ADDENDUM 4

With encouraging feedback from active OI Pulse users we believe that our vision of
empowering Retail traders by enhancing their knowledge is on the right track. Certain features
have provided life changing experiences for such active users. Thus continuing with our
mission we intend to simplify more things for our users. In this Addendum we shall explain new
features added and elaborate more about the “Trending OI” feature that has actually proved to
be the flagship feature of OI Pulse for Intraday trading.
Continuing with our promise to simplify the complex market analysis we have added a new
element in already existing featureOI Statistics called “​Select Period​”

Let us first examine ​OI Statistics/ Select Period feature first and then see how it can be used
while we elaborate more about Trending OI.

OI Statistics feature has already been explained in previous versions and its details may be
seen there. Still we would revisit some basics.

This feature may be accessed in following manner

Once we select the feature we get following options

The Select Period as highlighted is a new feature added.

This unique feature of the tool would enable you to get a holistic picture of the entire Open
Interest of both calls and Puts.

With this feature you can see OI of different Calls and Puts with just a single click. You can
analyse the OI of ATM strikes and see whether the CALLS are more or the PUTS. Also we can
catch a glimpse of whether CALL writers are dominating or the PUT writers and at what strike
prices.

The data can be seen for the cumulative Open Interest of different strikes or for the change in
OI for that particular day in both Live Market as well as for historical Data.
For example in the above diagram which is OI Data for Bank Nifty Future on 18 Feb 2021 we
see that strikes 37500 & 38000 have highest Call Open Interest while 35000 & 36000 strikes
have highest Put Open Interest.

Though it gives a broad idea about support and resistance but conveys a little information
about how the trading day went and what would be its implication for the next day.

In order to prepare for the next day we must know how and where OI changed today. For this
use “Change in OI” feature on the menu of OI Statistics.

In the above diagram you can see we have plotted “Change in OI” while in the previous
diagram we plotted “Total OI”. Here we see clearly that Call Writers have dominated the day.
Call writers have written close to 34,00,000 call options while there has been negligible Put
writing. This data compliments the overall Open Interest which shows total CALL OI at nearly
1,00,00,000 is much more than cumulative PUT OI of 80,00,000. Ths it is clear that at the end
of day Call writers have a dominance. The “Change in OI” plot also shows us the levels at
which Call Writing has happened. Thus gives us a hint that tomorrow in absence of any
external influence Call writers would love to eat premiums and thus would resist any rise in the
market. Thus any rise should invite sell off in case we get a Gap Up. This would hold valid till
the previous day high is taken off.
Now the new feature of OI Pulse would give us added advantage for analysing the data. If we
are able to analyse the data of change in OI of the last one hour then it would be very useful for
us. This new feature gives us this flexibility.

If you see, this new feature has following options

So we may analyse the data for above mentioned time periods. This feature would be very
helpful for intraday trading as we can see exactly where the action is happening. On expiry day
this would be a very useful tool in the arsenal.

This would look like this

Here we see that in the last one hour the market saw major unwinding. On this day Bank NIfty
saw a rise of 400 points in the last one hour. But despite the rise there was no significant Put
writing that would have suggested that Bulls want to take the market higher tomorrow morning.
This new feature when combined with trending OI would be very useful as you can see where
exactly the options writing is happening in the last 15/30/60 minutes thus giving more
confidence in taking trades.

Trending OI
Now let us switch to the ​Trending OI ​feature and analyse it in more detail.

The basic details of this feature have been elaborated in previous Addendum but let us revisit
some basic elements of this feature

● The main idea behind this feature is to know how Options sellers are placing their
positions in the market at any given time and who (either Call or Put writer) is
dominating at the moment. This information plays a very important role in identifying the
correct trading opportunities.
● This feature is focussed ​primarily on the Change in OI of Calls and Puts ​rather than
their ​absolute OI​. Information about absolute levels of Open Interest can be accessed
via OI Statistics and Options Chain feature of OI Pulse.
● Information about change in OI is the most dynamic and essential element to enter a
trade with high probability of success.
● OI Pulse has an inbuilt AI driven system that selects important strikes for analysing the
change in OI data. Thus the user need not worry about selecting the strikes manually,
though you can always change them manually too.

