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.