As discussed in prior chapter, the options open interest data is studied from option sellers/ option writers’ perspective, because they are the traders/participants with deep pockets, as option selling involves taking unlimited risk and limited reward, i.e. restricted to option premium and also exchanges stipulate an initial margin requirement. With such a skewed payoff structure, it suggests that they know the market better (probably a better market bias) to assume a negative risk reward.
The options open interest tool of Quantsapp gives a perspective to option traders about open interest across different strike prices of Nifty or F&O stocks, whichever would be the specific underlying. The dynamics of open interest such as option unwinding can be studied using the open interest tool of Quantsapp.
As studied earlier, the red bars indicate put option open interest, while green bars indicate call option open interest.
The dark green shade, on the green bars indicates addition of open interest in the specific call option. Similarly dark red shade indicates addition of open interest in specific put option.