How to Use Trending OI

When you select the Trending OI feature of OI Pulse you would get following menu bar open

You can select different time intervals and different instrument names for Live or Historical
Data. We shall analyse the Live Data for reaching some conclusions.
We shall be analysing data for a 60/15 min time interval for Bank Nifty. Present example is for
16 Feb 2020.

First we need to understand how to read this chart

1. TIME​:

It reflects the time interval one has selected. Read the table from bottom to Top rather than Top
to bottom as shown by the arrow.

2. LTP:

It represents the Last Traded Price of Bank Nifty Future at end of Time Interval.

3. CALL & PUT OI​:

The figures appearing under this column represents the ​Change in OI with respect to previous
day OI of the ​selected strikes​. Please pay attention to the work “Change in OI”. This would
represent the cumulative Change in OI of selected strikes and not the absolute numbers.

Let us clarify this here with more elaboration. The above data is for 16 Feb 2021. The Strikes
selected for analysing are

These strikes have been automatically selected by the ​AI system of OI Pulse and are the
ones that would see maximum action. By the end of 15 Feb 2021 the cumulative Call OI of all
these strikes was 10,00,000. At 9.30 in the morning this cumulative OI changed to 15,96,250.
So what is the change in OI? It would be 1596250-1000000=596250. So what you see on the
table is change in OI and not absolute cumulative OI.

Following table would further clarify the point in consideration

[Link] Date Time Cumulative OI Change in OI Remarks

1 15 Feb 2021 End of Day 10,00,000 -

2 09.30 AM 15,96,250 5,96,250 It is ​Change in OI

3 10.30 AM 30,23,925 20,23,925 and not absolute

4 11.30 AM 38,47,650 28,47,650 Cumulative OI that is
5 16 Feb 2021 12.30 AM 41,89,825 31,89,825 reflected in Trending
6 01.30 PM 43,39,700 33,39,700
OI
7 02.30 PM 42,17,825 32,17,825

8 03.30 PM 36,64,800 26,64,800

Cumulative and Change in OI of selected CALL strikes

Hope the point that we want you to understand is loud and clear.

Now let us proceed further and understand what other information is conveyed by Trending OI

4. Difference in OI​ :

It is simply the difference of Change in Put OI and change in Call OI.

Mathematically

Difference in OI = Change in Put OI - Change in Call OI

For example in above data

Difference in OI= Change in Put OI - Change in Call OI

-21,65,075 ​ = 4,99,725 - 26,64,800

Just for clarity observe following example for Bank Nifty data of 15 Feb 2021

Just observe under Call OI the figure mentioned is -11,73,100 (negative). This simply means
that Cumulative OI at the end of Day reduced by 11,73,100 from the previous day. Difference
in OI would be calculated as

Difference in OI= Change in Put OI - Change in Call OI

42,26,675 ​ = 36,53,575 - (-11,73,100)

Hope the concept is now clear.

5. Day High/Low Diff in OI

This column would compare the “Difference in OI” column.

There would be two options appearing under this column. These would be

Day High Break​ and ​Day Low Break

But when do they appear and what do they signify​?

Let us examine first when these messages appear.

Day High Break would appear if the Difference in OI at a particular interval is positive and
greater than Difference in OI of immediately preceding time interval.
In the above example, start reading the table from below. As shown by arrows 1,2 & 3 a
relative comparison is made between present and immediately preceding time interval data.

Arrow 1 compares data at time interval 10.30 and 9.30. At 10.30 we see that the Difference in
OI is 22,94,275. It is higher than 5,59,125 and highest difference OI of the day, thus is would
get reflected as ​Day High Break

Now let us focus on Arrow 2 which compares data at time interval 11.30 with that at 10.30. At
11.30 Difference in OI is 23,12,475. It is higher than immediately preceding value 22,94,275
and highest value of the day, thus it again gets reflected as ​Day High Break

Now observe Arrow 3 which compares data at time intervals 12.30 & 11.30. AT 12.30
Difference in OI is 22,66,525 while at 11.30 the corresponding value was 23,12,475. Now this
is LOWER than preceding value, thus nothing would appear in the Day High/Low Diff in the OI
column.

