Interpreting top 10 open interest – 29-July-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 (August expiry) that have got highest open interest as of Friday’s close.

Option Open Interest based analysis

Option Open Interest based analysis

Observations –
1) Weekly change in OI is showing big numbers this week, but that is due to start of new series. Players have built their positions for August series. Hence this week, I am not going to read too much into Change in OI.

2) 5400 Put has highest OI, i.e. it should provide first level of support. Next level of support is at 5200. Observe that 5200 has higher OI then 5300, indicating low level of importance on 5300.

3) 5700 level Calls have highest OI hence it should act as resistance.
4) As far as PCR for top traded strike goes,it is at 0.98 indicating balanced market condition.

Interpretation –
1) For now the range for current series is established between 5200/5400 on downside and 5700 on upside.

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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