FAQs:
What is Open Interest (OI), and why is it important?
Open Interest (OI) tracks the total number of open options contracts on an underlying instrument, helping traders gauge market sentiment. Changes in OI, when combined with price movements, can signal potential trends.
How can I use OI data for trading?
OI data provides insights into market behaviour:
- Rising Call OI with falling prices: Indicates bearish sentiment.
- Rising Put OI with rising prices: Suggests bullish sentiment.
So, monitoring OI at key strike prices can help identify support and resistance levels.
How do I access the Options OI Analysis feature on Upstox Pro?
- Log in to Upstox Pro.
- Navigate to the ‘Discover’ section.
- Click on the ‘Explore’ tab and scroll down to select ‘Options OI Analysis.’
- Choose the desired index, like NIFTY BANK or NIFTY 50, to view live data.
What metrics can I track using the Options OI Analysis feature?
- Open Interest (OI): Total contracts open at a strike price.
- Change in OI: Tracks the increase or decrease in OI to identify fresh activity.
- Call/Put Data: Helps evaluate sentiment for calls (resistance) and puts (support).
- PCR (Put-Call Ratio): The ratio of put OI to call OI.
- Max Pain: The strike price at which option buyers face the maximum loss, and option sellers gain the most. This often acts as a magnet for the expiry price.
How can I strategise using the Options OI Analysis feature?
- Rising Put OI at lower strikes suggests strong support.
- Rising Call OI at higher strikes indicates resistance.
- Use OI data in conjunction with price charts for a comprehensive analysis.
Is the Options OI Analysis feature available for all indices?
Currently, you can analyse OI data for indices like NIFTY50, NIFTY BANK, FINNIFTY, SENSEX and MIDCPNIFTY.
How does this feature improve my trading strategy?
It allows you to:
- Confirm market sentiment before making trades.
- Spot potential entry and exit points.
- Plan trades around support and resistance levels.