1. Thus for the message ​Day High Break ​to appear three conditions need to be fulfilled
2. Difference in OI should be a positive number
3. Difference in OI of selected Time interval should be higher than corresponding value in
preceding Time interval
4. Difference in OI of the time interval should be the highest value of the day.
5. On similar lines the message ​Day Low Break ​appear when following conditions are
met
6. Difference in OI should be a negative number
7. Difference in OI of selected Time interval should be lower than corresponding value in
preceding Time interval
8. Difference in OI of the time interval should be the lowest value of the day.

Just try to figure out the messages in following table on your own based on above mentioned
rules and concept would be crystal clear to you
Now having understood when these messages appear it is time to understand what do ​Day
High Break​ and ​Day Low Break ​ ​signify?

We would come back to this topic again once we cover the last Column of Trending OI i.e
Sentiment.

5. ​Sentiment

This column of Trending OI suggests whether the outlook of the market is ​Bullish or ​Bearish
based upon changes in Open Interest during the day.

It would show Bullish always when the difference in OI column has a positive value and
Bearish whenever the Difference in OI column has a negative value.

Just observe the Sentiment and how it has appeared.

Now having understood the basic concepts it is high time to know how to use this information
for trading. For this we must understand the significance of data suggested by Trending OI.

So let us understand the significance of information conveyed by Trending OI.

At the very beginning we shall like to clarify

;****************************************************************
Do not trade exclusively on the basis of Trending OI

;****************************************************************

It is ​one of the major dots to connect but not the only one. Do take into consideration other
factors like Price levels,Volume,VIX, IV, Global Markets etc before making an entry. However
information analysed through Trending OI shall help you identify scenarios ranging from weakly
bullish/bearish to extremely bullish/bearish. But certainly this would highly increase the
chances of a successful trade. So let us begin

We shall begin the process by discussing ​bullish scenarios.

When the Market is Bullish what do you expect Options Sellers to do?

They would certainly like to write more Puts than Calls during the day. So if that is the case
then on any day when market outlook is Bullish then we expect the change in OI of Puts to be
more than the change in OI of Calls.

To put it simply

Thus by virtue of this simple rule any situation when Diff in OI Column of Trending OI shows a
positive value the outlook is Bullish. But this is very simple and naive. The probability of a Long
Trade in this scenario would be very less.

Let us see an example

Take into consideration Bank Nifty Futures on 17 Dec 2021.

Just observe that at 12.30 the Sentiment is simply Bullish without any Day Break.
Also observe the price chart of the corresponding day at 12.30.

Would you enter a trade at this juncture? It might face a resistance at Day’s High. Also we do
not see any significant Put Writing. Rather more calls were written than Puts in the last 15
minutes.

So though it is showing bullish but still odds are low in favour of a long trade.
Let us observe what happened

It actually took a strong resistance and moved lower.

So the lesson learnt is that in a simple Bullish scenario without any additional
information wait for more confirmations.

So we have seen a simple bullish scenario. Now let us identify a ​moderately strong Bullish
scenario based on Trending OI.

It would be based upon the information conveyed in ​Day High/Low diff ​column in OI. For this
we need to understand the significance of information first.

We get a ​Day High Break only when the difference between Put & Call Change in OI is
maximum. This simply means that we have more numbers of Puts written in the day and now
they are being written at a faster rate than the Calls.
So the key advancement over plain vanilla Bullish scenario is that Puts are being written at a
faster rate than Calls now. This is certainly a ​more or moderately bullish scenario.

Just consider the following example of Bank Nifty 15 Feb 2021 and focus upon time 10.45

We see that at 10.45 both Puts and Calls were written but certainly more Puts were written as
compared to Calls as a result of which we saw a Day High Break.

With the new element of “Select Period” in OI Statistics we can see exactly where the Options
are being written that would prove out to be very useful.

The above change has also been explained in the following diagram.
Let us consider the price chart for this example

Just observe that at 10.45 we have price above VWAP and getting a moderately Bullish
scenario as per Trending OI. Thus any further up move with volume would confirm the Bullish
setup.

Let us see what happened next.

In the very next candle we saw a further up-move with volume. Thus Bullishness was
confirmed and it became a buy on dips situation.

We would like to reiterate that Trade one should enter a trade when the majority of the dots are
connected. Here in this example at 10.45 apart from Trending OI data we got a strong
Marbuzo type bullish candle with Volume > 50 K and RSI too jumped above 60..thus many dots
in favour.

