how does the number of puts and calls or the future contract’s effects the underlying asset’s, they themself are not share’s but contract’s.why does the index or stock respect these level’s or zone’s
correctly
Because that’s where smart money (Institutions) is and if required they can influence spot market to an extent but this is not a unbreakable as such, many times we have witnessed spot not sticking to those zones and can move violently either side, but knowing these levels will let you understand the market dynamics, experience should make you better at this as understanding and acting on these levels is more of a art than science.
@Sensibull should able to give you more insights in to this.
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While theoretically F&O is a derivative on the underlying stocks & indices and should ideally follow the underlying, it hardly ever works that way. 80% of all trading on exchanges happen on F&O, and since most trading is on F&O it usually leads the indicator and not follow.
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