A red Monday imported. 23,000 is the line. Long gamma day

A very good morning, guys. While we were sleeping this weekend, the rest of the world fell apart. 64 percent. And then Asia woke up this morning and joined the selling. 08 percent, Hong Kong, Jakarta, Shanghai, all red. And on top of that, crude oil has jumped more than 3 percent overnight, Brent is back up to 96 dollars. So the whole world is dumping stocks and buying oil at the same time. Our markets did nothing wrong on Friday. We are about to open sharply lower this morning, not because of anything that has happened in India, but because of everything that has happened elsewhere.

So this is The Tanmay Edge. You are listening to episode 55. I am Tanmay Kurtkoti. Let's go. One line on Friday before we trade. 3 out of 5 calls landed. The full scorecard, every level and every number, lives on the website. Today is the only thing that matters now, and the weekend has changed that question completely. Our GIFT Nifty is sitting at 23,137 as I record this podcast. Friday we closed at 23,366. So we are looking at a gap down of roughly 230 points at the open.

That drops us straight onto a very specific battlefield, because today we open between two lines. Below us, at 23000, sits the heaviest pile of put contracts on the board, 92 lakh of them, that is the support, the floor everyone is watching. Above us, the level we just lost, 23300, has 74 lakh put contracts that now flip into resistance over our head, that is the resistance. And 23,500 above that level is the call ceiling that capped every rally last week. So we open in a tight box of 23,000 to 23300, and that entire day is a fight over which edge breaks first.

And here is what the options market itself is saying about the size of this fight. The cost to bet on a move either way into tomorrow's expiry, the straddle, is trading about 280 points. Multiply that and the market is pricing the whole week to land between 23,000 and 23,500. Read that carefully. 23,000 is not just a support level, it is the bottom edge of the entire range the option market thinks is even possible by tomorrow. Lose it on a closing basis and the floor has to be repriced lower in real time.

That is the level we are going to watch for today. So 23,000 acts as an important support for this week's expiry, as well as the positioning we have today. And the volatility itself was fast asleep. 79. The one-week expected move was priced under 13 percent. That is the calm before the storm, and the storm has arrived. On a Monday morning like today, that number does not stay down, it spikes. So there are two trades inside this day. One, on direction, the bias is to sell on the rise, more on that in a moment.

On volatility, you are a buyer of the move, not a seller of premium. Remember this. Here is the part that should genuinely worry you today, and the reason I am leaning the way I am. Look at how far the rest of the world has already fallen. 08 percent. And look at us, gapping down barely 1 percent. We have not caught down yet. India walked into this weekend more crowded, more expensive, with the foreign desk already heavily short. That combination does not make us safer than our peers.

It makes us better set up for a fall, because we have the most room left to travel down to meet them. A 1 percent gap against a 6 percent rout is not protection. It is unfinished business. That is why every bounce today is a place to sell, not a reason to relax. Sell on rise continues, but 23,000 is that level we are watching for. Now, who walked into the morning positioned right and who is trapped? Let's look at that as well.

This is the part that matters, so let me give you the actual book. The big FIIs are net short the index futures by 2,67,000 contracts, the heaviest of the entire run, and they added to it on Friday even after the bank held up. And it is not just futures. On the index calls they are net short around 2,76,000 contracts, betting the upside stays capped. On the puts they are net long over 5,30,000 contracts, betting on the fall. So futures short, calls short, all three legs pointing at the same thing, that is way down.

For once the biggest desk on the screen is standing exactly where the morning has opened up. They didn't predict it, they were just in the right place when the world tipped over. The pros did something smarter. They are net long futures, not short, but only about 21,000 contracts, that's extremely small. The real story is in their options book. They are long around 1 lakh 81,000 index calls and long around 2 lakh 57,000 index puts at the same time. They bought both sides, calls and puts on both ends.

In plain words, they paid to be in the move whichever way the market goes. They care about the distance, not the direction. And they will get the distance today, because we open well below that 23,400 level where the market flips from calm to jumpy. So below 23400, every move gets exaggerated. Today is a movement day, not a sitting-idle day. And the crowd. Retail is net long the futures by 2 lakh 8000 contracts, and they spent last week selling, 8 lakh 10,000 contracts of them are net short, betting the market sits or drifts up.