Now we have learnt how to identify bullish and moderately bullish scenarios with the help of
Trending OI. The beauty of this tool is that it can also help you identify ​extreme Bullish
scenarios as well. ​Still we would again emphasize that these are just scenarios, look for other
factors like price levels,volume,RSI, Global Markets, VIX etc before entering a trade. What
makes these scenarios as extremely Bullish are the favourable reward risk ratio.

We can have two cases where the outlook is extremely Bullish and we will discuss them
separately.

Extremely Bullish scenario 1

The starting point of such scenario would be

1. The “Sentiment” column in Trending OI has be ​Bullish

2. The “Day High/Low Diff in OI” column has to show ​Day High Break
So we know what happens in such a situation. Overall the Puts Change in OI would be more
than Call change in OI. But tcan you think what would be the situation of Call writers in cases of
extreme bullishness? ​They would be frightened to the core and would unwind their
positions to limit their losses. ​In such a situation Put writers would become aggressive and
Call writers would start to unwind their position.

In such a situation We would still get a fresh ​Day High Break​. However the nature of this new
Day high break would be somewhat different. IN this case The CALL OI would actually be less
than the CALL OI figure of immediately preceding time interval while PUT OI shall be higher.

Let us see example and try to understand the point made here

In the above example compare situation 1 and 2.

In situation 2 we got both ​Bullish as well as ​Day High Break also in Situation 1 we got both.
Kindly pay attention to the respective CALL & PUT OI columns.

In situation 2 Put OI @ 27,01,875 increased from 23,90,425 meaning there was an increase in
Put writing. Thus Put writers are confident about up move.

Also in situation 1 PUT OI further increased to 29,08,775 from 27,01,875 thus showing the
confidence of Put writers about their belief of up move.

Now compare the CALL OI numbers.

In situation 2 the CALL OI ​actually increased ​from 19,28,000 to 19,53,025. Though the
increase is small as compared to the rise in the number of PUT OI still it shows that there are
some CALL writers who believe that the market may not move up thus ​making Bullishness
only Moderate. ​But in situation 1, CALL OI ​actually decreased ​from 19,53,025 to 19,06,700.
What does it show? It means that some call writers are running away and unwinding their
position thus ​Bullish outlook is strong. ​More is the unwinding more is the strength of Bullish
outlook in this case.
In such a situation ​if other factors like Price,Volume,RSI,Global Markets favour we may get
a very favourable reward.

Let us take an example of Bank Nifty 15 Feb 2021. Here is the price chart till 11.15 AM

Now let us analyse the Trending OI chart till 11.15

We saw an extreme Bullish scenario and after that if one would have followed buy on dips
strategy ,one would have scalped with good returns as shown below
We have now identified one Extreme Bullish scenario, now let us identify one more Extreme
Bullish scenario. The prerequisites would be

1. The “Sentiment” column in Trending OI has be ​Bullish

2. The “Day High/Low Diff in OI” column has to show ​Day High Break

3. We must see continuous ​Day High Break o

​ n time intervals

4. Price action must be Bullish.

Here let us consider the Bank Nifty situation on 12 Feb 2021. First we shall consider the price
chart till 10.30 AM. We see that at10.30 we got an upside move with volume.

Now let us also see what Trending OI said on that day till 10.30
If you see we got continuous Day High Break till 10.30 and also there was price candle
confirmation, so Trending OI supported the Bullish move strongly.

And now let us see what happened next

It gave very handsome rewards while scalping.

Thus we see that Trending OI in this situation was used with price action to enter a trade that
gave good results.
So now we can summarise our learnings for Bullish scenarios as under

1. Trending OI can be used to identify the market sentiment.

2. Trending OI may also be used to gauge the strength of Bullish or Bearish outlook.
3. In simple Bullish Outlook there would be no remark in “ Day High/Low Diff in OI”
column.
4. In Moderately Bullish Outlook we shall get ​Day High Break ​in the remark column.
5. In an extremely Bullish Outlook we shall witness reduction in CALL OI column figure
with respect to figures of previous time interval.
6. If we get continuous ​Day High Break ​then also the outlook is Extremely bullish
provided Price action supports it.
7. With the new “Select Period” element of OI Statistics we can know where exactly the
Option writing is taking place in time intervals of 15/30/60 mins.

So having summarised these findings we would still repeat that Trending OI data has to be
analysed ​not in isolation but in conjunction with other major connecting Dots like Price,
Volume,RSI, Global factors etc.

