Lesson 3 ✅ Green & Red Candle Theory In Stock Market

Summary

The instructor introduces open interest (OI) and option-chain interpretation, then explains how price and OI together can help distinguish four market-positioning patterns behind green and red candles. The main lesson is to combine chart price action with OI rather than infer positioning from candles alone.

OI and option-chain concepts

• OI is described as the number of open contracts at different option strikes. It rises when positions are opened and falls when they are closed.
• The instructor uses Nifty option-chain data to illustrate call and put OI at individual strikes.
• In the instructor’s interpretation, call writers or sellers generally benefit from a falling or contained market, while put writers or sellers generally benefit from a rising or contained market. “Call writing” and “put writing” are presented as alternative terms for call and put selling.
• The option chain is dynamic: OI can change during the session, so a reading taken at one moment may not remain valid later.
• The instructor recommends combining option-chain data with a price chart rather than relying on the chart alone.

Price and OI framework

Price and OI movement Term used Interpretation in the lesson Price rises, OI rises Long build-up New bullish positions; bullish Price falls, OI rises Short build-up New bearish positions; bearish Price falls, OI falls Long unwinding Long positions are being closed, also described as profit booking; bearish pressure Price rises, OI falls Short covering Short positions are being closed; bullish pressure

The session explains long build-up and long unwinding in more detail. Short build-up and short covering are identified as topics for a later class.

Strike levels and examples

The instructor describes round-number strike prices as psychological levels (PSY levels) that may attract market activity. Examples include Nifty 19,900 and 20,000, and Bank Nifty levels around 44,000–44,500. Bank Nifty 48,000 is also mentioned as a relevant round level.

In a cited Nifty option-chain snapshot, the market is around 19,750:

• At 19,750, the instructor cites call OI of about 238,589 and put OI of about 374,803, interpreting the higher put OI as bullish.
• At 19,800, call OI is cited at about 419,867, compared with put OI of about 244,772. The instructor interprets this as greater call-writer positioning and a potential resistance level.
• At 19,850, call OI is cited at about 334,314, compared with put OI of about 69,639.
• At 19,900, call OI is cited at about 282,487, with much lower put OI. The instructor uses this to illustrate a possible resistance area.

The instructor says the market closed near 19,763 and suggests that the conflicting OI readings around 19,750 and 19,800 could indicate a range between those levels. These figures are examples from a particular snapshot, not enduring levels.

A move briefly above 19,850 that fails to hold is described as a possible fake breakout. The stated rule is that crossing a level is not enough: price should also sustain above it.

Resources and instruments mentioned

• Instruments: Nifty and Bank Nifty options; call (CE) and put (PE) options; shares or equities; bonds.
• Companies and stocks: ITC, Tata, Adani, Reliance, Pidilite/Fevicol, and Zomato.
• Market-data and trading tools: NSE’s official option chain, OI Pulse, Opstra/Obstra, Dhan, Zerodha, and Sensibull (rendered as “Sensible” in the subtitles). The instructor describes some as paid and others as free or accessible through linked accounts.

Cautions and disclosures

• The instructor repeatedly presents OI as showing sellers’ positioning and treats higher call or put OI as evidence of sellers’ market views. This is an oversimplification: every options contract has both a buyer and a seller, and OI alone does not reveal which side initiated the position or reliably establish market direction.
• The subtitles include a statement equating volume with OI for simplicity. Volume and open interest are different measures: volume counts contracts traded during a period, while OI counts outstanding contracts.
• The instructor makes strong claims about the reliability of combining charts and OI, but the lesson does not provide performance evidence or a risk-management framework.
• No formal “not financial advice” disclaimer is heard in the subtitles. The session also promotes a paid or live options course and mentions referral links.

Presenters and source

• Presenter: The instructor is not named in the subtitles.
• Source: Dil Se Traders, Lesson 3: Green & Red Candle Theory In Stock Market.