In Friday’s trading session, the following five stocks witnessed a build of fresh long positions. Let’s first understand how it’s concluded whether a stock has seen a buildup of fresh long position or not.
When a stock price moves up and also the open interest on a counter, it is taken as a sign of a long buildup. The signal is considered more reliable if the volume on the counter has also seen an increase.
Dixon Technologies’ stock price jumped 8.33%, and open interest saw a rise of 35.1%.
M&M price surged by 6.95%, and open interest saw an increase of 6.13%.NMDC rose 4.22%, and the open interest saw an increase of 0.12%.Navin Fluorine stock rose 3.01%, and the open interest saw an increase of 0.74%.Oberoi Realty stock price gained 2.39%, and open interest saw an increase of 3.26%.
Also Read: F&O stock strategy: How to trade in Bharti Airtel and BEL?Some additional checks would help traders make better trading decisions as they increase the probability of a follow-up of the upward movement in the stock price.
First, if this fresh long build has come when the stock is very close to its 52-week high, this increases the probability of the stock making an attempt to break its previous 52-week high.
Second, if this long buildup is accompanied by any bullish crossover, which means whether in the current up move when the open interest has moved up, the stock price has been able to cross either its 20, 50 or 100-day moving average. Another point traders should keep in mind when taking a trade is looking at the matrix of buildup of long positions on the basis of open interest.
Also, check whether there is any extraordinary buildup of long positions in any out-of-money call option, especially any far-of-the-money call option. That indicates the probability of any informed person taking exposure through options.
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