Options Open Interest Skew

Options open interest skew refers to the imbalance in the number of outstanding call options versus put options at different strike prices. A significant skew toward puts suggests that the market is heavily hedged or bearish, indicating a high level of anxiety among participants.

Conversely, a skew toward calls can indicate bullish speculation or a desire to participate in potential upside moves. Analyzing this skew allows traders to gauge the collective sentiment and risk appetite of the market.

It is a vital tool for predicting potential support and resistance levels based on institutional positioning. When the skew becomes extreme, it often serves as a contrarian indicator, suggesting the market may be overextended.