Uncovering Untapped Potential: Leveraging AI for Deeper Insights in Derivatives Market Analysis

Business News & Trends
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As I’ve been browsing the web and following developments in fintech, I’ve noticed a fascinating trend where AI is being used for certain tasks in the financial sector—things like demat holding sectorial analysis, calculating ratios, screening for opportunities, and setting price alerts. While these are undoubtedly useful applications, I can’t help but feel that they’re somewhat shallow in comparison to what AI could potentially achieve, especially when it comes to derivative market analysis.

The idea really struck me when I uploaded a simple line chart with multiple data points, and AI provided a surprisingly insightful, subjective commentary on what those data points meant. It’s amazing how well AI can interpret this kind of data and turn it into something more digestible for human users.

This made me wonder—why aren’t we applying similar technology to more complex derivative market charts, like Open Interest bar charts, Change in Open Interest, Implied Volatility (IV) charts, and Multi-Strike charts?

Here’s the concept I’m thinking about:

What if we had an icon next to these charts that allowed AI to automatically generate a subjective analysis of the current positioning of the data points? The key is that the AI wouldn’t even need raw data—imagine a simple screenshot of a bar chart being sent to the AI, which would then analyze it and send back a live analysis based on the data it sees. This could significantly improve the way traders and investors interpret complex charts, making these platforms far more user-friendly and intuitive.

I believe the true potential of AI in fintech is being underutilized right now.

The focus is mostly on the basics—price alerts, screening tools, and the like—but there’s so much more AI can do to provide deeper, more nuanced insights, especially in markets like derivatives.

This isn’t just a “nice to have” feature—it could fundamentally change the way we interact with financial data. We’re at a point where technology is capable of simplifying complex data, and fintech developers have a real opportunity to tap into this potential and bring it to the forefront of their platforms.

I’m encouraging fintech developers to take a closer look at this concept. The market for AI-driven analysis is growing, and I think it’s time we focus on unlocking deeper insights that go beyond the usual basics. Let’s not miss out on the true power of AI in our tools!

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It’s surprising (and honestly a bit disappointing) that we still don’t see AI icons next to these charts yet.

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I just uploaded the above screenshot and requested an analysis.

You don’t need access to the raw data for this.

This bar chart shows Open Interest (OI) Change for Reliance on Monday, 1 September, broken down into Put OI change (green) and Call OI change (red) across different strike prices.

Here’s the analysis:

Current Spot Price:

Reliance is trading at 1353.9 (indicated by the dotted line).
Call OI Build-up (Red Bars):

Very heavy Call OI addition is seen at 1360 strike (around 20L contracts).
Significant Call OI addition also at 1370, 1390, and 1400 strikes.
This indicates strong resistance levels ahead (especially around 1360 & 1400).
Put OI Build-up (Green Bars):

Decent Put OI build-up at 1300, 1320, and 1340 strikes.
This suggests support zones near 1300–1340.
Interpretation:

Since Reliance is trading at 1353.9, the nearest resistance is around 1360 (huge Call writing).
The support zone is between 1340 and 1320 (Put writing).
Option writers are expecting Reliance to remain range-bound between 1320–1360 in the near term.
Sentiment:

Slightly bearish to neutral, because Call OI additions are stronger and higher compared to Put OI additions, suggesting limited upside movement.

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If I remember correctly, Fyers integrated AI into their systems. Don’t know to what extent it works, but that’s a good initiative. I had came across a video where the AI icon is placed on a charting page. A user can ask queries related to charts/scrip or use it as a custom screener.

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Hi @Brishide,

Thank you for sharing this use-case. Not sure what platform you used, but I liked how the interpretation of the chart you uploaded was educative and not merely a recommendation for buy/sell. If you’re an active member of this community, I hope you would be aware that we’re building something in this space.

Would love to reach out to you to understand your workflow better.

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https://private-poc.madefortrade.in/t/how-one-small-idea-became-a-standard-in-the-world-of-options-analysis-in-india/55449

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Dhan is already planning an AI with https://askfuzz.ai. Screener.in did it as well for fundamental analysis.

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