For example consider following situation

If Trending OI shows Extreme Bullishness but RSI is above 80 or there is a major resistance
level nearby do not enter the trade. Wait for RSI to cool down or Price to cross the resistance
with volume before entering a trade.

Thus we must know how to use Trending OI effectively. Once you know how to use it ​Trending
OI is a Beauty.

Now on similar lines we may analyse Bearish scenarios as well. The broad contours would
remain the same. So let us start straight away with the summary first and then jump to
examples.

1. Trending OI can be used to identify the market sentiment.

2. Trending OI may also be used to gauge the strength of Bullish or Bearish outlook.
3. In simple Bearish Outlook there would be no remark in the “ Day High/Low Diff in OI”
column.
4. In Moderately Bearish Outlook we shall get ​ ​Day Low Break ​in the remark column.
5. In an extremely Bearish Outlook we shall witness reduction in Put OI column figure with
respect to figures of previous time interval.
6. If we get continuous ​Day Low Break ​then also the outlook is Extremely bearish
provided Price action supports it.
 7. With the new “Select Period” element of OI Statistics we can know where exactly the
Option writing is taking place in time intervals of 15/30/60 mins.

Please consider following Trending OI of Bank Nifty for 18 Feb 2021 for identifying different
Bearish Outlooks which are self explanatory as explained in Bullish scenarios.

Now let us see how Trending OI helped to enter a trade.

We will consider Bank Nifty Futures for 18 Feb 2021.

Consider the price chart till 11.45 AM first

Here you can see that at 11.45 the Price action looks Bearish as Price is Below VWAP and
near Day’s Low. We also have big Red Volume Candles to suggest that it is a bearish day.

But we got an Inverted Hammer candle , now should we enter or not. We shall take help of
Trending OI.
We see that at 11.45 we get an Extremely Bearish Outlook. So I would definitely look for
Shorting this market. If price retraces with small volumes then it would be an ideal situation to
enter short.

Even at 12.00 we got another Extremely Bearish Outlook as we saw unwinding of Put OI and
rise in CALL OI that suggests that this is bear territory.

Let us see what happened

Till 12.00 there was minor retracement without volume till Supertrend thus a perfect entry and
then the market fell rapidly thus confirming the Trending OI view.

Thus on this day​ ​Trending OI helped to trade with confidence and that is key to success.

Let us consider one more example to see how Trending OI helped a Bearish Short Trade while
the market was Extremely Bearish.

Consider Bank Nifty Future of 10 Feb 2021.

Let us see the price chart of the day till 13.30 Hours
Here you can see that the price is below VWAP, and trying to test the Day’s Low at 13.30
Hours and RSI below 40. Should one consider going short here? Let us see what Trending OI
said on that day
As you can see that since 11.15 we got a continuous series of ​Day Low Break till 13.30. This is
a case of Extreme Bearish Outlook meaning that Call Writers want the market to go down.

Now with price reaching the Day Low and that too with Volume is a bearish scene. The Outlook
provided by Trending OI is a nail in the coffin for the occasion. Risk bearing Traders could have
entered at 13.30 itself, while conservative players could have entered once the Day low gets
broken with Volume (that happened at 13.39). IN both cases the reward was very good. Just
observe what happened next

It was a further downward rally. Thus again Trending OI proved to be a beauty.

Thus we see how we can combine Trending OI with other Dots to enter a trade.

Thus with this we shall like to conclude the Trending OI feature. We would strongly suggest
you make this a regular weapon in your arsenal.
Again towards the end we would re emphasize that ​Trending OI has to be used in
conjunction with other connecting dots like Price Action, Volume analysis, RSI, Global
Markets, VIX etc to enter a trade. Thus we would recommend you to go through the
instructions again and again and backtest this feature to gain confidence.

On the basis of our analysis and backtests we can surely say that ​“Trending OI is a Beauty”.

We explain all the fine nuances of Connecting the dots to trade in workshops and mentoring
programs in which you can enroll to become a better version of yourself. The details of these
programs are regularly updated on our website​ ​[Link]

We hope that the Trending OI feature of OI Pulse would help you to decode the markets further
to develop an edge and become a better version of yourself.

Kindly share your feedback about OI Pulse on our email ​support@[Link].

Regards

Team OI Pulse