Option Chain (Equity Derivatives)
NSE Option Chain:
NSE option chain displays “Open Interest”, “Change in OI”, “Volume”, “Implied Volatility (IV)”, for all strike price for a particular underlying stock. The tool also provides the functionality to see the trend of how these values have changed over the month.
How To Use NSE Option Chain Table?
The option chain table can be very useful for traders in many different ways, few of those are:
- Identifying Support and resistance for stocks for the month
- Identify support and resistance for intraday perspective
- Identify market expectation of volatility using IV(Implied Volatility)
For “Options Trading”, this is extremely useful as it shows where the rest of the market participants are seeing support and resistance. The “Option Writer” and “Option Buyer” both can use this table to improve their odds in trading.
To explain it with a very rudimentary example: if SBI has highest Open Interest at 150PE and highest addition in 150PE as well, this will imply that the market participants are expecting 150 to be a good support level for SBI.
With practice and experience, traders can develop a good gut feeling for identifying support and resistance using the table. Some traders also use IV and Volume to make sense of these numbers, however for a beginner OI and Change in OI are sufficient.
Trading and Investment Terminology