Thursday, May 13, 2010

Volatility Ahead with High OI and Volumes

 While i was looking at Open Interest in options  on NIFTY was bit surprised by seeing the volume of futures increased in last few days ,average volume in April is around 5 Lakh contracts and now we are trading above that..will see how it goes till month..as Volatility index came of from lows..we might expect more volumes in coming days.


Date Index Futures
No. of contracts Turnover (Rs. cr.)
03-May-10 349631 8451.55
04-May-10 570849 13736.02
05-May-10 714820 16977.22
06-May-10 784241 18544.8
07-May-10 880349 20520.97
10-May-10 745870 17846.47
11-May-10 651926 15681.6

Todays NIFTY Futures contract details, we had a Price rise with increase in Open Interest in market with good volumes when compared to average of last month,,


CONTRACTS VAL_INLAKH OPEN_INT CHG_IN_OI
581001 1492615.74 27492350 713300

Looks like its enough to judge the direction still i will do some more research and will come up with another post some time later

Here is how we interpret Open Interest with Volumes and Price Rise

Price  Volume Open Interest   Interpretation
Rising Rising Rising Market is Strong
Rising Falling Falling Market is Weakening
Falling Rising Rising Market is Weak
Falling Falling Falling Market is Strengthening

for me it looks markets are Strong for now..Lets compare them with Options Data
From the Graph we can that 5000 and 5100 put had a increase in OI..means Options Writers are writing the puts in expectation that market might go up.. that indicates for short term we are having support at those prices and also one can see that there is a  decrease in OI for 5300 Call ,mean option writers closed there positions in expectation of market going upwards..for now we have resistance at 5300


Even though global cues are weak we will where it heads in coming days..my bet is towards going up :) will see

2 comments:

  1. Thank you da, but need to do a lot of analysis to understand the dynamics of market forces

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