Tracking PUT CALL Open Interest

[prasadam]

prasadgvrk

not yahoo. its gmail

 

[suntosh10]

dear SM sahab,

thank you very much for this wonderful new thread. iam eager to know, if you would also be commenting on stock options?

 

[findvikas]

Super work... keep up the good work.

 

[RamP]

Re: Tracking Smart Money Using Options

Great efforts. But I am a novice. What actions one can take from this.

 

[Mangafreakz]

Thank you SM for this thread , like AW10 said if you can post some OI Interpretations , it will be helpful to understand it more for starters like me.

 

[rkkarnani]

Check the link :
http://www.traderji.com/options/7896-excel-worksheet-analyse-options-bhav-copy.html#post55993

An excellent idea which I suppose was abondened midway!! If it did reacha conclusion I request tanewbie to share it here with us!!

 

[kenneth]

Check the link :
http://www.traderji.com/options/7896-excel-worksheet-analyse-options-bhav-copy.html#post55993

An excellent idea which I suppose was abondened midway!! If it did reacha conclusion I request tanewbie to share it here with us!!

This Link will give the info you are looking

http://www.ventura1.com/Derivativesnew/DerivativesInner.aspx?id=7

Regards
Ken

 

[rkkarnani]

Some basics about Open Interest I found in this thread :
http://www.traderji.com/derivatives/18142-open-interest.html

 

[rkkarnani]

A bit detailed read about Option Analysis , courtsey : Kamlesh Langote. Word File attached.

 

[AW10]

My this post might confuse people who are new to OI.. so plz skip if you fall in this category.. Plz go ahead with standard interpretation as given in the doc attached to Karnani's post.

I know the basics of of OI inteprtation, but a bit confused when I put the dimension of "market phase" in it..and trying to figure it out myself.. My confusion is :-

In standard interpretaion.. increasing OI is with increasing mkt is strong bullish signal. But if I look at the way smart money plays during the distribution phase, then my feeling is that this intepretation could be misleading.

If I am Smart Money who moves the market due to huge volme of their trades, and I want to build short position. i.e. I want to sell big amount of qty in the market. So I buy the stock at lower level, price goes up, novice follows and I am happy to sell my stock to them. But what I am doing is buying less qty and selling more qty. So effectively I am selling.

At this stage, I know that all other smart players are also doing more or less same thing.
i.e. all upmoves are fake to pull in more novice buyers in the market.

As smart money, I have to protect my long positions. So I start building shorts by selling futures..(so Future OI goes up cause there are enough of novice F&O buyers there).. or BUY PUTs.. (from some novice seller who thinks that mkt is going up and ready to sell puts in distribution phase).
In other words, It is difficult to find out from OI alone whether smart money is on the buy side of OI or on the sell side. Depending on the side they take, the intepretation of increase in OI might change (I am not sure as of now, I have no theory behind it, but just my 6th sense)

Both these position are Strong bullish with normal interpretation of OI or PCR.. but what is actually happening in the market is entirely opposite of it. Smart Money is taking bearish stance, hedging there position and generating false bullish sentiment thru F&O as well.

Hope you are able to visualise what I am trying to say here. Hope I get some pointers from readers here to solve this puzzle / or my misunderstanding.

Once again - if u are confused, then skip this post.. OI is great tool to understand the undercurrent of market.. so standard interpretation of it is still valid in most of the case.

Happy Trading