In the Futures & Options Month i.e From September 25th 2009 – October 29th 2009, Nifty traded from the high of 5181 to the low of 4738 and finally closed at 4750, in the previous month i.e on September 24th 2009 Nifty closed at 4986, Now lets see how the Open Interest in various Options built up, and how the Nifty fluctuate when the open interest started subsiding
1) Nifty 5100 PE Option
Nifty 5100 PE option saw the highest built up on 17th October, Open interest stood at above 37 Lakh, Nifty saw its highest closing for the month on the same day, Open interest in Nifty 5100 PE which was above 8 lakhs on 6th October saw open interest built up above 37 Lakhs on 17th October, 5100 PE saw a high price of 232.65 and a low price of 61 when this built up took place, on the other hand when the Open Interest started decreasing from 20th October to 29th October, to settle at just below 7 Lakh option interest, the Option traded between a low of 46.1 to a high of 353.05
Conclusion when there is an built up in Open Interest normally prices of the option move down and when the Open interest starts cooling down the prices starts moving up, the option tends to trade between the prices it traded when it saw open interest built up till the same level of open interest is not reached again, we can conclude the same from other options listed below
2) Nifty 5000 PE
Open Interest in this option stood at just below 6 Lakhs on 18th September 2009, the option saw the highest built up on 17th October 2009, it was above 51 Lakhs, in this period it traded between a high price of 210 and a low price of 35.05, further on the open interest started decreasing and on settlement stood above 8.6 Lakhs and the contract saw its high price of 250 on the same day, the low price in the period between 20th October to 29th October was 25.10
3) Nifty 4900 PE
On 16th October 2009 this option saw a highest built up of Open Interest which stood at above 70 Lakhs, as of 18th September 2009 this Open interest just stood at just below 8 Lakhs, in the meantime it traded between a high price of 135.95 to a low price of 19.10, when the open interest started subsiding it started gaining price and saw a high price of 150 on expiry i.e 29th October 2009, in the period between 20th October 2009 to 29th October 2009 it registered a low price of 12.10, and the open interest on expiry stood at just above 13 lakhs
In my further post I will deliberate on what the current conditions are and also how we can increase the chances of a successful trade using open interest as one of the mechanism
No comments:
Post a Comment