Future-OI Built-up
The key to successful options trading in the Indian stock markets lies in grasping the underlying price action. This comprehension is facilitated by analyzing the futures price action alongside monitoring open interest behaviour.
Open Interest stands out as a crucial data point in futures and options trading on NSE, containing a wealth of analytical insights. It serves as a valuable tool for not only gauging the level of participation but also discerning the underlying trend, thus enhancing our understanding of price behaviour.
Option traders understand that price changes supported by substantial Open Interest (OI) participation tend to be more enduring and signify a more effective rally compared to price action lacking OI participation.
Discussion of open interest would be incomplete without the mention of the necessary conditions that exist with price action for the Futures OI Built-up tool for NSE traded equity derivatives.
On the bullish end:
Longs = Price Up + OI Up (L)
Long Unwinding = Price Down + OI Down (LU)
On the bearish end:
Shorts = Price Down + OI Up (S)
Short Covering = Price Up + OI Down (SC)
What you’ll learn
Varun Shetty possesses rich experience in the field of training, he is amongst the best experts for gaining an understanding of Equity Derivatives Trading
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