How to Use PCR Data Effectively In Intraday Trading
Do you want to gauge the market sentiments? What better indicator than one which shows the sentiments of the people trading it -Put Call Ratio (a.k.a PCR). This video decodes Put Call Ratio from scratch & the right way to interpret Put Call Ratio.
Put Call Ratio = Total Number of Put OI
Total Number of Call OI
Open Interest in Options trading is important from tradability perspective. One needs to choose the most participated option considering highest Open Interest for our option trading strategy. Options Open Interest = Option Buyer + Option Seller, however Options Writers stake is high in the Market because of following reasons:
1. Unknown Loss
2. Limited Profit
3. Margin
4. Negative Reward to Risk
But if still Option Seller writes indicates conviction & well-researched approach so Options OI is analysed from the Seller’s perspective which helps in gauging sentiments. • Call Writers view = Bearish to Neutral (Bears) • Put Writers view = Bullish to Neutral (Bulls)
OI- PCR greater than 1- Indicates more Bulls in the Market are writing Puts.
OI- PCR less than 1- Indicates more Bears in the Market are writing Calls.
PGDM in finance, having 5+ experience in Equity, commodities , forex analysis and trading.
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