Saturday trading mood: Lack of volume, spikes on counters and abrupt option pricing on expiry shift

The surprise full-day trading session on January 20 was marked by a lack of volume, spikes on counters, and arbitrage opportunities resulting from a shift in expiry. The Nifty 50 fell into a bear trap during the last couple of hours of the session as bulls failed to hold their ground.

The market mood remained abrupt as some traders discovered that the sudden announcement of a full-day trading session affected their trading strategies. The premium pricing behavior was also abrupt, as the market had not discounted the preponed session.

According to Arun Kumar Mantri, Founder of Mantri Finmart, “Markets have been lackluster, with moves being more pronounced on the stock-specific front, focusing entirely on corporate earnings and new developments among the counters.”

He highlighted that overall volumes were on the dry side among large caps, and the action was more prominent in the mid and small-cap space. “Due to the shift in BANKEX and MIDCAP INDEX options expiry from Monday, there was a definite one-day time decay, impacting options pricing, which came in lower. Trading strategies for options traders were also affected.”

Railways outperformed, and the Adani group saw last-hour spikes

“There was more of a segmented trade where railway stocks experienced continuous momentum, followed by PSU banks continuing their outperformance. On the other hand, the Adani group also witnessed significant price spikes in the last hour of trade,” added Mantri.

Premium pricing affected due to expiry day shift

Regarding the expiry day shift, Mantri added, “The expiry positions executed by market algos and high-frequency traders were certainly disturbed, as the options expiry shifted one day earlier, drastically affecting the price. Options strategies, which consider time value, had to be squared off today.”

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