Interpreting top 10 open interest – 19-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.

Nifty Options OI Analysis - 19-August-2011

Nifty Options OI Analysis - 19-August-2011

Observations –
1) 5000 Put that was carrying the highest PUT OI till last week, saw unwinding of positions. These positions have shifted to 4600 / 4700 PUT levels making them strong support for current series.
2) 5000 CALLs have got huge jump in OI. It has highest CALL OI now indicating that it will act as new resistance level.
3) Interestingly, Put Call Ratio of for top 10 OI strikes has shifted to below 1. This indicates that the bearish positions are getting closed and preparation is in progress for bounce.

Interpretation –
1) For now the range for current series is established between 5000/4900 on upside and 4600/4700 on downside.

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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