Interpreting top 10 open interest – 5-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 (July expiry) that have got highest open interest as of Friday’s close.

Weekly option OI Analysis
Observations –
1) 5000 Put has added 39 Lac plus of open interest, making it the strike with the highest Put OI. This indicates a strong base for current series is set at 5000.
2) 5200 Put has not changed much in last week. It also has second highest level of OI. So if we don’t see any further downmove, then 5200 level will act as immediate support.
3) Higher volume of Open Interest in Calls at 5500, 5600 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 5500/5600 on upside.

2) 5200 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.

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