Learn the basics: what the readings mean
These notes explain the words used on this page, so that you can check any reading yourself. They describe how markets are commonly read; they are not rules, and none of them says what will happen next.
Futures build-up: price and open interest together
Long build-upPrice up, open interest up. New buyers are opening positions.
Short build-upPrice down, open interest up. New sellers are opening positions.
Short coveringPrice up, open interest down. Sellers are closing positions, which can lift the price for a while.
Long unwindingPrice down, open interest down. Buyers are leaving, which can pull the price down for a while.
Open interest (OI) is the number of contracts still open at the end of a session. It rises when new positions are opened and falls when they are closed. Near expiry, OI moves from the near-month contract to the next one (the roll), so the table shows the near month, the next month and both together.
Other terms on this page
- VWAP is the day’s average price weighted by volume. Trading above it is often read as strength for the day, below it as weakness.
- PCR (put-call ratio) compares put OI with call OI near the price. Taken alone it says little; it is shown against its usual level for the stock.
- Support and resistance from option OI: a strike with a lot of put OI is often read as a floor, one with a lot of call OI as a ceiling. These are habits of the market, not guarantees, and they can give way.
- Premium, time decay and volatility. An option’s price is its intrinsic value plus time value. Time value shrinks every day and faster near expiry, and it moves with implied volatility. A buyer can lose the whole premium even when the view is right but slow.
- Lot size and margin. Each contract is for a fixed lot. Leverage makes small price moves large in rupees, for gains and for losses.
- Odds by the close and EV. The odds of touching a level and the expected value (EV) of a plan are model estimates. They depend on the assumptions behind them and are shown so that you can see the trade-off, not to promise an outcome.
How to use the page for study
- Read the points for and against a reading together, and note what would prove it wrong (“You’re wrong if”).
- Check the snapshot’s time and the notes under “Before you trade”: figures can be old, rebuilt from history, or affected by expiry or the roll.
- Decide your size and your exit before you enter, and risk only what you can afford to lose. A plan that is written down is easier to follow than one made under pressure.
- Treat every reading as a starting point for your own study, not as a signal to act on.
For investor education from the regulator and the exchange, see SEBI’s investor website and the investor education pages of the National Stock Exchange (NSE).