Introduction
-> Open Interest (OI) is a critical metric in futures and options trading, representing the total number of outstanding derivative contracts for a specific asset. It indicates the level of market activity and can influence trading decisions.
-> Strikewise OI Analysis enables traders to monitor and compare OI for a strike price (call and put options), across index and equity
Basic Terms
a) OI: OI stands for Open Interest, which reflects the total number of active futures or options contracts for a given financial instrument that has not yet been closed.
Why use it?
-> Open Interest is used by traders and investors to assess market sentiment, liquidity, and the health of a particular market. It helps identify trends, potential price movements, and the level of trader interest in a security or derivative.
Navigation:
Analysis-> Instrument Overview-> Open Interest-> Strikewise OI
How to use it?
-> You can track changes in OI to gauge market participation and assess whether new money is flowing into or out of a market.
-> Steady or increasing OI may indicate strong market interest while decreasing OI might suggest waning interest.
FAQs:
1) What does it mean when OI is increasing while prices are falling?
-> An increase in OI during falling prices could indicate bearish sentiment, with new short positions being added. Traders should consider other factors like trading volume and news events for a comprehensive analysis.
2) Can OI alone predict future price movements?
-> No, OI should be used in conjunction with other indicators. While it provides valuable insights, it doesn’t predict price movements on its own.
Additional Resources:
a) Buildup explained-> Link
b) What Is The Relationship Between Open Interest And Volume?-> Link
Support
For further support and understanding join our trading community group-> Telegram Link
Disclaimer
The materials and content available on this platform are intended solely for educational purposes, aiming to demonstrate the functionalities of the Stolo product and facilitate a better understanding of its operation. It is important to note that we do not assume responsibility for any financial gains or losses incurred. Prior to making any financial decisions, we strongly recommend consulting with your investment advisor for personalized guidance.