padiyaraa

An idea about the open interest on request

NSE:NIFTY   Nifty 50 Index
414 17 6
Open interest applies primarily to the futures market. Open interest, or the total number of open contracts on an instrument, is often used to confirm trends and trend reversals for futures and options contracts.

Open interest is the total number of outstanding contracts that are held by market participants at the end of the day. It can also be defined as the total number of futures contracts or option contracts that have not yet been exercised, squared off, expired, or fulfilled by delivery.
Open interest measures the flow of money into the futures market. For each seller of a futures contract there must be a buyer of that contract. Thus a seller and a buyer combine to create only one contract.

Therefore, to determine the total open interest for any given market we need only to know the totals from one side or the other, buyers or sellers, not the sum of both.

The open interest position that is reported each day represents the increase or decrease in the number of contracts for that day, and it is shown as a positive or negative number.

calculate Open Interest

Each trade completed on the exchange has an impact upon the level of open interest for that day.

For example, if both parties to the trade are initiating a new position. say one new buyer and one new seller, then the open interest will increase by one contract.

If both traders are closing an existing or old position. one old buyer and one old seller, so open interest will decline by one contract.

The third and final possibility is one old trader passing off his position to a new trader that, one old buyer sells to one new buyer. This case the open interest will not change.

Get a CLUE from monitoring open interest

By monitoring the changes in the open interest figures at the end of each trading day, some conclusions about the day’s activity can be drawn.

Increasing open interest means that new money is flowing into the marketplace. The result will be that the present trend whatever it is up, down or sideways will continue.

Declining open interest means that the market is liquidating and implies that the prevailing price trend is coming to an END. Here we are now. A knowledge of open interest can prove useful toward the end of major market moves.

A cutting off of open interest following a sustained price advance is often an early warning of the end to an up trending or bull market.

Open Interest - A confirming indicator
An increase in open interest along with an increase in price is said to confirm an upward trend. Similarly, an increase in open interest along with a decrease in price confirms a downward trend. An increase or decrease in prices while open interest remains flat or declining may indicate a possible trend reversal.

Use following table to memorize the relationship between the prevailing price trend and open interest:

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

@vanathi
Now look at the open interest of Nifty             23 Feb 2017 current month future.

Date Open High Low Close Settle Price Contracts Turnover (in lacs) OI Changes

10-Feb-17 8829.9 8839.9 8786.6 8809.4 8809.4 87575.0 578911.5 21685425
13-Feb-17 8836.7 8846.0 8765.5 8815.4 8815.4 118500.0 782547.4 22318275 632850
14-Feb-17 8824.0 8830.0 8786.1 8814.9 8814.9 89528.0 591555.6 23350950 1032675
15-Feb-17 8826.1 8827.2 8727.0 8743.1 8743.1 171595.0 1128252.0 25091025 1740075
16-Feb-17 8760.0 8796.2 8734.0 8787.6 8787.6 103632.0 681849.9 24620025 -471000
17-Feb-17 8869.8 8872.5 8800.1 8827.0 8827.0 137805.0 913002.4 24253650 -366375
20-Feb-17 8828.2 8881.3 8810.0 8873.9 8873.9 115075.0 763958.9 21694650 -2559000
21-Feb-17 8880.1 8924.5 8858.9 8910.4 8910.4 174589.0 1163091.7 16272450 -5422200




15 feb to feb 16, open interest changed from +ve to -ve implies the sideways or downtrend is getting weak and possibly a trend reversal. Am I right? Please explain.
Reply
padiyaraa vanathi
@vanathi, if you are watching it vocationally only you will get the picture.


usually the open interest go on increasing till the last week of expiry, and expiry week it get rollover. A one third unwinding and roll over is normal.

But we looks at the percentage change. if it is unusual or greater than the average, it is a concern.



Reply
padiyaraa vanathi
@vanathi, Actually this was the progression from the near month to current month, now we are near the expiry. ok

see the date 29 DEC was the expiry date, and that time feb contract is entered into near month from the FAR month. ok.toatl three months,
iam not shoings its first months data. it was all very minimum importance.

But from the 23 Jan , that month expiry week on wards , huge addition in happening. those this are quiet normal every time.

