My Secret Nifty Open Interest Data Analysis Technique

You have heard of Open Interest. But do you know how exactly to use Open Interest? Today I will show you how to do Nifty open interest data analysis. You can also taker successful Nifty trades after you learn this technique.

Now, what is an Open Interest?
If a trader buys one contract of Nifty and does not sell it before the day ends its called increase of 1 open interest on the buy side. Similarly when a trader sells one contract of Nifty and does not buy it before the day ends its called increase of 1 open interest on the short side.

Options are not like futures. In options generally, smart traders are option sellers who make money selling options and eating the time value. So in options, generally increase of open interest denotes short build upon the options. So if you see a sudden spike of open interest on a call option you can understand traders are selling that strike price calls and that zone will be resistance. Similarly, if you see a sudden spike of open interest on a put option you can understand traders are selling that strike price puts and that zone will be supported.

Now how exactly to do Nifty open interest data analysis?
Visit this page in my site, Nifty Open Interest. There you can notice 2 charts. The first chart shows current Nifty options open interest position and the second chart shows open interest increase or decrease in a specific strike price.

nifty open interest data analysis

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Now, watch the first chart carefully. This chart is an updated chart of Nifty open interest. We can see that highest open interest bar is at 8000 put option. So its obvious that 8000 is the strongest support. We are also seeing highest open interest bar of the calls are at 8400. So 8400 is the immediate resistance. Also, notice that calls OI bars are much smaller than the put OI bars. So it denotes that supports are stronger than resistances.

How to trade using Nifty open interest data analysis?
As we see that the supports are stronger we will not short the market on rallies, rather we will try to buy in dips. Also as 8400 is the immediate resistance we will try to take profit close to 8400. In my next post, I will discuss how to interpret increase and decrease in open interest.

Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of on 2008. He follows Indian and world stock markets closely.

Categories: Trading Strategy

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9 replies

  1. excellent education to small traders,typical of sri indrajit mukherjee.

  2. Sir, Daily open interest changing everyday, so daily we have to trade as per support/resistance. we have to trade this for that month

  3. It is indeed a very informative writeup.Where is the chart available on a daily basis?

  4. sir how do we are identifying any strong support or resistance is going to break with the help of option chain data.i.e. change in open interest and its impact on stock direction.
    can you plz share a link where we can find such open interest change happening and stock started moving according to that.

    • Check the 2nd chart, i.e, open interest change data. If you find aggressive call writing and put unwinding is happening in a particular support area, you can assume that support will be broken. Same is true for resistance areas if you see put writing and call unwinding.

  5. Your selfless service is of the greatest in this material world where one is measured by his or her financial success. No doubt no one can fail taking and following your lead. I salute you dear Indrajit. God bless you. Keep up the noble work. 😇

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