Lets See What the OI Chain is saying for Sun Pharma, Below is the data from the option chain on NSE
Open Interest on 350 PE which is at 365k
If we look at the build up in OI, there was a large volume and OI jump on 3rd April , during that day the stock saw a big up-move. So, the action in the PE suggest option writing with the stock moving up.
Sun Pharma Daily Chart - Reference 3rd April
Stock saw a breakout candle on 3rd April and stock has not entered that range ever since, which makes the PE writer comfortable and profitable. This doesn't make it any insider case of buying done in a random strike and panic about it. Also average cost for writers are 15 rs for 350 PE, CMP at 0.3
Similarly we can observe same for other PE strikes as well.
Now lets see where the stock is standing at Sun Pharma closed at 485, weekly high close since Nov 2018
COI - Cumulative Open Interest - Sum of Open Interest of Current Series + Next 2 Series of Future Contract
If COI is going down in case Sun Pharma is on a back drop of a big rally in Sun Pharma & in all Pharma Stocks. The way i see it as, Sun Pharma is a stock owned by MFs , institutions and they mostly keep their PF hedge via Future short when there is uncertainty around the stock / sector to a large extent and keep the position in cash segment. Now that stock has started to move up and sector is seeing a good inflow of news and stock is not going down now on bad news whenever it has came in past few months.
These Institutional shorts in Futures when cut results in reduction in COI. Also recently promoter also made an open market purchase of nearly 30.8lk shares this year which market is making a note of.
Promoter buying data
Src - https://web.stockedge.com/share/sun-pharmaceutical-industries/5071?section=insider-deal
Sun Pharma COI Chart -
COI at on week closing 27 March at 44683
COI at on week closing 24 April at 36863
Yes there has been a reduction in COI and above is the view i am going with.
and in the end Reading of data is not that plain and simple. There is always a story around how someone made sense out of the data when he traded it..... successfully and in case of failure there is always a point post which you give your view up. I have kept a close below 443 as the level post which i give up the view.
I am trading this stock on long side, one intraday trade was done on Friday in TradersClub and going forward too if there isn't any change of price structure which indicates bearishness i will be looking to trade it with bullish bias only.
Next Batch of TradersClub starts from 1st May, Details over the link - https://www.indianstockss.com/forum/miscellaneous/traders-club-learn-online