This just for your information. FYI
Reply
padiyaraa padiyaraa

Date Open High Low Close Settle Price Contracts TO (in lacs) OI Changes
28-Dec-16 8100 8149 8075 8081.4 8081.4 3922 23855.14 566025
29-Dec-16 8080.45 8147.05 8074.9 8138.8 8138.8 4027 24487.14 706050 140025
30-Dec-16 8120.1 8227.0 8120.1 8208.5 8208.5 5094.0 31334.2 800775.0 94725
02-Jan-17 8212.9 8240.8 8175.1 8216.5 8216.5 3811.0 23463.6 836400.0 35625
03-Jan-17 8220.0 8250.0 8185.0 8222.6 8222.6 5321.0 32822.3 982350.0 145950
04-Jan-17 8242.3 8247.3 8209.4 8229.7 8229.7 3558.0 21968.6 1054200.0 71850
05-Jan-17 8229.7 8323.6 8229.7 8313.0 8313.0 6235.0 38813.2 1165275.0 111075
06-Jan-17 8328.3 8355.5 8285.0 8293.8 8293.8 6052.0 37748.0 1222725.0 57450
09-Jan-17 8295.1 8296.2 8267.9 8277.1 8277.1 4102.0 25476.0 1307775.0 85050
10-Jan-17 8291.1 8324.9 8291.1 8318.9 8318.9 3297.0 20551.4 1307550.0 -225
11-Jan-17 8338.0 8424.5 8338.0 8413.6 8413.6 6034.0 37962.0 1353000.0 45450
12-Jan-17 8424.0 8449.4 8409.5 8443.0 8443.0 6553.0 41435.4 1446000.0 93000
13-Jan-17 8473.3 8479.2 8414.3 8443.1 8443.1 13049.0 82545.2 2069700.0 623700
16-Jan-17 8424.3 8466.5 8410.2 8455.2 8455.2 5702.0 36117.8 2162625.0 92925
17-Jan-17 8460.1 8470.0 8417.0 8430.9 8430.9 7353.0 46529.5 2339325.0 176700
18-Jan-17 8441.0 8492.0 8431.5 8454.9 8454.9 9390.0 59619.6 2444250.0 104925
19-Jan-17 8440.4 8475.0 8430.6 8466.8 8466.8 11588.0 73506.0 2880600.0 436350
20-Jan-17 8427.0 8457.5 8377.0 8387.2 8387.2 28281.0 178396.3 3863325.0 982725
23-Jan-17 8370.0 8440.0 8366.8 8424.8 8424.8 60177.0 379564.2 6696975.0 2833650
24-Jan-17 8444.7 8519.0 8441.2 8509.6 8509.6 118150.0 751137.5 12670725.0 5973750
25-Jan-17 8469.7 8622.2 8469.7 8614.9 8614.9 174164.0 1120284.1 18169050.0 5498325
27-Jan-17 8650.0 8698.2 8641.1 8671.1 8671.1 124832.0 812299.8 19389450.0 1220400
30-Jan-17 8645.0 8682.0 8636.4 8655.4 8655.4 91222.0 592176.2 19939950.0 550500
31-Jan-17 8639.8 8639.8 8576.3 8584.3 8584.3 151198.0 975710.7 19447125.0 -492825
01-Feb-17 8600.2 8747.5 8555.0 8737.9 8737.9 256338.0 1662725.2 20860725.0 1413600
02-Feb-17 8730.0 8773.8 8697.3 8744.0 8744.0 137422.0 899984.2 21658800.0 798075
03-Feb-17 8745.0 8763.9 8725.3 8754.4 8754.4 90734.0 595124.7 21486000.0 -172800
06-Feb-17 8808.0 8834.4 8781.8 8816.6 8816.6 110169.0 728035.1 21854325.0 368325
07-Feb-17 8800.5 8811.9 8758.7 8785.6 8785.6 85012.0 560425.7 21568425.0 -285900
08-Feb-17 8785.6 8814.0 8732.5 8796.4 8796.4 116252.0 765412.5 21768225.0 199800
09-Feb-17 8816.3 8843.8 8733.0 8796.9 8796.9 155576.0 1024703.7 21760950.0 -7275
10-Feb-17 8829.9 8839.9 8786.6 8809.4 8809.4 87575.0 578911.5 21685425.0 -75525
13-Feb-17 8836.7 8846.0 8765.5 8815.4 8815.4 118500.0 782547.4 22318275.0 632850
14-Feb-17 8824.0 8830.0 8786.1 8814.9 8814.9 89528.0 591555.6 23350950.0 1032675
15-Feb-17 8826.1 8827.2 8727.0 8743.1 8743.1 171595.0 1128252.0 25091025.0 1740075
16-Feb-17 8760.0 8796.2 8734.0 8787.6 8787.6 103632.0 681849.9 24620025.0 -471000
17-Feb-17 8869.8 8872.5 8800.1 8827.0 8827.0 137805.0 913002.4 24253650.0 -366375
20-Feb-17 8828.2 8881.3 8810.0 8873.9 8873.9 115075.0 763958.9 21694650.0 -2559000
21-Feb-17 8880.1 8924.5 8858.9 8910.4 8910.4 174589.0 1163091.7 16272450.0 -5422200
Reply
vanathi padiyaraa
@padiyaraa, Ok. Thank you. I am trying to understand :)
Reply
Also Shall appreciate, when you say trend reversal , does it mean the entire trend , or the trend of the last leg or is it is higher up higher lows , will it make lower high and lower lows? pls expalin this for knowledge sake.. thanks in advance
Reply
padiyaraa Parasuram
@Parasuram, Trend reversal is not like correction.

But here its first degree is the first swing will be corrected more than a 38%.
But, in this context it may be more, if we are not in inner wave 3.
it is all depends on situations ,were we are now.

I mean if we are in a corrective wave,then the DEGREE of reversal will be drastic and frightening.
Reply
Please explain when the contract is nearing expiry , wont the open positions decrease? how do you view it then?
Reply
padiyaraa Parasuram
@Parasuram, The contract , when we say it again the "contract" we get some meaning ,it is to mature, or expire to get receive the full benefit out of t it.
Just think why one want o close it early.Because they think that the target achieved or a top is near. And mind that, it is not just you and me,
the specially talented team is unwinding their position is to to be taken noticed or not???.
Reply
Parasuram padiyaraa
@padiyaraa, Thank you! yes i saw the FII figures too... Cheers!
Reply
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