how do you use the changes/spikes in OI to gauge the market sentiment and the strategy to be deployed? What is the logic behind this? Please post it here…
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Look at the historical data for that index, only for the recent n months where options OI was significant enough to drive the whole market, analyse how oi/oi changes have affected the direction of the market. There are no hard and fast rules but the more days you analyse, the better you get at predicting what a sudden change in oi possibly indicates (or rules out). This works better the closer you are to the expiry.
And you have to watch out for fake spikes, big players often make fake entries/exits to make it difficult to figure out where their interests lie.