1,58,033 long calls on Tuesday. A 2,71,829 contract swing into max long. And they added another 1,01,765 fresh short puts on top of that already short book that they were holding.

So client is max long calls plus max short puts. Maximum greed structure we can see. Every time the crowd takes that shape at the chain top, the chain bites them back and it hurts them badly. Pro took profit. FII defended the range. Client got greedy. And today is what comes next. So now look at where the OI built up started happening yesterday. Remember today's Sensex monthly expiry, so both chains on the same strikes. The double magnet pulls harder than a normal week.

Starting at the top. 28 lakh fresh short calls. Far out of the money calls. Pure premium decay positioning. 32 lakh fresh shorts. Also a lottery ticket. These do not move the spot. Then comes the real ceiling or the resistance. Strike 76,500. 28 lakh fresh short calls in one session. 56 million contracts. The biggest single strike line fresh adds on the May series. That is the resistance. Remember it. 76,300 to 76,500 would be the resistance. Below the resistance is the rotation zone.

76,200, 300 and 400. All got 360 to 477,000 fresh shorts each. Sellers stacking the ceiling from 76,200 upwards till 76,500. That is where the call ratios or calls have been written. Then the magnet or the pin strike. The strike is 76,000. Call OI is 985,000. 14 million contracts. 13 million contracts on one strike. Monthly chain and weekly chain agree on this line. Sensex closed yesterday around 76,000. Ten points above the magnet. Below the magnet two important moves that can happen. 76,200 and 300 puts unwound.

Long puts cut by 2 lakh and 2 lakh 86 thousand. That is a push for the support staying at 76,000. Then comes the support so let's talk about it as well. So 75,500 up 363,000 fresh long puts. Secondary floor. 13 million total. And then 75,000 directly. 15 lakh fresh long in one session. 87 million contracts. Okay, that is the strongest support on the chain at 1000 points below the spot. That is not a normal hedge. That is somebody paying for protection across the closed day.

The holiday is tomorrow so there is a holiday hedge as well in play. And ATM straddle at 76,000 is trading at 544 points. So one standard deviation says the chain expects plus or minus 680 points today. That gives us a range of 75,330 on the bottom end. Remember that. To 76,690. Okay so there are two stories that collide today. 27 percent from yesterday. 36. So is the premium decay. And story two is tomorrow is closed. Tomorrow is a holiday. Writers cannot earn theta on a closed day.

So they ask for that extra premium at the open briefly in the first 30 to 60 minutes. Keep a watch on that before crushing again. Stories are right. They play will at different times. The morning spike is the seller's opportunity. Not a regime change. Just a holiday gap up priced in. Then the magnet can pull up the whole option chain as well. So the trade plan for today. If Sensex opens above 76,200, that is a clear breakout. Walk into the 76,500 long because that is the strike that might get hit if we stay above 76,200.

28 lakh fresh shorts defending over there. Most of these shorts approach on 76,200 to 76,500 is the carry trade that everyone is playing. Call ratios. If Sensex opens between 75,900 to 76,100 that is what most likely the base case is present. Buy the dips until 75,900 doesn't break. Sell calls of 76,300 and 500 to maximize your long hedge. Also you can buy 75,500 which is trading around 88 right now and which would open around 65 to 70. Almost free given the closed day risk.

Carry to settle. If Sensex opens below 75,800, that is a failure. So the fade would happen to 76,000 and that is where you have to sell if the market puts back anything. Floor is then 75,500 and then there is a deeper floor of 75,000. That is the maximum support. So 75,500 is then the likely case and use 75,000 puts if you are going to buy if the market opens below 75,800. And Bank Nifty settled at 55,090 yesterday. May monthly is done.

The June futures is already up with 500 points of premium to cash. Real money rolled into June. So buy the dips on Bank Nifty. Bank Nifty is the biggest driver we could see in the month of June. The new June expiry opens today. 92 lakh combined contracts of OI. Biggest single strike in the last few seasons we have seen. The chain wants to settle there across the holiday gap. 24,000 is the magnet for the next two to five sessions. Remember it.

The market is not going to leave 24,000 easily. One thing worth keeping for the next time. Today is a rare combo. Sensex monthly plus a closed day tomorrow. When two expiries stack on the same expiry strike, at that strike is roughly double a normal session. That is why writers built the resistance at 76,500 and a support at 75,000 so quickly yesterday. They are betting on the settlement inside this range. And a closed day, and hedges have to reprice once again at the open.

The IV crush we are seeing yesterday does not skip the open spike. It comes back to crush after the spike is done in the opening part. And RupeeCase Nifty 10 picked up 71 basis points yesterday. Day one since Monday's rebalance. Nine out of ten stocks beat the Nifty. 06. 89. 46. The framework picked up the rotation. com as well. Have a great Wednesday guys. And a longer Wednesday because tomorrow is a holiday. Sell that spike. Buy the dip. Watch 76,000 by the close.

This was The Tanmay Edge. If you found value in this, guys, please share it with one trader friend who needs it right now. com where it streams first. And give it a rating, guys, if you like it and a review if you want to add something in the podcast. Have a great expiry. A happy holiday tomorrow and see you once again on Friday.