DLF: Stock Options Chart

What is “Stock Options Chart for derivative stocks”?

The NSE Option Chain chart for stocks above shows open interest data for stock options that are trading on NSE India. The total open interest of Puts and Calls is visible for each strike price for that particular stock.

How to use these charts?

The charts can be used to identify the support and resistance levels based on Open Interest data. Generally speaking, the strike price with highest OI of Calls is considered a resistance. Similarly, the strike price with highest Open Interest of Puts of considered a resistance level for that stock

If a particular stock has a market cap of INR 1 Trillion and OI is just ten thousand then the Open Interest data should not be used to identify levels for that particular stock.

Also, if the stock is in sharp uptrend or the momentum is very strong, the trader should not rely on support and resistance from these charts. The major supports and resistances get broken during strong up or down moves.

Are these charts reliable in identifying support and resistance levels?

The charts should not be relied upon for the stocks where the open interest is very low. The higher the open interest of a particular stock, the better.

Identify support and resistance levels based on stock options data.

Future/Option trading with Open interest in view involves:

a. Long Built-up (Rise in Price along with Rise in OI)

b. Short Built-up (Fall in Price along with Rise in OI)

c. Long Unwinding (Fall in Price along with Fall in OI)

d. Short Covering (Rise in Price along with Fall in OI)