The oil trigger fired at 91

A very good morning, guys. Today is the expiry day, and Brent has crossed 90 dollars overnight. 35. The trigger that we called 8 episodes ago fired this morning, and today is the expiry. 6,61,000 puts have been sold by the clients, into a third consecutive record naked put book. IV has crossed, almost a 25 percent jump yesterday, and the expiry IV woke up today at the support. So today is the expiry day, somebody wins at 3:30. This is The Tanmay Edge. You are listening to episode 105.

I am Tanmay Kurtkoti. Let's go. So first, yesterday. 32 percent lower, at 24,287. The high was 24,360 and the low was 24,226. A fifth straight lower close we have seen. And the flow is, 24,472 five days ago, then 24,436, a lower one, then 24,396, another lower one, then 24,366, another lower one, and 24,288 yesterday. A staircase down, almost 45 to 50 points every day we are seeing. We will come back to it later. The Sensex closed 281 points lower at 77,728, and it made a low of 77,454.

4. The breadth for yesterday was 18 stocks up on the Nifty and 31 down, so almost a 2 is to 3 breadth that we saw. 53 percent. FMCG as a sector was down 1 percent. 26 percent. Small caps were green, so the broader market is still showing strength, and we will come back to it as well in this episode. So about yesterday, buy on dips went wrong. The dip sliced towards 24,227, so the 24,300 stop worked, the exit rule worked. And one thing that worked was, IV got a jump of almost 25 percent yesterday.

So direction was wrong, vol was right. So I will take a 2 on 5 on that. com. Now the flows for yesterday. FII cash saw 2,535 crore of selling yesterday, whereas the DIIs bought 5,101 crore, the second 5,000 crore cheque in 3 sessions. That is a big one. FII index options, they bought 8,423 crore in one day, so they are buying the protection and they are buying it in full throttle. 82 lakh, a new cycle high that we are seeing in this August month.

And the crowd, the clients, you can see the numbers yourself. 61 lakh. Three consecutive records in the naked short put book. 53,000 puts added on Monday, yesterday, into a falling knife, one night before oil crossed 90 dollars. The first record burned at 24,266 on the 12th. They have built it twice since that point, and bigger each time. So let's see whether the clients can hold those naked puts or not. 12 lakh puts. That means they are long vol on both legs into the expiry.

So they are long calls as well as long puts. The IV spike overnight has already paid that book, but the loop keeps on working and they are carrying it. 02 lakh, crossed 5 lakh for the first time this month. The FIIs covered around 50,000 call shorts, so even the hedges respect the upside tail that we see. And for today's option chain, max pain sits around 24,350, that is where the expiry should happen. So 24,350 to 400 is that level where the max pain sits, and the market is 62 points below the magnet.

35 crore puts over there, 33 lakh just got added over there yesterday, so that is the single biggest strike of the defensive bulls. 5 lakh, was added yesterday itself, the biggest add that we saw. 14 crore. So below 24,250 we can still see that 24,200 level or 24,000 levels hitting in, so keep a watch on that. Resistance, the first resistance stands at 24,350 with 71 lakh calls, and 31 lakh got added yesterday. 05 crore, 24 lakh that got added over there.

25 crore calls have been written over there. So put writers added one crore contracts between 24,200 to 24,300 in one day. A great support that has been created. 92. So the expiry straddle is roughly around 125. The 24,300 reference strike is trading at 131, and that gives a range of almost 160 points on both ends. That gives us a box of roughly 24,150 on the lower end and around 24,400 on the higher end. If you look at the levels simply, 24,350 to 400 is your magnet zone, and below which it is negative gamma territory, which means the moves will amplify and we could see sharp trending moves.

Above 24,350, the market should pin around 24,400. And the vol is over the board as well, where we saw it jump 25 percent yesterday, so it is still around that 10 level. So the vol has subsided and the cash effect has gone down. Still, 120 rupees straddle means we could see another 40 to 50 rupees of decay till 3:15, and we could see the market pricing in around a 70 rupee straddle by 3:15. So if you are going to sell, be cautious, it is not advisable, as buy IV or buy long volatility is going on.

And the global headwind this morning. GIFT Nifty is flat, but Asia is melting. The Nikkei is down 1 percent, almost 700 points. 12 percent. 71 percent. 37 percent, that is the only positive. 32 percent. 61, the lowest that we have seen, and the oil tax compounding effect is able to be seen in the markets as well. 73, gold at 4,400, off the records. 50. So that is both bad news for the Indian markets, which may get surprised, and we will see it in the next part.

And one thing before we go to the plan. 4 on day one. 11 percent in the new book. So the scorecard still remains a CAGR of almost 48 percent year on year. Now the plan, guys. The battlefield is roughly around 24,200 to 400 levels, so we have got those 200 points to play for. Max pain above spot for once, the pin needs to settle down. 6 lakh naked puts are the fuel, and that would cost, 24,000 might get hit as well.

So do not rule out a trending move today. And oil above 91 gives the downside the benefit of the doubt, the standing rule. The vol model says buy the IV, do not sell it, own it in small risk. So what we are going to do, we are going to play the same direction, still buy on dips remains, and that is where the trade comes in. So we are doing a long spread, that means the 24,300 put we are buying and the 24,500 in the money put we are selling.

The spread is trading at a credit of 127 rupees, expected to sell around 135 to 140, with a stop loss of 160. So it gives you a 20 point stop loss with a target of almost 60 points, that means a one is to three trade is available. 24,300 and 24,500, expecting the markets can bounce till 24,400 as well. If it goes below 160, then do not carry it, just exit it and stay on the sidelines. Still, 24,100 becomes the first buy zone and the final buy zone is 24,000.

Keep a watch on it, keep position sizing right, guys, and have a happy trading. If this added value, please share it with one trader friend who needs it right now. com where it is streaming first at 8:30 every morning. And give it a rating, guys, if you want to add something to the podcast. See you all once again tomorrow. Till then, have a happy expiry.