Navigating the Open Interest of Options on 6/22: Traders Grew More Confident in CHPT
Traders grew more confident in $ChargePoint(CHPT.US$ as its open interest of the calls whose strike price is $9.00 strike price with the expiration date on 8/18/23 rose by 50,810, the highest daily change, indicating more demand for the stock.
And the open interest of $Nikola(NKLA.US$'s options with the strike price $1.50 and the expiration date 7/7/23 experienced the largest fall in the market of 46,990, bringing down its related total open interest to 6,865.
The OI PCR of $Celanese Corp(CE.US$ surged by 35.2% to 0.67 today, the highest increase in the market.
The OI PCR of $Mohawk Industries(MHK.US$ dropped by 43.0% to 0.86 today, the largest fall in the market. This indicates that the sentiment in the stock has become more positive than the previous day.
What is Open Interest Put Call Ratio? An indicator to help with market sentiment analysis within specific time-frames.
OI PCR can be used to determine market sentiment -- if it is greater than 1, it is considered bullish, and if it is lower than 1, it is considered bearish. And computed by total open interest of all the puts divided by total open interest of all the calls.
Its utility, however, goes beyond this simple interpretation. The OI PCR can be used to determine market sentiment. If the OI PCR is greater than 1, it is considered bullish, and if it is lower than 1, it is considered bearish. However, its utility goes beyond this simple interpretation. The indicator can detect the dangerous consensus we discussed earlier, which can lead to drastic price movements.
To provide context, when the OI PCR goes significantly above 1, it indicates a shift from a bullish sentiment to an extremely bullish sentiment. Similarly, if the OI PCR is close to 0, it suggests an extremely bearish mood.
Disclaimer:
Options trading entails significant risk and is not appropriate for all customers. It is important that investors read Characteristics and Risks of Standardized Option before engaging in any options trading strategies. Options transactions are often complex and may involve the potential of losing the entire investment in a relatively short period of time. Certain complex options strategies carry additional risk, including the potential for losses that may exceed the original investment amount. Supporting documentation for any claims, if applicable, will be furnished upon request.
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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