Understanding B/Y and OI Graphs

What is a B/Y Graph?

• B/Y (B/Y) Graph: Volume divided by Open Interest (OI)
• Volume: The higher the number of people trading, the higher the volume.
• Open Interest (OI): The number of contracts that remain open in the market.

Graph Analysis

• Graph Spike: When does a spike occur on the graph?
  • A spike will occur if there is a sudden increase in volume with no change in OI.
  • If there is a sharp decrease in OI, the graph will go up.
• Market Movement:
  • Spike in the green line: The market is bullish.
  • Spike in the red line: The market is bearish.
• Blue Line (C - P):
  • Upward in C: The market is bullish.
  • Upward in P: The market is bearish.

Important Terminologies

• Sharp Movements on the Graph: Sharp movements on the graph may predict the market.
• Big Players: Sharp movements can be made by big players.
  • If big players are purchasing, you may purchase as well.

Open Interest (OI) and Market Movement

• Decrease in OI: Call sellers unwind, cut positions.
• Market Becoming Bullish and Bearish:
  • If OI decreases sharply and volume increases, a big spike will appear in the market.
  • Sharp movements for P signal a bearish indication.

In Summary

• B/Y: Pay attention to sharp movements in the graph of volume over open interest.
• Market Trend: The market trend can be understood from whether the blue line goes up or down.