Interpreting top 10 open interest – 12-August-2011

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As options open interest shows us the footprint of smart money/big players, so lets try to decipher their footprint. Here is the list of option strikes (August expiry) that have got highest open interest as of Friday’s close.

Open Intrest Analysis - 12-august-2011

Open Intrest Analysis - 12-august-2011

Observations –
1) 5000 Put is still carrying the highest OI for PUTs, making it the strike with the highest Put OI. This indicates a strong base for current series is set at 5000.
2) 5300 CALls have got huge jump in OI, indicating that it has come up as new resistance level.
3) Higher volume of Open Interest in Calls at 5500 will make it difficult for market to go up beyond 5500 level.
4) Interestingly, Put Call Ratio of for top 10 OI strikes has not changed from last week. This indicates that the sentiment from last week has not changed much. The players have shifted their position to new strike levels in similar ratio.

Interpretation –
1) For now the range for current series is established between 5000/4900 on downside and 5300/5500 on upside.

2) 5000 Put is going to provide immediate support to market. As it is already oversold, expect a bounce from here and lets watch out for any new shift in OI positions during next week.

Hope this analysis helps you in forming your own views on market. Feel free to drop your comments on the post. Let me know if you would like to see something more in the analysis.

Disclaimer – These are my views on the market and I could be wrong in reading it. Please use your own judgment and make sensible trading decision based on your own analysis.

Wishing you all Happy Independence Day

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