Options7 min read
Options trading basics: what a call and a put actually are
A call is the right to buy, a put is the right to sell, and a premium is what that right costs. Here is what each side of an option contract is signing up for.
Options and futures
Open interestkitne contracts abhi khule hain
The total number of outstanding futures or options contracts that have not been closed or expired, showing how much money is committed at each strike.
Open interest, or OI, counts how many derivative contracts are currently open, that is, created and not yet squared off or expired. Every contract has a buyer and a seller, and OI counts each pair once. It differs from volume, which counts trades during the day; a contract bought and sold ten times adds ten to volume but nothing to OI. Rising OI with rising price suggests new money entering long positions; rising OI with falling price suggests fresh shorts. Traders read the option chain for strikes with the highest OI. Heavy call OI at Nifty 24,500 is often read as a level where option writers expect the index to stay below, a rough resistance; heavy put OI at 24,000 as support. These readings are popular and often wrong, because large OI can be hedges rather than directional bets.
Related terms
Lessons that use this term
Options8 min read
Lot size, expiry and margin: the three things every F&O beginner gets wrong
One Nifty lot is not one unit. Expiry is not just a date. Margin is not the price. Get these three straight before your first F&O order.