Expiry trade setup: Will NIFTY50 continue bullish momentum on Thursday? Here’s all you need to know

NIFTY50

Max call OI:24,500 Max put OI:24,500

NIFTY50 index closed with gains on Wednesday for the sixth consecutive session. The rally was surprisingly led by IT stocks, which rallied higher in optimism around Q4 results and gains in the US tech stocks after reports of de-escalation between China and the US trade war. For today, the overall trade setup continues to remain bullish with positive global and domestic cues. However, experts believe Wednesday’s swing high could remain a key resistance level on Thursday.

On the 15-minute chart, the index opened with a nearly 184-point gap up on Wednesday. Later, the index pared all the gains to trade in red in the late morning session. However, the index took support of 50 EMA levels and bounced back to close in green. This indicates the strength of buying at lower levels for the index. On the daily chart, the NIFTY50 formed a hanging man candlestick pattern, which is considered to be a bearish signal after a strong rally. NIFTY50 has continued bullish momentum for the sixth consecutive session and gained more than 12% from the recent lows. The consistent rally from lower levels increases the odds for some profit-booking at higher levels.

Options buildup

The 24,000 puts witnessed high open interest addition on Wednesday, indicating strong support at these levels for the current expiry. The upside remains capped as 24,500 calls hold the highest open interest. Traders looking to trade with bearish sentiment can continue with a bear-put strategy by buying 24,300 puts and selling 24,000 puts. The strategy would help in having a bearish stance amid profit booking with a moderate bullish outlook.

Traders with bullish sentiment can execute a long call strategy by buying 24,300 calls. The strategy would turn profitable after the index moves above 23,363.

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