If anybody had any doubts on how Open Interest rules the NSE trading screen (and our accounts) today’s activity in the Nifty spot, particularly in the last hour should put all those doubts to rest.
The Nifty spot price was used to settle positions with the writers of the 6000 CE and the 6000 PE today. It made new lows today, matching the lows of last week and all the time the Nov Future, held the lows of the morning and closed with a 70 point premium !
After finishing off the 6000 CE writers from early morning whose Open Interest at one point reached 12 lacs ( subsequently reduced to 2 lacs) the Nifty made a u turn for the PE writers who at that point had written 22 lacs for a little over 4 bucks. The PE story at 6000 read as 17 lacs reduced from yesterday’s close.
Moral of the story : You do not write penny options.
Moral 2 : You do not write close to expiry.
The overall picture is still the same