Regarding Option Open Interest

[rajputz]

Cl5454ploppdpo3oç 3olljo l

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[travi]

coi is increasing- option writers were strengthening?
i trade options based on coi in real time ,
i watched n number of times-
coi increasing at particular ce and its underlying also increasing parallel- brutally
it means that- hedgers are buying that ce and gamblers were also buying that ce-
you cannot trade based on coi or net oi ,
Its only a supporting factor for a particular trade-
i used options oi as a leading and primary indicator once-
but now iam using it only as a secondary indicator-

Where did I call it a Primary indicator?
This thread is based on specific questions in the first post and everything in posted only in that context.
Ask brokers (or search) and they will tell you a huge % of retail day traders don't even have 1-2L balance in their a/c's.
I've read even 80% type figures but I don't have hard facts to prove it so I will not contend this.
But its a fact that writing options is not every average Joe's cup of tea.

When a particular strike has huge OI, there is for sure many large capital players holding that level.
Whether it stays there or not gets broken is different.
and pro option writers don't go few days before expiry to get their butt kicked so if u write something at inr. 300 and on expiry day it jumps from inr. 3 to inr. 50, its not going to bother them.

 

[Subhadip]

Where did I call it a Primary indicator?
This thread is based on specific questions in the first post and everything in posted only in that context.
Ask brokers (or search) and they will tell you a huge % of retail day traders don't even have 1-2L balance in their a/c's.
I've read even 80% type figures but I don't have hard facts to prove it so I will not contend this.
But its a fact that writing options is not every average Joe's cup of tea.

When a particular strike has huge OI, there is for sure many large capital players holding that level.
Whether it stays there or not gets broken is different.
and pro option writers don't go few days before expiry to get their butt kicked so if u write something at inr. 300 and on expiry day it jumps from inr. 3 to inr. 50, its not going to bother them.

:clap::clapping::thumb:

 

[rajputz]

Where did I call it a Primary indicator?
This thread is based on specific questions in the first post and everything in posted only in that context.
Ask brokers (or search) and they will tell you a huge % of retail day traders don't even have 1-2L balance in their a/c's.
I've read even 80% type figures but I don't have hard facts to prove it so I will not contend this.
But its a fact that writing options is not every average Joe's cup of tea.

When a particular strike has huge OI, there is for sure many large capital players holding that level.
Whether it stays there or not gets broken is different.
and pro option writers don't go few days before expiry to get their butt kicked so if u write something at inr. 300 and on expiry day it jumps from inr. 3 to inr. 50, its not going to bother them.

Thanks.

So in a nutshell, If my time horizon is last 7 days and all my wisdom says that I should short a particular call or sell as it would be sitting at resistance or support, then I should sell.

As an extra indicator, I can select a stock which I know that if it breaks the resistance/support is sure to go in that direction and I can buy 2 lots of future. 1 for exit and 1 for profit riding with trailing stop loss to catch the trend. Although I am very much against holding futures overnight. Plus I can keep an eye on OI as an extra indicator to strengthen my view and early caution for exit and changing the direction.

 

[travi]

Thanks.

So in a nutshell, If my time horizon is last 7 days and all my wisdom says that I should short a particular call or sell as it would be sitting at resistance or support, then I should sell.

As an extra indicator, I can select a stock which I know that if it breaks the resistance/support is sure to go in that direction and I can buy 2 lots of future. 1 for exit and 1 for profit riding with trailing stop loss to catch the trend. Although I am very much against holding futures overnight. Plus I can keep an eye on OI as an extra indicator to strengthen my view and early caution for exit and changing the direction.

bhai, your method is fine, there are no qualms.
If ur position is threatened, ur against that trend so take a trend position and ride it.
All of us make losses, even me but losing isn't a big deal, mitigating loss is a big deal

 

[mohan.sic]

rajputz,

Observing one stock for few days wont give you good picture of the method.
Track No of stocks for No of expiry's and only then you can conclude yourself.

what you can do is, try working on data of 30th march ( previous expiry date)

For each individual stock, check the max oi CE & PE strikes on 30th march and
then look if closing price of the stock is between those strikes or out of range.

If close price is between the strikes - Max OI strikes are respected
If close price is out of range - Max OI strikes are not respected

Pls note - Results may seem good during flat expiry months and bad during trending months. Therefore, One expiry data is not sufficient for concluding. But for now, start on previous expiry and that will give you confidence either to go ahead or drop the idea.

 

[rajputz]

rajputz,

Observing one stock for few days wont give you good picture of the method.
Track No of stocks for No of expiry's and only then you can conclude yourself.

what you can do is, try working on data of 30th march ( previous expiry date)

For each individual stock, check the max oi CE & PE strikes on 30th march and
then look if closing price of the stock is between those strikes or out of range.

If close price is between the strikes - Max OI strikes are respected
If close price is out of range - Max OI strikes are not respected

Pls note - Results may seem good during flat expiry months and bad during trending months. Therefore, One expiry data is not sufficient for concluding. But for now, start on the previous expiry and that will give you confidence either to go ahead or drop the idea.

That's a good lead. Thanks. One. More thing. Where can I find historical OI data.

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[mohan.sic]

That's a good lead. Thanks. One. More thing. Where can I find historical OI data.

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Data part, please request others.

I tested this way a year and half back, but not satisfied with results. So i don't have last month data readily available.

 

[travi]

Bhai, I don't think historical OI will help in current and future positions.
OI is based on current mkt (or future) scenarios and works on that. :thumb:

 

[mohan.sic]

Bhai, I don't think historical OI will help in current and future positions.
OI is based on current mkt (or future) scenarios and works on that. :thumb:

travi, its not about checking current price behavior to some historic OI values.

It is checking historic OI values to historic prices and understanding how the results were during that period. Its just manual back testing.

In this case, he will check march 30th OI values of stocks Visa-a-vi March 30th closing prices of respective stocks.

Requesting you to help him with data.