Reading the Option Chain (The Matrix)
The Option Chain is the dashboard of the market. It tells you where the big players are betting.
Key Columns to Watch
| Term | Meaning | Significance |
|---|---|---|
| OI (Open Interest) | Total active contracts outstanding. | Highest Call OI = Resistance. Highest Put OI = Support. |
| Change in OI | Contracts added/removed today. | Shows Momentum. If Call OI is decreasing, Bears are running away (Bullish). |
| LTP | Last Traded Price. | The current premium. |
| IV (Implied Volatility) | Expected volatility. | High IV = Expensive Options. Low IV = Cheap Options. |
Interpreting the Data
- Big Call Writing: If you see massive OI build-up on the Call side (e.g., at 22,000), Sellers are defending 22,000. It's a strong resistance.
- Big Put Writing: If you see massive OI build-up on the Put side (e.g., at 21,800), Sellers are defending 21,800. It's a strong support.
- Short Covering: If Nifty moves UP and Call OI drops sharply, sellers are panicking and buying back. This fuels a massive rally.
*Disclaimer: NSE/BSE frequently revise Lot Sizes and Expiry Days (e.g., SEBI Circulars 2024/2025). Always check the latest circular on nseindia.com before trading.
Standard Disclosure: Investment in securities market are subject to market risks. Read all the related documents carefully before investing. The content provided here is for educational purposes only and does not constitute financial or investment advice. AlgoStraddle Academy is not a SEBI registered investment advisor. Trading options involves high risk and capital can be lost.