STOCK Options trade
One of the vital derivative data points which market participants look at is, open interest. Do you know it can be used to gauge market participation and option break out scenarios. How?
Let’s start and pour over it:
Open interest in an option chain refers to the total number of outstanding contracts that have not been closed or exercised on a particular option, with a particular strike price. The approach to understand the soft spots and points of interest, as an option trader – would be to arrive at options’ strike with Highest OI of CE and Highest OI of PE.
The open interest analysis of options, of a particular underlying like Nifty, BankNifty or stocks in F&O segment of NSE, helps us to find the range in which the underlying is likely to trade for the current expiry. Mostly helpful in finding the trigger points or breakout points for the underlying.
Quantsapp option analytics tool, namely, Triggers helps in searching among the list of F&O stocks/indices in Indian Stock Markets, to gauge which are those where a potential breakout could occur from the perspective of open interest structure and positioning.
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PGDM in finance, having 5+ experience in Equity, commodities , forex analysis and trading.
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