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Index Option & Open Interest Hacks that'll Help you in Actual Trading
1) Rise in OI + Fall in Premium.
- Most Common in ATM & All OTMs.
- Shows strong Presence of writers
- If you're a Option Buyer, this is a Scalp and run Scenario, Or You'll get Trapped in Decay.
Index Option & Open Interest Hacks that'll Help you in Actual Trading
1) Rise in OI + Fall in Premium.
- Most Common in ATM & All OTMs.
- Shows strong Presence of writers
- If you're a Option Buyer, this is a Scalp and run Scenario, Or You'll get Trapped in Decay.
2) Fall in OI + Rise in Premium
- Happens at ITM and Pressured ATM Options.
- Shows Panic in Writers
- Best Case scenario for Option Buyer
- Momentum is Stronger as the Move is fueled by Triggered Cluster of SLs.
- Most Common on Expiry Days.
- Happens at ITM and Pressured ATM Options.
- Shows Panic in Writers
- Best Case scenario for Option Buyer
- Momentum is Stronger as the Move is fueled by Triggered Cluster of SLs.
- Most Common on Expiry Days.
The Rest 2 Scenarios Don't happen much Often in Index Options.
3) Rise in OI + Rise in Premium
- This Theoretically means Long OI Buildup which is Rare in Options Bcz Punters are more interested in Selling Premium than Buying it.
-Usually it can be a Hedging Against Sold premium
3) Rise in OI + Rise in Premium
- This Theoretically means Long OI Buildup which is Rare in Options Bcz Punters are more interested in Selling Premium than Buying it.
-Usually it can be a Hedging Against Sold premium
4) Fall in OI + Fall in Premium
- Shows Unwinding of Positions. These Can be Both Shorts or longs liquidated.
- You'll Notice it Mainly after 3 PM as Intraday Positions start to Unwind.
- Practically, No use For Option Buyers.
- Shows Unwinding of Positions. These Can be Both Shorts or longs liquidated.
- You'll Notice it Mainly after 3 PM as Intraday Positions start to Unwind.
- Practically, No use For Option Buyers.
Conclusively, Some Important Points to Remember,
If You're an Option Buyer, Best Case Scenario,
Fall in OI + Rise in Premium.
Bcz, Here The Edge is Bent Into Buyers Favor, as the Panic in Writers Fuels the Momentum. Study n Practice such setups.
Cheers..!!
If You're an Option Buyer, Best Case Scenario,
Fall in OI + Rise in Premium. Bcz, Here The Edge is Bent Into Buyers Favor, as the Panic in Writers Fuels the Momentum. Study n Practice such setups.
Cheers..!!
