Nifty Open Interest Analysis

[anup]

935,850 OI added in 5900 Calls

 

[twist]

yesterday after seeing 5600PE crossing 70L mark, today i traded 5700CE from 90 to 110 :clap: quick 18-19points gain

thanks option.trader for 70L theory

 

[anup]

Those who are following this thread, can you please answer this question:

On what basis 70 L OI addition is considered in taking Call/Put?...

 

[Option.Trader]

5600 PE is pretty much established as the series low... sentiment is now bullish.

None of the CEs are over 70L... means sellers are not sure which top to make... 58, 59 or 6000 ... this clearly looks bullish.

Now waiting for one CE to get locked... which will it be?

My guess 5800. Market should reverse from there.

What an excellent piece of analysis on call side... only that i dont see any call writing happening any time soon... even 6100 had 18% unwinding.. so bears are really unsure of top this time

 

[Option.Trader]

Date: 2.3.2013

FII's have initiated longs after long time. 5600 looks to be good base.. need to see if 5700PE gets taken out tomorrow.

Trade
Initiated 5600PE writing at open as discussed yesterday.
open - 41.1
Close - 27.25

P/L : 14

 

[jamit_05]

Interesting...

55,56 and 57 PE have added about 3.5 L OI in all... total. Dismal.

Whereas, 58, 59, 60 CE have added near about 18 L. Now that is a big difference.

This means,
1) a strong up move today is ruled out due to heavy selling of CEs.
2) a strong down side is possible cuz
a. market is up for past 4 days. Overbought.
b. OI addition in 5700 PE is very very dull. As if makers are not interested in selling an PEs above 5600 !!

 

[jamit_05]

Another interesting thing...

5400 and 5300 PE have squared off, probably in despair. Whereas, no CE strike (till 6400 CE) has reduced OI. Meaning, writers do not want to take the risk in return for low premiums on the downside.

Is it cuz they see a possibility of a fall out ? !!!

 

[prabhsingh]

Interesting...

55,56 and 57 PE have added about 3.5 L OI in all... total. Dismal.

Whereas, 58, 59, 60 CE have added near about 18 L. Now that is a big difference.

This means,
1) a strong up move today is ruled out due to heavy selling of CEs.
2) a strong down side is possible cuz
a. market is up for past 4 days. Overbought.
b. OI addition in 5700 PE is very very dull. As if makers are not interested in selling an PEs above 5600 !!

Isnt it possible that heavy addition in CE is accumulation rather then writing.Its start of series so might be FII are accmulating.

 

[jamit_05]

Isnt it possible that heavy addition in CE is accumulation rather then writing.Its start of series so might be FII are accmulating.

I am going with the assumption that the market makers in Options are writers. So, I see everything from their perspective.

Writers are the "more eager" ones to sell in the direction of the trend to get maximum time decay. And are also the more eager ones to buy, due to the "unlimited risk" factor.

Buyers, big pockets who matter, use options only to hedge. So they place their hedges only if the math, the costing, of the hedge appears profitable to them.

This is the pricing dynamic I am assuming as it makes most sense to me.

 

[anup]

9.75 Lakhs OI added in 6000 calls... Fingers crossed