Doubts regarding option chain analysis

#1
I just learnt the basics of options and I had a few doubts.
1. In option chain analysis, if OI is increasing at a particular strike price in the CALL area, for example, where the strike price is above the current price, how to find out if those new additions are buyers or sellers?
2. Also, what does premium change at a specific strike price tell us? Please explain this point with respect to PUT as well as CALL?
 
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#2
Well option chain analysis is a tricky one for every buy there is a sell. First let us use the general assumption. Option selling is usually done by the institutions, or individuals who are well capitalized. Option buying is done by the retailers. In option chain analysis one has to look for for OI and change in OI from the sellers/writers perspective.
If particular strike put change in OI is increasing then the market is bullish. That means selling is going on and the sellers are not expecting the market to go below that particular strike price. Similarly the same for calls. But inherently puts priced higher as they are bought as insurance to protect a portfolios. That's the basics. I suggest you learn option pricing and the greeks. How interplay of greeks affect the pricing and its implications. If you have any questions please post in this forumdo not create new threads. There are many active threads where people more experienced than me. They would be happy to help you.
 
#3
Well option chain analysis is a tricky one for every buy there is a sell. First let us use the general assumption. Option selling is usually done by the institutions, or individuals who are well capitalized. Option buying is done by the retailers. In option chain analysis one has to look for for OI and change in OI from the sellers/writers perspective.
If particular strike put change in OI is increasing then the market is bullish. That means selling is going on and the sellers are not expecting the market to go below that particular strike price. Similarly the same for calls. But inherently puts priced higher as they are bought as insurance to protect a portfolios. That's the basics. I suggest you learn option pricing and the greeks. How interplay of greeks affect the pricing and its implications. If you have any questions please post in this forumdo not create new threads. There are many active threads where people more experienced than me. They would be happy to help you.
Please answer my questions specifically and please be clearer. I did not get your answers. I asked how can I determine fresh long/short positions by looking at change in OI and change in premium.
 
#4
Please answer my questions specifically and please be clearer. I did not get your answers. I asked how can I determine fresh long/short positions by looking at change in OI and change in premium.
Please read it carefully once again.
 
#5
"If particular strike put change in OI is increasing then the market is bullish. That means selling is going on and the sellers are not expecting the market to go below that particular strike price. Similarly the same for calls."
What does this mean: "Particular strike put change..." ?
 
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#6
@Ronith12,
Let me know which part of this Varsity Chapter you did not understand. Take time and read it mindfully please. Also if you are more of a visual person who easily gets bored reading books like me, please consider going through all these videos, specifically Video # 25 for understanding Open Interest.
 

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