Option Chain Analysis + Open Interest (OI)🧠 Let’s First Understand: What is Option Chain?
An Option Chain is a table that shows available strike prices for a particular stock/index along with their Call and Put option data—like premium, volume, open interest, change in OI, etc.
✅ Where can you find it?
NSE Website (most reliable)
Trading Platforms like Zerodha, AngelOne, etc.
Apps like Sensibull, Opstra, etc.
The option chain is divided into two parts:
Left side – Call Options (CE)
Right side – Put Options (PE)
Each row shows the strike price and various data like:
LTP (Last Traded Price) – the premium.
Open Interest (OI) – total contracts outstanding.
Change in OI – new positions added or removed.
Volume – how many contracts traded today.
🔍 What is Open Interest (OI)?
OI = Open Interest = Open positions in the market.
It shows how many contracts are live at a particular strike. It’s like a pulse of the market—it tells us where the action is happening.
If OI is going up → Traders are adding positions
If OI is going down → Traders are closing positions
🔑 Why Is OI Important?
Because institutions and smart money create large positions—and OI helps us identify where they’re betting.
OI gives an idea of:
Support and Resistance zones
Strength of a trend
Where market might reverse
Where volatility might increase
📘 Understanding Support & Resistance Using Option Chain
Support and resistance levels can be seen through the OI data in the option chain.
✅ How to Identify Support?
Look at Put OI:
The strike price with highest Put OI is considered strong support.
Why? Because put writers (who are mostly smart money) don’t expect the price to fall below this level.
Example:
If 22,500 PE has the highest OI, it acts as a support level.
✅ How to Identify Resistance?
Look at Call OI:
The strike price with highest Call OI is considered strong resistance.
Why? Because call writers are betting price won’t go above this level.
Example:
If 23,200 CE has the highest OI, it acts as a resistance level.
🔁 Change in OI – Fresh Positions vs Exits
Don't just look at total OI—look at the change in OI today.
Increase in OI = Fresh positions are being added
Decrease in OI = Traders are squaring off positions
It helps confirm if the current market move is genuine or fake.
Example:
If Nifty is going up and Call OI at 23,000 is increasing, it means fresh selling → possible resistance.
But if Call OI is decreasing, it means sellers are exiting → breakout possible.
🧩 How Option Chain + OI Help in Intraday Trading
Find Support & Resistance Zones
Use highest OI levels to set your boundaries.
Avoid buying near strong resistance; avoid selling near strong support.
Use OI to Validate Breakouts
Watch how OI changes near key strike prices.
If resistance strike sees short covering (OI falling), breakout is real.
Trend Confirmation
Long buildup (Price ↑, OI ↑) = Uptrend
Short buildup (Price ↓, OI ↑) = Downtrend
Expiry Day Strategy
Focus on where OI is building rapidly.
Use max pain and max OI to sell straddles/strangles safely.
🧠 Advanced Concepts
🔸 Max Pain Theory
Max Pain is the strike price where the most option buyers lose money on expiry. It is the level where option sellers are most profitable. It usually acts like a magnet near expiry.
Example:
If Max Pain for Nifty is 23,000, market may stay near this level on expiry day.
🔸 PCR (Put Call Ratio)
PCR = Total Put OI / Total Call OI
PCR > 1: More Puts than Calls → Bullish sentiment
PCR < 1: More Calls than Puts → Bearish sentiment
PCR near 1 = Neutral/Rangebound market
Use it with caution—extremely high or low PCR may signal reversal zones.
🛠️ Tools to Use (Free)
NSE India Website – Best for raw data
Sensibull, Opstra, Quantsapp – Visual OI charts
TradingView – Combine charts + option levels
Telegram OI Bots – For quick OI updates
📌 Do's & Don'ts in Option Chain + OI Analysis
✅ Do:
Use OI + Price + Volume together
Watch OI shifts during the day (especially 9:30–10:30 AM and 2–3 PM)
Combine with support/resistance zones from charts
❌ Don’t:
Trade blindly based only on highest OI
Ignore rapid changes in OI—it could signal smart money exit
Confuse high OI with direction—it just means “interest,” not bias
🎯 Final Words
Option Chain + OI analysis isn’t just a tool—it’s your insight into the mind of the market. It tells you what others are doing, especially the big players who move the markets.
To master it, keep practicing:
Observe how OI builds around events (like RBI policy, earnings)
Watch price + OI behavior on breakout and breakdown days
Pair OI with basic technical analysis for solid confidence
