What does lower stike prices (or very high) indicates?

#1
Hi,

I'm new to F&O and traderji.... but I know few technicals and is an active trader in the cash market the past 6-7 years....

I have a query regarding Strike Prices... I have noticed many times that people use Open Interest data to read markets... I understand open interest meaning and all but I'm a bit confused about how to read open interest build up in Options...

For example:

JP Associates is trading at around Rs. 35 but you can see that there are open interest build up around 25 levels (PUT Options) and the Call option open interest starts at 30 Rs. and it is upto Rs. 60.

So is it possible to predict the trading range for the current month from this data?

I understand that people write put options when they dont expect a stock to touch those levels...

So if the stock is trading at 35 Rs. and if FIIs expect stock to hit 25 Rs. or say 50 Rs. then what will they do? They write or buy options? 'Coz someone has to write the option for someone to buy it.
 

Mr.G

Well-Known Member
#2
OI usually indicates the range in which the market is expected to move. And the options with the highest OI is the likely direction of the market.

I am just taking a logical guess. I am not a technical analyst.
 

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