Twelve stocks are headed out of futures and options (F&O) trading on Thursday. The likes of Arvind, Birlasoft, DHFL, Hindustan Zinc, IDBI Bank going out of F&O trade. There is a fair amount of open interest (OI) which is still there in these stocks for the September series. For stocks like IDBI, nearly 70 lakh shares are still there in terms of OI.
What does this mean?
At the end of todayâs trading session, all these shares or all these positions in the F&O space will have to be squared off or perhaps let to expire and the settlement will take place at the difference between the cash market as well as the futures price, which will converge at the end of this day.
The positions which are there right now which are open on either the long or the short side will see exaggerated moves. If the stock price goes lower, investors who are long will have the pressure of liquidating those longs and that would exaggerate the stock price movement on the lower end.
Conversely, for the stock price which has moved higher and there are a fair amount of shorts in the system, there would be more short covering.
There have been a lot of erratic moves on these stocks over the last couple of trading sessions such as Arvind, IDBI Bank and MCX but the volatility is likely to be there till the end of todayâs trading session. More importantly in the last half an hour of today as well.