Your explanation of how open interests affect stock prices was fascinating! How do I determine what is a large open interest for a particular stock? (July 9, 2002)

  It is not really a fixed number for any specific option on a stock. It depends on what the current open interests are and that can vary from month to month. What you look for is any open interest for a particular strike or group of strike prices that is head and shoulders above other open interests. For example, if you see several strikes with 200 to 300 open interests and then see one at 700 or a thousand open interests, that is a strike where the market maker could suffer a lot of pain. That one sticks out as a resistance level if it is a call position above the current stock price or a support level if it is a put position below the current stock price.


Previous Page Next Page

Return to Table of Contents


Legal Disclaimer