Call wall vs Put wall

A "call wall" and a "put wall" are concepts from the options trading world, and they refer to significant concentrations of open interest at specific strike prices for call and put options, respectively. These concentrations can act as psychological or technical levels of support or resistance for the underlying asset's price movement.

1. Call Wall:

   • Definition: A call wall refers to a large concentration of open interest at a specific strike price for call options on an underlying asset.

   • Effect on Price: As the underlying asset's price approaches the call wall's strike price, it can create a level of resistance. The rationale is that option sellers (who are short the calls) might sell the underlying asset to hedge their positions as the price approaches the call wall. This selling pressure can prevent the asset's price from rising further or might slow its ascent.

2. Put Wall:

   • Definition: A put wall refers to a significant concentration of open interest at a specific strike price for put options on an underlying asset.

   • Effect on Price: As the underlying asset's price approaches the put wall's strike price, it can act as a level of support. This is because option sellers (who are short the puts) may buy the underlying asset to hedge their positions as the price approaches the put wall. This buying pressure can help support the asset's price or slow its descent.

Difference between Call Wall and Put Wall:

• Direction of Impact:

  • A call wall generally acts as a resistance level for the underlying asset since it may hinder the price from rising further.

  • A put wall typically acts as a support level, potentially preventing the asset's price from dropping further.

• Hedging Activity:

  • Near a call wall, option sellers might sell the underlying asset to hedge, exerting downward pressure on the price.

  • Near a put wall, option sellers might buy the underlying asset to hedge, exerting upward pressure on the price.

• Option Type:

  • A call wall pertains to call options, which give holders the right to buy the underlying asset.

  • A put wall pertains to put options, which give holders the right to sell the underlying asset.

It's important to note that while these "walls" can provide insights into potential price behaviors, they are not guarantees. The price of the underlying asset is influenced by various factors, including other technical indicators, market sentiment, and fundamental events.