What is Support and Resistance (from Option Chain)?
In option chain analysis, support is the strike with the heaviest put open interest below the market and resistance is the strike with the heaviest call open interest above it, because option writers tend to defend the strikes they have sold.
On this page
Why OI creates support and resistance
Put writers lose money if the underlying falls below their strike, so large put OI at a strike suggests many sellers expect that level to hold. Likewise, large call OI suggests sellers expect the market to stay below that strike.
Watching levels shift
Levels move during the day as writers add or cut positions. Fresh put writing at a higher strike can shift support up (bullish), and fresh call writing at a lower strike can shift resistance down (bearish).
AOC shows the server-computed resistance (CE R) and support (PE S) in the chain header, draws nearby support and resistance lines on the chart, and labels intraday shifts with the time of the change: SFT in red when the level moves lower, SFB in green when it moves higher.
