Technically, previous support if breached becomes resistance for the market. It’s not a thumb rule that strike with maximum put built-up becomes support and strike with maximum call built-up becomes resistance.
Interestingly, despite Nifty futures correcting from 4424 to 3965 in six trading sessions, implied volatility decreased from 45% to 35% and Put-Call-Ratio correcting from 0.99 to 0.80.
This indicates that there was selling of options and mainly call options and hence above support and resistance come into play.
One should remember that implied volatility is function of premium of options and premium of option is function of what participants opt to do.
As they opted to sell the options, prices came down and so did implied volatility.
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