Nifty Monthly Expiry Outlook: Call Unwinding Lifts Index Towards 22,800; Heavy Put Addition at 22,700 Strengthens Support

On the day of monthly derivatives expiry, the Nifty 50 index has rebounded from its lower levels and is now trading near the day's high. The index is trading at 22,799.80, up 46.60 points or 0.20%, as of 12:49 PM on Tuesday, October 27.

The recovery has been accompanied by a noticeable change in options positioning. Call open interest (OI) has declined considerably over the past 15-18 minutes, while put positions continue to remain concentrated around 22,700 and 22,750. More importantly, fresh put additions are now visible at the 22,800 strike, indicating that participants are increasingly positioning around a higher support zone.

The movement in OI, along with an increase in the Put Call Ratio (PCR) and an upward shift in the maximum pain level, suggests that the near-term options structure has become relatively more favourable for the bulls. However, a sustained move above 22,800 remains necessary to extend the recovery.

Significant Call Unwinding Supports Nifty's Recovery

One of the most important developments in the updated options data is the reduction in overall call open interest.

At approximately 12:31 PM, total call OI stood at 32.96 crore. By 12:49 PM, it had declined to 31.06 crore, representing a reduction of approximately 1.90 crore in outstanding call positions within 18 minutes.

During the same period, the Nifty recovered from approximately 22,755 to 22,800, suggesting that the rise in the underlying index coincided with substantial unwinding of call positions.

The 22,800 call strike, which earlier carried approximately 2.96 crore OI, has witnessed a reduction to around 2.40 crore. Similarly, call OI at 22,750 has declined from approximately 1.90 crore to nearly 1.10 crore.

This is an important change because both these strikes had previously attracted substantial call additions, creating resistance near the prevailing market price.

The reduction in call OI as the index moves higher is consistent with call writers covering their positions. When call sellers begin exiting, some of the resistance created by their positions weakens, allowing the underlying index greater room to advance.

However, options data alone cannot establish whether all the unwinding represents short covering. The combination of price movement, changes in OI and option premiums is needed to confirm the nature of these positions.

Put Open Interest: 22,700 Remains Strong, While 22,800 Attracts Fresh Positions

On the put side, the highest outstanding OI continues to be concentrated at the 22,700 strike, with approximately 3.35 crore positions, followed by 22,750 with around 2.42 crore and 22,500 with nearly 2.30 crore.

The change in OI provides a more relevant picture of where fresh positions have been created during the session.

The 22,700 put strike has witnessed the largest fresh addition of approximately 2.30 crore, followed by 22,750 with nearly 1.98 crore. More importantly, the 22,800 put strike has recorded fresh OI additions of approximately 1.45 crore.

The substantial addition at 22,700 indicates that this strike remains the principal support from an options positioning perspective. However, the concentration of fresh put additions at 22,750 and 22,800 is equally noteworthy.

As the index has recovered towards 22,800, these higher strikes have attracted considerable put positioning. If the additions predominantly reflect put writing, it would indicate growing confidence among option sellers that the index can sustain at or above these levels.

The implication is that the immediate support structure is shifting higher, although 22,800 must first be sustained for this development to carry greater significance.

For the remainder of the session, 22,750 is likely to act as the immediate support, followed by the more substantial 22,700 level. A break below 22,700, accompanied by significant put unwinding, would weaken the recovery and increase the possibility of a decline towards 22,650 and 22,600.

Fresh Call Addition at 22,800 Still Requires Attention

Despite the overall reduction in call OI, traders should not overlook the fresh positions that remain outstanding at higher strikes.

The 22,800 call strike continues to record the highest positive change in call OI, at approximately 1.49 crore since the beginning of the session. Fresh call additions are also visible at 22,850, with around 1.23 crore, followed by 22,900 and 23,000, each with additions exceeding 1.10 crore.

In terms of total outstanding positions, the 23,000 call strike carries approximately 2.88 crore OI, making it a significant overhead resistance level. The 22,800 strike has around 2.40 crore, while 22,900 carries approximately 2 crore.
This suggests that although some call positions have been unwound during the recovery, the upside is not entirely free of resistance.

A sustained move above 22,800, accompanied by further call unwinding, could allow the index to advance towards 22,850 and 22,900. However, if fresh call additions resume at 22,800 and the index struggles to move higher, the level could once again restrict the recovery.

Therefore, the next important development to monitor is whether call OI at 22,800 continues to decline as the index attempts to move above the day's high of 22,804.50.

Put Call Ratio Improves, Maximum Pain Shifts to 22,800

The recovery in the Nifty has also been reflected in the broader options indicators.

The PCR has increased from 0.981 at approximately 12:31 PM to 1.095 at 12:49 PM. Meanwhile, the broader PCR (ALL) has risen from 1.0393 to 1.1052.

This improvement reflects a relative increase in put OI compared with call OI. However, the principal reason for the sharp improvement over the latest interval is the reduction in outstanding call positions rather than aggressive net addition to overall put OI.

Total put OI has increased only marginally, from 34.25 crore to 34.33 crore, while call OI has declined by approximately 1.90 crore.

Another important development is the shift in maximum pain from 22,750 to 22,800.

The maximum pain level now coincides almost exactly with the prevailing market price. This suggests that the options positioning has adjusted towards the higher strike during the recovery.

Maximum pain should not be treated as a price target, but its upward movement, alongside call unwinding and higher PCR readings, reinforces the view that the options structure has improved in favour of the bulls.

Meanwhile, India VIX has declined to 16.64, down 0.52 points, indicating some moderation in expected volatility.

Nifty Monthly Expiry: Key Levels and Trading Strategy

The updated options data places the 22,800 level at the centre of the remaining expiry-day trading session.

Bullish Scenario: If Nifty moves decisively above 22,804.50 and sustains above 22,800, further unwinding of call positions at this strike could strengthen the recovery. In such a scenario, 22,850 becomes the immediate upside level, followed by 22,900. A sustained move above 22,900 would bring the next major call OI concentration at 23,000 into focus.

Range-Bound Scenario: If the index fails to sustain above 22,800 but continues to find support around 22,750, consolidation within this 50-point band remains possible. The sizeable put additions at 22,750 and 22,700 could help contain declines, while remaining call positions at 22,800 may restrict the upside.

Bearish Scenario: If Nifty slips below 22,750, the immediate focus would shift towards 22,700, where the highest put OI is concentrated. A sustained break below this level, particularly with put unwinding, could accelerate the decline towards 22,650 and 22,600.

For intraday traders, the most important signal would be the behaviour of open interest as Nifty tests 22,800. A breakout supported by continued call unwinding would carry greater significance than a temporary move above the level without corresponding changes in positioning.

Outlook: Bulls Gain Ground, but 22,800 Breakout Holds the Key

The updated monthly expiry data shows a clear improvement in the Nifty's near-term options structure compared with the position observed earlier in the session.

Call OI has declined sharply as the index recovered towards its intraday high, while substantial put additions at 22,700 and 22,750 continue to provide downside support. Fresh put positioning at 22,800 further indicates that traders are increasingly focused on whether the index can establish a higher trading floor.

The improvement in PCR and the upward shift in maximum pain to 22,800 lend additional support to the recovery.

However, the 22,800 strike continues to carry substantial call OI, and a meaningful breakout has yet to be established.

A sustained move above 22,800, supported by continued call unwinding, could extend the recovery towards 22,850–22,900.

Until that happens, traders should remain alert to the possibility of another rejection near the day's high, with 22,750 and 22,700 serving as important downside reference levels.