Sensex expiry day, and the big money is short

And here's the thing about expiry: price tends to get tracked towards the middle, towards the level where the largest number of option buyers walk away with nothing. That magnet today sits around 74,300 to 74,500. So my base case for the Sensex is a grind back towards that middle and a settle, with almost negligible change overnight, unless something forces it out of that range. One warning, guys, if you are trading Sensex options today, they die this afternoon. The volatility baked into them collapses into the close.

So if you buy a Sensex option for direction and the market just sits there, which is the base case, you can lose half of your premium to time decay alone, without the market moving a single point your way. On expiry, in a quiet tape, the option seller wins. Respect that, and remember that today as well. So now the Nifty, which is the cleaner trade, because the Nifty is still carrying tomorrow's event in its price. Nifty closed at 23,405. The options market is pricing a weekly move of around 375 points, which stretches to a band of roughly 22,940 on the downside and 23,875 on the upside.

Inside, three levels run your day. 23,300 is the support to look for, the heaviest stack of downside protection sits there and buyers will defend it. 23,500 is the resistance, yesterday a massive wall of fresh upside bets landed at exactly that strike, almost 3 million contracts in a single day. That's a hard lid now, about 95 points above us. And between them, at 23450, is the flip level. Below 23450, moves get amplified, the tape is fast and twitchy. Above 23450, it is calm and drifts.

We are sitting at 23405, just below the flip. So expect it jumpy until the buyers take back 23,450 on the upside. So here's the plan in plain terms. While 23,300 holds on a closing basis, you buy the dips, the zone is 23,300 to 23330, stop just under 23250, so if 23,250 breaches you're out. But you only trust the upside once we are back above 23,300 and cross 23,450. Until then, every push into 23,500 is a sell-on-the-rise, remember that, a place to book, not chase.

Lose 23,300 on the close and the next stop directly is 23200, and 23000, yes, 23,000 is a likelihood, and that's your tell the market is getting scared and pre-positioning for a bad rate call tomorrow. Now the trade that is already paying up. A couple of sessions ago, I told you this was a long-volatility setup, buy the strangle into the event, don't sell your options. 28, up six percent in a single day. If you're long that volatility, you are already paid. And it keeps working for one reason: volatility stays bid right up until the big event, and then crushes the moment it passes by.

Tomorrow is that event. So on the Nifty, you stay long volatility or you stay flat, you do not sell Nifty premium the day before the central bank is going to speak. And the positioning underneath tells you why everyone is cautious. In the index futures, FIIs are now net short 2,60,000 contracts, and they piled almost 29,000 fresh shorts yesterday itself. That's their most defensive stance all week, built deliberately right before the rate decision. On the other side, the retail crowd is net long, almost 1,96,000 contracts.

The professionals are slightly long and busy writing options, pros are long, but they have written a huge amount of calls and bought puts. So big foreign money short and hedged, the small trader long against them, into the biggest event of the week. When the smart money pays up for protection and the crowd leans the other way, you respect the protection. The cash market also agrees, guys. FIIs sold another 5336 crore of cash yesterday, but our institutions bought 5510 crore. The domestic wall is the reason Wednesday held.

Because Wednesday was ugly under the hood, the IT sector fell more than 5% yesterday, led lower by its heavyweight TCS, and yet the index barely moved. The banks rotated up, banks helped it. Rotation was the reason, not collapse. Quick scorecard on yesterday's five calls: three landed. 74,000 held. Crude stayed under 97. 02. The miss was IT, which I said would lead and instead led the fall. Now I am owning it. Now the world this morning is showing something different. GIFT Nifty points to an open near 23313, about 90 points lower.

Asia is red, Japan down nearly 2%, Korea is down 2%, America closed lower overnight. The reason the mood soured this week is crude, renewed US and Iran tensions spiked oil towards 98 on Brent. But here's the relief: it has cooled this morning, back to 96 levels and change, under 97. Gold is firm at 4466. 71. 02. Even Bitcoin, for the risk crowd, slipped under 70,000. So the two things that could have boxed in the RBI, runaway crude prices, spiking yields, have both gone quiet overnight.

Which brings us back to the shadow, the RBI tomorrow. The meeting started yesterday itself. 25%, but with a careful, watchful tone, given the oil shock and a weak rupee. That's the wait. That's why nobody is swinging big size today. And so here's your Thursday in one breath. Today is expiry, the Sensex pins between 74,000 and 75000, dragging towards 74,300 to 74500, your pin strike that we're focusing on. You don't buy Sensex options for direction into the vol crush that is going to happen.

On the Nifty, buy the dips while 23,300 holds, only trust the upside if we close above 23450, the flip level, sell into 23500, and stay long volatility into tomorrow's open. The foreigners are short, the locals are buying, and the whole market is settling its week with one eye on the RBI's policy tomorrow. My tag for the day: expiry pin, range-bound, long volatility, support around 23300, resistance around 23500, conviction capped until the rate call. If I gave you a cleaner plan for today, then share it with one trader friend who needs this plan as well.

com. And I am waiting for your reviews, they tell me what's landing and what isn't. This has been The Tanmay Edge. I'm Tanmay Kurtkoti. I'll see you tomorrow, before the bell, for the RBI. Once again, have a happy expiry, guys.