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analysis of option chain

Nifty 50 Option chain

Nifty 50 Option chain consist of it’s strike price along with OI and Volume. Higher OI means more people are buying the contracts. Increasing open interest represents new or additional money coming into the market while decreasing open interest indicates money flowing out of the market. 

Why #Nifty is at an all-time high despite the second wave and when India's GDP contracted by 7.3% #ChellamSir

Importance of open interest

Open Interest

Open interest is different from trading volume. Volume represents the total buy and sell in the market. But in OI, when one trader with 10 option contracts sells those contracts to a new trader, it may increase the volume trader but the total contract does not change the total open interest.

Thus increase in OI describes the flow of market trend. OI also acts as both support and resistance. When there is high OI in 10500 CE and 10400 PE, chances are the nifty closes at 10450 to cancel out both OI buildup.