March 2020 – A month to remember for a long time

Dharam Chand Sethia Uncategorized Leave a Comment

We have just finished march series of derivatives expiry, and what a roller coaster time it was for markets as well as for humanity.Let me take you straight to derivatives data and try to understand what happened in the markets.One important point that stood out for me was stock futures have become very light in open interest in lot of names.We can attribute many reasons for that – low participation,fear of market shutdowns,Shorts covering their position.

Data-

A.Price Performance of the month – Few names that stood out for me were- HUL,Torrent Power and couple of pharma names.The knock on these names were less than overall market.

Price performance

B.Open interest of the month- Lot of good short names have seen covering. ITC, Apollotyre, PSUbanks are few names where shorts have lighten their position.What happens further in april series will remain crucial.

 

Open interest changes of the month

C.Implied Volatility Changes-It was evident given the volatility across globe.

Implied Volatility changes

D.This is a sectoral presentation of all parameters.Technology didn’t see OI reduction(courtesy- TCS)

All sectors

E.Option Open interest– Last but not the least.I haven’t seen such low OI for a long time in front line stocks option position, due to a lot of Prop Desks and other large players are operating at very less capacity.I am also not expecting large positions on either side(call/Put) in stock options till normal volume resumes.

top stock option OI

Some Interesting Charts-

ITC-ITC

Bankbaroda

Bankbaroda

Biocon

Biocon

This also taught me one more thing – A retail account trader could easily enjoy the fruits of volatility than a Prop Desk /Institutional trader in these black swan events due to closure of offices.Large swings,very few algos and very few of the large desk traders in the game.Hope they have been able to benefit from these events.

Happy Trading all.

All charts courtesy- MyFnO.(myfno.com)

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