Thread by @stocktalk_in

📕 A Quick Guide on OPEN INTEREST (OI)

1⃣ What is OI?
OI is simply the number of outstanding contracts (open positions) for a given stock

For eg: A stock having OI of 1 lakh means there are 1 lakh open positions (long & short)

* OI data is available only for F&O segment

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How is OI calculated?

2⃣ As the name suggests OI represents the "interest" of traders in a given stock

For eg: If trader A has 10 long positions and trader B has 7 short positions then the total OI will be 17

That means buying interest is more than selling interest

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3⃣ What is Put Call Ratio (PCR)?

In F&O terminology;
🔸 Long positions = Calls
🔸 Short positions = Puts

PCR = Puts / Calls

4⃣ Calculating PCR in the above eg:
Calls = 10
Puts = 7

So PCR = 7/10 = 0.7

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5⃣ How to analyze PCR?

As a thumb rule;

🔸 PCR < 0.75 = Bullish (more long positions)

🔸 PCR between 0.75 to 1.25 = Neutral

🔸 PCR > 1.25 = Bearish (more short positions)

Based on PCR we can decide if we should go long or short as we now know which side is stronger

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6⃣ How to analyze change in OI?

OI keeps changing on daily basis as traders change their views;

🔸 If existing positions are closed then OI decreases, meaning traders are losing interest

🔸 If new positions are added then OI increases i.e. traders are gaining interest

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7⃣ Where to find OI data?

OI data is available in the option chain table of a given stock.

For eg: option chain of SBI can be found here 👇

cutt.ly/sbi-oi

In the option chain table, check the total of OI columns on CALLS side and PUTS side.

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8⃣ Where to find OI data for all stocks?

NSE updates the OI data every day at 6 PM for all the stocks in F&O segment.

You can download this data in a single CSV file here 👇

cutt.ly/nse-oi-report

🔸 File to Download: NSE Open Interest (zip)

THE END.

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