OI Walls, Shifts, and Event-Risk Limits

What this unit covers

Learn to read a large open interest build-up at a strike as a probable support or resistance wall, and why it becomes unreliable just before a major event.

By the end you will be able to

• Explain why a large Open interest build-up at a strike can act like probable support or resistance.
• Recognise that an OI wall can shift in size or location from one day to the next.
• Judge when a wall's reliability weakens sharply, in the days right before a major event.

How it starts: The Wall That Held, For Now

1. You watch one strike carry the heaviest open positions for three straight sessions.
2. Results are due in two days, and you plan a large bet.
3. What happens to that crowd of positions before the results actually arrive?

Words you will meet

Open interest

The count of option contracts at a strike that are still open, not yet closed.

OI wall

A strike with unusually high open interest that tends to slow price on an ordinary day.

In this module: Open Interest Analysis

1. Open Interest Additions and Unwinding
2. Price-OI Combinations
3. Call and Put Positioning
4. OI Walls, Shifts, and Event-Risk Limits (this unit)