Open interest, option walls and put-call ratio
Outstanding derivative contracts, and what the strikes with the most OI suggest.
Futures, options and institutional flows
What is Open interest, option walls and put-call ratio?
Open interest counts the derivative contracts that have been opened and not yet closed. In options, looking at OI strike by strike shows where traders have concentrated positions: the strikes with the heaviest call OI and put OI. Option sellers, who are usually the larger and better-capitalised side, want price to stay away from their strikes, so heavy call-OI strikes are often read as resistance and heavy put-OI strikes as support.
Formula
Put-call ratio (PCR) = total put OI ÷ total call OI
Call wall = strike with the highest call OI (above spot)
Put wall = strike with the highest put OI (below spot)
How to read it
- A PCR above 1 means more puts than calls are open, often from put writers who expect support. Very high PCR can also signal crowded positioning.
- Walls shift as expiry approaches; a wall that moves up day after day tracks rising expectations.
- OI data describes positioning, not intent. The same OI can be hedges, spreads or naked positions.
Common mistakes
- Treating option walls as hard ceilings and floors. They are crowded strikes, and large moves break them.
Use it on Flash Finance
Related concepts
Long buildup, short buildup, short covering, long unwindingThe four combinations of price change and open-interest change in futures.India VIXThe market's expected volatility for the next 30 days, from Nifty option prices.FII and DII activityNet buying or selling by foreign and domestic institutional investors.
