OI ANALISYS - how to use OI and change in OI to form a foundation for your trade

Trading
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OI at strike 26000 is put - 111.84 lac and call - 135.12 lac, , while change in OI for call - 30.42 lac and put - 26.24 lac , , , the difference of overall call and put is approx 24 lac, , , for market to stay above of 26000 or move beyond, , , the difference between change in OI of put and call should be more than 24 lac , , , , , , am I right in this , , , , if not pls help me to understand

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Hi @SAGAR_BABA_1116475,

Great question! Youā€™re on the right track, but thereā€™s a crucial distinction between OI levels and CHANGE IN OI. Let me clarify:

YOUR DATA BREAKDOWN:
At Strike 26000:

  • Put OI: 111.84 lac

  • Call OI: 135.12 lac

  • Net OI difference: 135.12 - 111.84 = 23.28 lac (slightly more calls)

  • Change in Put OI: +26.24 lac

  • Change in Call OI: +30.42 lac

  • Difference in change: 30.42 - 26.24 = 4.18 lac

YOUR INTERPRETATION vs REALITY:

You asked: ā€œFor market to stay above 26000, should change in Call OI - Change in Put OI be > 24 lac?ā€

NOT QUITE. Hereā€™s why:

  1. Static OI Levels (Put 111.84L vs Call 135.12L)

    • This shows CURRENT contract positioning
    • Already implies market expects ABOVE 26000
    • The 23.28L call excess reflects cumulative bullish bias

  2. Change in OI (Call +30.42L vs Put +26.24L)

    • This shows INTRADAY/RECENT positioning changes
    • Reflects traders ADDING positions TODAY
    • The +4.18L difference means more call additions today = bullish signal

THE KEY INSIGHT:

OI change tells you DIRECTION of trader bets, not confirmation.

If market STAYS ABOVE 26000:

  • Call buyers PROFIT ā†’ will exercise/hold calls ā†’ Call OI DECREASES at expiry
  • Put sellers PROFIT ā†’ will let puts expire worthless ā†’ Put OI DECREASES at expiry

If market FALLS BELOW 26000:

  • Put buyers PROFIT ā†’ will exercise puts ā†’ Put OI DECREASES
  • Call sellers PROFIT ā†’ calls expire worthless ā†’ Call OI DECREASES

WHAT YOU SHOULD ACTUALLY WATCH:

  1. Increase in Call OI = Traders BUYING calls = They expect upside
  2. Decrease in Put OI = Put sellers confident = Market stays above strike
  3. Increase in Put OI = Traders buying puts = Fear of downside
  4. Decrease in Call OI = Call sellers taking profit = Downside expected

YOUR ANALYSIS WITH CORRECT LOGIC:

Call OI +30.42L (more bullish bets being added)
Put OI +26.24L (more bearish bets being added)
Net: +4.18L more calls added = SLIGHTLY BULLISH

BUT HEREā€™S THE CATCH:
Both increased, meaning BOTH bulls AND bears are adding positions. This suggests:

  • HIGH UNCERTAINTY
  • Traders hedging both sides
  • Potential range-bound trading

FOR ACTUAL BULLISH CONVICTION, youā€™d want:

  • Call OI INCREASING significantly
  • Put OI DECREASING (sellers taking profits)

PRACTICAL EXAMPLE:

If market was at 26,200 with these OI stats:

  • Heavy call addition (+30.42L) = bullish
  • Heavy put addition (+26.24L) = still bears adding
  • Gap: Only +4.18L = NOT strong conviction

If instead you saw:

  • Call OI +50L (heavy bullish)
  • Put OI -20L (bearish liquidation)
  • Then you have STRONG bullish bias

BOTTOM LINE:

Change in OI difference of >24 lac is NOT the right criterion. Instead look for:

  1. Which contracts are being ADDED (positive change)
  2. Which are being EXITED (decreasing OI)
  3. The RATIO between them
  4. The current PRICE level relative to strike

Does this clarify the difference between static OI levels vs OI changes?

-VENKATA

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But shouldnā€™t we look at the OI from sellerā€™s perspective, , , , , , increase in put OI is bullish and increase in call OI is bearish , , , , , because afterall sellers are the movers and shakers

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Great question! Youā€™re thinking like a trader. Yes, sellers DO matter massively.

FROM SELLERā€™S PERSPECTIVE:

āœ“ Increase in Put OI = MORE put sellers = Theyā€™re confident market WONā€™T go down = BULLISH
āœ“ Increase in Call OI = MORE call sellers = They expect market to pullback = BEARISH

But hereā€™s the DUALITY:

BUYERS: Call increase = bullish, Put increase = bearish
SELLERS: Call increase = bearish, Put increase = bullish

Both views are correct! OI increases tell you WHO is adding positions.

PRACTICAL INSIGHT:

When BOTH Call & Put OI increase together (like in your 26000 example):

  • Buyers expect volatility BOTH ways
  • Sellers are ALSO playing both sides
  • NO clear conviction from either side

When Put OI DECREASES + Call OI INCREASES:

  • Put sellers taking profits (bearish for them)
  • Call buyers entering (bullish for them)
  • STRONG bullish signal

Key: Watch WHO is EXITING positions, not just entering. Sellers closing positions is MORE bullish than new sellers entering.

-VENKATA

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Thank you so much for explaining :+1: