Support/Resistance (OI Walls)

In options trading, support and resistance levels emerge from concentrated open interest at specific strike prices — often called "OI walls." A large put wall (high put open interest at a strike) acts as support because market makers who sold those puts will buy shares to hedge as the stock approaches that strike, creating buying pressure. Conversely, a large call wall creates resistance through the opposite dynamic: dealers hedge by selling shares as the stock rises toward the call strike.

OI walls are dynamic and change as traders open and close positions. The strongest walls form at round-number strikes (like $100, $150, $200) where open interest naturally concentrates. During options expiration, these levels become even more magnetic as gamma increases and dealers hedge more aggressively. The distance between the major put wall and call wall defines the expected trading range for the near term.

Options Pilot's Sentiment pillar identifies the major put and call walls in its Level 2 analysis, showing the specific strike prices and OI concentration. When the stock is trading between two strong walls, it suggests range-bound behavior that favors selling strategies. When the stock breaks through an OI wall, the resulting dealer hedging can accelerate the move, creating a momentum signal.