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How To Make Sure Profits With NSE Option Chain And Nifty Put Call Ratio?

Nifty Put Call Ratio

In this article, I will show you almost a holy grail to trade NSE Option Chain data. You can trade this strategy with above 85%-90% success rate positionally. Today I will discuss how to generate positional option calls using a simple trick called Put Call Ratio and I will show you the usage of Nifty Put Call Ratio.

Now, What Is PCR?

The formula of PCR is the total number of put volume divided by a total number of call volumes. You can see the live NSE option chain for Nifty at NSE India site to calculate PCR yourself. Go to THIs LINK to see live Nifty NSE Options Chain.

NSE Option Chain

This will open the Nifty NSE Option Chain. In the options chain, we are only concerned about 2 columns. The call option open interest and the call option volume and the put option open interest and the put option volume. Check the image below:

Now there are two ways of calculating the Nifty Put Call Ratio.

Case No. 1

Sum of total put option OI divided by the sum of total call option OI. This is the most widely used model. You can see auto calculated live Nifty put call ratio HERE. Also, you can see live Bank Nifty PCR HERE.

Case No. 2

Sum of total put option volume divided by the sum of total put option volume. This is a less used option to calculate the PCR.

How To Trade Using PCR?

PCR close to or above 1.3 denotes that there much more puts in the system than calls. When there is huge put standing in market it means almost all traders are with puts. No one to buy new puts so its almost a market bottom. Start buying calls now.

Similarly, PCR close to OR below 0.65 denotes that there are much more calls in the system than puts and its time for a downside reversal. However, in extreme cases PCR can be much higher than 1.3 and much lower than 0.65 also.

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Hi Sir, One doubt if PCR is >= 1.3 we can use the nifty dips to buy right?? Please reply

Yes sir i am observed in bank nifty i am getting PCR 1.90 so it is blasting. But in Nifty it is coming close like 1.25 so we can use this strategy right??

Hi sir, For stock derivatives also this same level applicable 1.30 and 0.65??

sir one doubt this OI is based on nifty futures or nifty spot price. For example if 10200 pe is having more OI we have to check nifty spot price or future price for support?? please explain

Ajit

what does PCR for individual strike prices reflect and how we can come to conculsions based on that for trading purpose?

Ajit

For example (all are dummy figures):- Suppose Nifty PCR is @ 1.3..and now suppose spot price of Nifty is around 10300. And suppose @ 10200 strike price, put open interest is higher than call open interest, then will 10200 act as support price and should we buy @ 10300 or wait for correction towards 10200 and take long position?

Basically I want to ask if @ particular strike price Put OI is greater than Call OI will it act as support & when Call OI greater than Put OI will it act as resistance?

Ajit

Okay sir, another query, what is the criteria for stop loss and when to take an exit within this strategy?

SK

is it intraday or positional trick?

Dinesh

For calculating PCR, you are using Volume data which is less used. Can you please confirm which one to use OI or Volume?

saravanan

Sir, Thanks for guiding the options traders who are unaware of the secrets of the game. Your articles can not be valued in monetary terms as a persons earnings,who learnt the secrets, are unlimited.

RAMAN KUMAR SAHU

SIR if PCR volume is 0.65 and PCR OI is 1.30 than what will be probability of upside or downside way

Pritam Ahire

Sir meand if it cross 1.20 means we can buy calls and if it goes below 0.65 we can buy puts right?