The above strategy is a detailed daily snapshot of the CME Striker levels for Open Interest and Gamma. I use these levels to identify turning points in the market based on institutional information.
Here are five compelling reasons to use CME options open interest levels for 0DTE (zero days to expiration) options on futures:
Real-Time Market Sentiment: Open interest on CME options shows where significant positions are being placed, indicating key levels that reflect current market sentiment. This data helps you understand the intentions and positioning of other market participants, especially as contracts approach expiration, where shifts in sentiment can influence price movements rapidly.
High-Probability Reversal and Support/Resistance Zones: Open interest levels on 0DTE options often align with major support and resistance areas. As options approach expiration, price tends to gravitate towards these zones where liquidity is highest, making them effective areas to anticipate reversals or consolidation.
Insight into Institutional Activity: Large traders, such as institutions, heavily influence the futures options markets, especially at key levels of open interest. Tracking these levels provides insight into institutional zones of interest, which can often act as magnets for price or barriers that price action respects.
Efficient Risk Management: By knowing high open interest levels, you can set more precise stop-loss and take-profit targets. These levels give you predefined zones where volatility spikes or significant price moves might occur, which is invaluable for reducing unexpected risk.
Enhanced Scalping and Intraday Trading Opportunities: With 0DTE options, intraday traders can use open interest levels to identify areas where price is likely to react quickly, given the concentration of open interest and impending expiry. This provides enhanced opportunities for scalping, as price fluctuations tend to be more pronounced near these levels.