Premium Distribution
Where capital is concentrated in the options chain
Premium Distribution shows the dollar value of options (notional open interest) at each strike, revealing where institutional capital is concentrated.
What is Premium Distribution?
Premium distribution displays the total notional value of open interest at each strike price, showing where the most capital is at stake in the options market.
Reading the Chart
| Feature | Meaning |
|---|---|
| Tall bars | High capital concentration—key levels |
| Call premium (positive) | Bullish capital or hedging |
| Put premium (negative) | Bearish capital or protection |
| Asymmetry | Directional bias in positioning |
Key Insights
- Premium walls: Strikes with high premium often act as support/resistance
- Premium imbalance: More call premium = bullish bias, more put premium = bearish bias
- Concentration: Institutional focus areas where large positions exist
- Capital at risk: Shows where market makers have the most exposure
Filters
| Filter | Use Case |
|---|---|
| DTE | Near-term for immediate levels, longer for structural positioning |
| Delta | Focus on ATM (0.3-0.7) for most relevant strikes |
| Moneyness | Narrow to strikes near current price |
Use Cases
- Identify key levels: High premium strikes often act as magnets or barriers
- Gauge conviction: Large premium = strong institutional interest
- Spot imbalances: Asymmetric premium reveals directional bias
- Risk assessment: See where the most capital is at stake
Note: Premium distribution shows current positioning. Large premium at a strike doesn’t guarantee price will reach or respect that level.
