OI is high - IV is high - The view is Market will continue in the trend (Bullish or Bearish)
OI is high - IV is low - The view is Market trend will reverse (if Bullish reverse to Bearish, if Bearish reverse to Bullish)
OI is low - IV is high - what is the view?
OI is low - IV is low - what is the view?
Do we have to consider this at the Strike-Price at which we are planning to take the trade (call or put)? Please explain
When OI is low, IV is high, there is a very uncertain event that may make the market move either side, very fast. Eg: Elections or Budget.
When OI is low, IV is low, market will be in a tight range with nothing major happening in the near future.
We should look at IVs of ATM options.
Hope these answers solve your querry.
Thank you for clarifying my query
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