Interpreting top 10 open interest – 16-September-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 (September expiry) that have got highest open interest as of Friday’s close.

S&R levels as per OI - 16-Sept-2011

Observations –
1)  5300 CALL have shown good addition in OI making them strong resistance for current series. 5200 CALL OI has gone down, i.e. this level has weaken as resistance.
2) 4900 PUT has also shown very good increase in OI making it stronger support level.
3) 5500 CALLs have shown drop in OI indicating people are booking profit on these calls.
4) Higher volume of Open Interest in CALLs is at 5200 level and then at 5300 level. Highest level of PUTs is at 4700, 4800, 5000 level.

Interpretation –
1) As market moved up during this week, support level has shifted up which is indicated by heavy increaes in PUT OI at 4900/5000 levels.

2) Resistance level is currently built up at 5200 and then at 5400 level.

3) As market moved up, if sentiments are turning bullish then we should have seen more CALLs OI. Unfortunately, that is not the case. This is indication of lack of strength in bullish move. We have seen increase in PUT OI which is going to provide support during current series, if market falls from here.

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.

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