Is there any relation

#1

Is there any relation between Open interest of calls and puts. The figures appear to be self contradictory sometimes. For instance

shows a fall in 11500 put option by a whopping 3 lakh plus contracts. Does this not indicate that put writers expect the market to fall to 11200 or 10800 where there is OI addition of 5 lakhs and 3 lakhs respectively. That means call buying at 11500 is simply illogical in the sense that markets are expected to fall till as low as 10800. There is a very high OI and addition to OI at 12000 CE also. Why are buyers buying calls of that far away strike prices unless they want to lose or just gamble?I read the varsity chapter but did not find the answer. Request some senior member to kindly elaborate.

#2

Dear @anugnani, Firstly I am not a Senior Member sorry for that.
As per Ur query you just monitor OI with change in OI but not Price change which indicate STRIKE has WRITER or BUYER.

PRICE RISE ---- OI FALL than — SHORT COVERING.
PRICE FALL ---- OI RISE than — SHORT BUILDUP
PRICE RISE — OI RISE than — LONG BUILD UP
PRICE FALL — OI FALL than — LONG UNWINDING

I see PRICE of all strike of CE OPTION is RED/NEGATIVE/FALLING means trader are WRITING CALL.

:slight_smile:

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