F&O Market Data
How to read open interest — the four buildups
Open interest (OI) is the number of outstanding derivative contracts. Read together with price, the change in OI reveals what the dominant money is doing:
- Long buildup — OI rises while price rises. Fresh buying with conviction; the bullish move has fuel.
- Short buildup — OI rises while price falls. Fresh selling with conviction; the bearish move has fuel.
- Short covering — OI falls while price rises. Shorts are exiting; the rally may be sharp but is fuelled by exits, not fresh buying.
- Long unwinding — OI falls while price falls. Longs are exiting; weakness without aggressive new shorts.
These are end-of-day readings — they describe how positioning changed over the full session, which is most useful for planning the next day. They are not intraday trade signals.
Option OI walls and the put-call ratio
Strikes with very large CALL OI tend to act as resistance — that's where option writers are betting the index stays below. Strikes with very large PUT OI tend to act as support. The biggest walls on each side outline the range the derivatives market currently expects.
The put-call ratio (PCR) is total put OI divided by total call OI for the expiry. Roughly: PCR near or above 1.2 means put writers are confident (leans supportive), near or below 0.8 means call writers dominate (leans heavy). Extremes often precede reversals — it's a sentiment gauge, not a timing tool.
Participant-wise OI shows how FII, DII, retail (Client) and proprietary desks are positioned in index futures and options — the closest thing to seeing the big players' cards, published officially by the exchange every evening.