How To Make Sure Profits With NSE Option Chain And 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 a 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.

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:
NSE Option Chain
Now there are two ways of calculating the Nifty Put Call Ratio.

Case No. 1 Sum of total put option OI divided by 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 sum of total put option volume. This is a less used option to calculate the PCR.

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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 are 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.

Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of on 2008. He follows Indian and world stock markets closely.

Categories: Trading Strategy

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18 replies

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

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

  3. 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

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

    • PCR is not calculated for a particular strike price. Rather, PCR is for a scrip. PCR levels for a scrip decides whether it is overbought or oversold.

      • 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 it’s a good question. PCR is an indication of the market being overbought or oversold. Three options, buy at the current market price or wait for a dip. If you wait for a dip chance is there that you can miss the move sometimes. The third option is to use some trend following indicator like SuperTrend indicator on the hourly chart to give you a buy signal.

  5. is it intraday or positional trick?

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

  7. 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.

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