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Interpretation of OI

Open Interest Simplified

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paul
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15 views5 pages

Interpretation of OI

Open Interest Simplified

Uploaded by

paul
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Interpretation of OI

Interpretation of OI Analysis
Market
Price Open Interest Strength Trader’s Perception
Sentiment

More trades on the long side, also


Increase Increase Strong Bullish
called long built up

Longs are covering their position, also


Decrease Decrease Strengthening Bullish
called long unwinding

More trades on the short side, also


Decrease Increase Weak Bearish
called short built up

Shorts are covering their position, also


Increase Decrease Weakening Bearish
called short covering
Interpretation of OI Analysis
Open Market
Price Style to Adopt Instrument
Interest Sentiment

Increase Increase Bullish Directional Trade Short PE or Long CE

Bearish + No
Increase Decrease Non-Directional Trade Straddle/Strangle
Bullish

Bullish or No
Decrease Decrease Non-Directional Trade Straddle/Strangle
Bearish

Decrease Increase Bearish Directional Trade Short CE or Long PE


Interpretation of Volume with Price
Market
Price Volume Strength Trader’s Perception
Sentiment

Increase Increase Strong Bullish Bullish and Trend is intact

Bearish trend could probably end,


Decrease Decrease Strengthening Halt
expect reversal

Decrease Increase Strong Bearish Bearish and Trend is intact

Bullish trend could probably end,


Increase Decrease Weakening Halt
expect reversal

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