Demystifying “Open Interest” and Securities in “Ban Period”

Demystifying “Open Interest” and Securities in “Ban Period”

Fellow Traders What is open interest? It  refers to the total number of outstanding derivative  contracts that have not been settled. Whenever you want to buy a Future/Option contract, there needs to be a seller. The buyer buys with the assumption that the contract price would go up and the seller sells with the assumption that the contract price would go down. When a trade happens between the buyer & the seller, there’s one ‘Open Contract‘ that comes into being and the quantity of these open contracts is referred to as ‘Open Interest‘. Thus Open Interest is the total number of outstanding contracts that are held by market participants at the end of the day. Open interest applies only to the futures/options segment. Open interest, or the total number of open contracts on a security, is often used to confirm trends and trend reversals for futures and options contracts. A common misconception is that open interest is the same thing as volume of futures and options trades. This is not correct, as demonstrated in the following example: Open Interest On January 1, A buys an option, which leaves an open interest and also creates trading volume of 1. On January 2, C and D create trading volume of 5 and there are also five more options left open. On January 3, A takes an offsetting position, open interest is reduced by 1 and trading volume is 1. On January 4, E simply replaces C and open interest does not change, trading volume increases by 5. Benefits of monitoring open interest By monitoring the changes in the open interest figures...
What is Pre-Open market session?

What is Pre-Open market session?

The NSE and BSE introduced the pre – open session to reduce volatility and provide better price discovery in the markets. Fellow Traders The pre-open market session lasts for 15 minutes from 9 AM to 9:15 AM and is divided into three parts:   First 8 minutes: In the first 8 minutes orders are placed. They can be canceled or modified during this time period also. Next 4 minutes: In the next 4 minutes price discovery will be done, and orders will be executed. Our suggestion is that go with best stock brokers. Next 3 minutes: The next 3 minutes are used to facilitate the transition from pre – open to regular session. One can place orders only in cash segment.  F&O segment is not available in pre-open session. Also exchange stipulates that only limit and market orders can be placed in this session . Stop Loss orders are not allowed.   The orders that have not been traded are carried forwarded to the normal trading session. 1.  Limit Orders that are not traded during Pre-Open Session will be moved to normal trading session at the same price. 2.  Market Orders that are not traded during Pre-Open session will be moved to normal trading session @ Opening...