On a 230 point gap down, this is the wrong side of the boat twice over, long the index into the fall and short the very puts that are now going to explode in value as the IV goes up. The only desk standing against the fall is our own. DIIs bought around 8762 crore on Friday, even as the FIIs dumped around 8360 crore in the cash market. So the question of the day is simple. FII money is selling the world's panic into our market.

Will our institutions keep catching it till 23000, or will they stand down for today? The likelihood is they buy in heavily as we breach that 23,000 mark. That brings me to today's one big idea. A heavy put wall like 23,000 we are about to test is either a trampoline or a trapdoor, and you do not know which until the first half an hour tells you. So here's the mechanic. The trader who sold those 92 lakh at 23,000 does not want 23,000 to break, because if it breaks they lose.

So at first they will defend it, and that defense can bounce the market hard, do not buy into the rally, wait on the sidelines. But if the selling is too strong and 23,000 breaks and stays broken, those same sellers are forced to protect themselves by selling futures, and that pours petrol on the fire that we are already going to see. The trampoline becomes the trapdoor. Same level, same people, opposite outcome. The only thing that decides it is whether 23,000 holds today in the first 30 minutes or not.

Watch the clock, not your gut. So here is the plan, guys, and the bias is clear. You sell on the rise, or wait for 23,300 to be broken on the upside. Step one, do not catch the knife at the open, it's a falling knife. A gap down driven by Wall Street and oil does not need you to be a hero in the first 5 to 10 minutes. Let it print a low and let 23,000 show its hand. Step two, treat the bounce as a selling opportunity, not a buying one.

You can do either call ratios or buy put spreads. Yes, the foreign desk is sitting on the heaviest short of the run, so any bounce can be sharp because some of them buy back to cover as well. But while we are below 23400, that bounce is a gift to sell into, not a trend to chase. Sell the rallies into 23,300 and 23400, keep your stop at 23400, because below that line the sellers own the tape and the FII book wants it lower.

Only a reclaim and hold above 23,400 pauses the bear case. That is where we come into step three. If 23,000 breaks and stays broken, go with it, because the next stop is 22,850 and then 22500, where the deeper put wall sits. Do not argue with a broken floor. For a smaller account, the movement-day trade is your friend, you do not need size. Buy one 23,000 put if you are riding the fall, or buy one 23,300 call and sell two 23,500 calls now that we have fallen below it, as a lottery on a short-covering snapback where you can use call ratios.

Define your risk. These reprice the second the bell rings, so check them. And tomorrow is the expiry, so we are entering a volatile zone as well. A quick word on sectors. Most sectors were already on a sell on Friday, only pharma and media were green. Into a global gap down, the most exposed ones are tied to the world, IT is extremely negative as well as metals, both have broken down, both already the weakest on Friday. Banks have held up better on the FII sell-off, and domestic banks are where our own money hides.

Crude is trading at 96 and rising, the new worry, because higher oil is an import bill and an inflation tax on us. And gold did not even rally, which tells you this is a clean risk-off, not a panic with a hedge. Do not forget, tomorrow is Nifty's weekly expiry, so today's fight at 23,000 sets where the week settles for tomorrow. Five things I am watching to grade tomorrow. One, does 23,000 hold on a closing basis today or not. Two, does our domestic desk make it a ninth straight day of buying.

Three, does the FII short book finally start to cover on a bounce back, or do they add even more. Four, does the options market expectation of a movement jump above 16 of IV on a closing basis, and the likelihood is high. And five, does 23,300 cap every rally attempt that we see towards that 23400, the way 23,400 and 23,500 capped on Friday. So have a great Monday, guys. One important sell-off, one short desk that finally got ready, one line to watch for, that is 23000, that decides the week, and an India that still has the most room left to fall has a sell-on-rise rally to be set up.

23,300 and 400 are those levels, respect them, 23,000 as the narrative, and let the first 30 minutes sink you into the trampoline or the trapdoor. The data doesn't lie, guys, narratives do. But remember one thing, India is positioned well amongst its global peers, as we have not fallen down. We have already underperformed global peers, and that is what is to look for, so this is an opportunity for India to shine in, and that is what I think in this sell-off is going to happen, where we stay resilient amongst our global peers.

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