Interpreting top 10 open interest – 2-September-2011

This item was filled under [ Traders zone ]

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 - 2-Sept-2011

Observations –
1) 4700 /4800 PUT have shown very good addition in OI making them strong support for current series.
2) 4400 PUT has also shown good increase in OI indicating people taking position there for next leg of fall, if it comes.
3) 5000, 5100, 5200 CALLs have shown drop in OI.
4) Higher volume of Open Interest in CALLs is at 5000 level and then at 5300 level.

Interpretation –
1) As market moved up during this week, support level has shifted up which is indicated by 4700/4800 PUTs.

2) As market moved up, if sentiments are turning bullish then we should have seen more CALLs OI. Unfortunately, that is not the case. Infact CALLs OI has reduced. This is indication of lack of strength in bullish move. Volume also has been low in this week (maybe because of just 2 days of trading holidays).

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.

Be Sociable, Share!
You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

7 Comments on “Interpreting top 10 open interest – 2-September-2011”

  • Sunil
    4 September, 2011, 4:46

    Your analysis really gr8 and i m a big fan our analysis, i have a query .actually i confused when writing not buying :)is going on in a particular strike price in call/put option.

  • Sunil
    4 September, 2011, 4:49

    Your analysis is really gr8 for any trader/investor, i am a big fan of your analysis.i have a query, if possible then please reply me.

    Query:
    When we analyze that writing is going on a particular strike price either in call or put.means on what parameters we can decide that writing is happening in particular call/put.

  • Trader anup
    5 September, 2011, 7:54

    Hello Sunil, Good to know that you like my analysis. Regarding your query – In trading OI number or volume data, buy is always equal to sell. For every buy option trade to complete, there will be 1 write option trade. Challenge is to know which party is on the writing side and which one is on buying side. To analyse this, we need to look at the possible trading behavior of professional trader and novice traders. As professionals work on statistics and they take position where odds are in their favor, it is fair to assume in normal circumstances that they are on the writing side. Having said that, it is also true that they manage their risk actively i.e. shift their positions, buy OTM options to limit risk etc. It is not straight forward rule based interpretation but more of a subjective/discretionary analysis. That is what I attempt to analyse and write every week. I will make a post soon with some of the factors that I use to form my opinion, so please wait for that.
    Happy Trading

  • Sunil
    7 September, 2011, 3:03

    Thanks a lot sir.
    Can i have any contact number of urs or any mail id other that this.

  • VISHAL MEHTA
    3 April, 2012, 10:58

    SIR, I AM TRADER IN PUT CALL OPTION TRADER IN NIFTY OPTION,, I TRIED ALMOST 6 MONTHS TO UNDERSTOOD PUT CALL OPTION IN NIFTY HOW IT WORKS? BUT I AM FAIL , CAN U HELP ME ABOUT THIS ?

  • 13 April, 2012, 16:09

    Can we meet up sir,I am not a trader but am into finance,I read about ur article of short term trading,I am also identifying variours instruments of short term investments,My no is xxxxxxxxx.If u have some time,lets meet up and discuss.
    thanks.

  • Trader anup
    24 April, 2012, 16:43

    Hi Vijay, I am not residing in India currently hence it will be difficult to meet personally. But we can always be in touch thru this blog.
    Happy Trading

Leave a Comment