Price |
Open Interest |
Interpretation |
Rising |
Rising |
Market is Strong |
Rising |
Falling |
Market is Weakening |
Falling |
Rising |
Market is Weak |
Falling |
Falling |
Market is Strengthening
|
This is the basic rule when it comes to interpreting the relationship between OI and price. If a market is strengthening, then calls will be bought as against written and if the market is weakening, calls will be written. This is my understanding. But its tough to call it right, because every call written will have a call buyer.
Thanks for response,But issue is how we get to know that writing is taking place in particular call or put ? Because writing an call option indicates bearishness,How from OI or our ratio we get to know writing in call or a put?
i amalso searching for the same issue you have asked but did not get any suitable answer yet…till yet i get it from business news channels