Nb. Our comment from the 08/15/2022 (Not published)
Nb. Our comment on 08/22/22
The August expiry was even more bullish than we thought/predicted it would be, ending up with a gain of 416.49-points (5.84%) on the EDSP of 7550.62.
And not only was 7550 the settlement price, it is also the closing level for the FTSE.
This is very significant, as the actual real time closing price of the FTSE was in fact 7539.79, down 2.06-points.
So, not only has the auction turned a loss into a gain (so much for transparent and representative market data then) but it has also taken it to a very significant ratio level as well.
For those not sure of the significance of this it is because in real time both the futures and equity market are open, whereas the auction is the preserve of equities only. Therefore, the auction takes place without allowing for any dynamic delta or hedging to take place from the derivative stock index options and futures.
The end result is that today, this index is going to start right on DR ratio, which is a lot, even for a triple.
By the end of a triple, we always say that they can, and frequently do, trade up to the B ratio levels, such is the huge increase in activity in both derivatives and index equities created via stock index options and futures hedging.
But, at the very start of the expiry, DR is a lot of dynamic delta futures selling for a market to absorb.
On top of which, the zone is down at 7300.
Hat’s off to the bulls if they are that committed, but we suspect this will be too much for them to contend with, at least for this week.
Range: 7450 to 7550 or 7550 to 7700
Type: On balance bearish