Is there any guide you can suggest that tells you how to read option chain/data mainly open interest and volume to enhance stock picking and trading. I know it wont be perfect but it will enhance stock trading with more info/data in option chain.
Most interpret Volume and O.I. as similar don't they? But Larry Williams uses O.I. as the Dumb Money.
He claimed "the Herd" is usually wrong at Tops and Bottoms - O.I. is high at Tops and low at Bottoms. Thus a contrarian indicator.
He’s wrong. OI doesn’t mean much. If I buy an option from you and sell it back to you: volume is 2 and OI is zero. If I sell it to someone else, volume is 2 and OI is 1. If I sell a slightly different option to someone else instead then volume is 2 and OI is 2 and risk is the same as the second scenario
I just checked it again - Chapter 8 Trading Stocks and Commodities with the Insiders p83: he says low OI means only the Commercials are in etc. He claims more Tops are made with high OI, more Bottoms with low OI. He was a Commodities specialist though.