Module Breakdown

Gain insights into market makers’ bets with Dealer Directional Open Interest. This tool elucidates whether market makers are net long or short in various contracts, which can significantly influence market trends. By analyzing the aggregate positions of dealers, you can infer potential resistance or support levels and adjust your strategies accordingly.

Dealer Directional Open Interest (DDOI) is a key concept in options trading that provides insights into the market positioning of options dealers. DDOI quantifies the net position of options contracts held by dealers, indicating their overall market bias. This metric is derived by analyzing the direction (long or short) of all option contracts held by dealers. A positive DDOI implies that dealers are predominantly long on the options, suggesting a bullish market outlook. Conversely, a negative DDOI indicates that dealers are primarily short on options, reflecting a bearish sentiment. This information is invaluable as it helps traders and investors understand the underlying trends and sentiments in the options market.

Understanding DDOI is particularly beneficial in markets with significant options activity. It offers insights not just into the current state of market sentiment but also into potential future movements. For example, if dealers are accumulating a large number of long positions (positive DDOI), it could indicate an expectation of upward price movement in the underlying asset. Traders can use this information to align their strategies with the prevailing market trend. Similarly, a negative DDOI could signal impending price declines, prompting traders to adjust their positions accordingly. Thus, DDOI serves as a valuable indicator for traders and investors, enabling them to make more informed decisions by understanding the dealers’ perspectives in the options market​​.