Sir In stock options say Infosys now trading at 1560. In option chain there is open Interest of 23 in call side at strike price 1200 and open interest of 153 in put side. What does this signify. Infy is trading 350 points above but still open interest is showing at strike price of 1200. What we mean by that?
If you wanted to know whether infy will rise or fall based on OI , Its not possible…although media does create a noise relating to this and people get fooled.
Academically, we have more put trading at lower strike due to the hedging that put offers for people who have long position in stock.
So it is no surprise that PUT OI is higher than call OI for lower strike.Infact call OI will be higher than put OI for higher strike price.
We at SSEI markets have always maintained a non direction trading strategy betting on the level of Implied volatility.
Directional trading is something we do not adhere too much, and that too should be conducted with strict stop loss based on delta.