Interpreting top 10 open interest – 1-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 (July expiry) that have got highest open interest as of Friday’s close.

Top10 OpenInterest Analysis

Observations –
1) 5300 Put has added 22 Lac plus of open interest, making it the strike that has got highest OI. This indicates a strong base for current series is set at 5300.
2) 5400 Put has added almost 10 Lac in OI, which gives additional support to 5300 base. This also will act as support.
3) There is no major change in 5600 and 5800 Calls but there has been 8 Lac plus change in OI for 5700 Call. This indicates a resistance is currently set at 5700 level.
4) Higher volume of Open Interest in Calls at 5600, 5700, 5800 will make it difficult for market to go up.
5) More Puts have been added in this week (4.2 lac compared to 1.6 lac Calls), which is bullish sign. No wonder that it supports the bullish price action of this week.

Interpretation –
1) For now the range for current series is established between 5300/5400 on downside and 5700/5800 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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