iCharts Discussions

[casper]

[casper]

Hi jsar

according to the nifty option chain, i think it is 5200pe and 5500 ce where most shorts or writing have taken place

so we can expect the range of market to be around 5200-5500 in near term

but according to my anna,vishytns,who is a successful option trader himself,he told me that big boys wont short without a 100 pts head room at least, so as per him, the range of market should be 5400-5300 effectively for today and he warned me saying " check opt chain of Monday after the market closing, if any of the range is breached, viz nifty some how go past any of these levels by closing, then we will have huge covering in option, resulting the an erase of the concerned level which in turns will give us move either to 5620 or towards 5050

[psri]

hi casper,

yr post on 4th feb explaining OI is simply great... keep it up


GS

[psri]

hi Casper,

I am eager to know ur interpretation of PCR as well. can u do that?


GS

[casper]

[casper]

PUT CALL RATIO


put call ratio (pcr) is a tool to get a view of the market sentiment during too bullish or too bearish times, it is derived by dividing total volume of puts by the total volumes of calls (irrespective of their strike price)

so pcr =tot vol of traded put/tot vol of traded calls

now from this formula its clear that pcr will increase with more put buying and will decrease with more call buying

clear?

u know GS, its a contrarian indicator, means it helps us to go against the market sentiments


now let us take a break and chat a while




u know who buys options and who sells them?

option is bought by peoples like me and u and it is sold by professionals and big boys

now let us think, why those good old big boys sells options? they short options to ultimately cover them at cheap,

and we, the fools (some opt buyers are really good traders, i am not talking about them, i am talking about the general public who buys option to get rich overnight due to its high leverage and ultimately these sheeps goes to slaughter house directly!!!!) who consists 90% of option buyers, buy them


as i just mentioned, that almost 90% option buyer faces losses, so it is generally believed that " go against the crowd and win the trade", pcr has its use here!

when pcr goes up dramatically, its evident that peoples are buying puts more and more and when pcr goes down heavily it means the peoples are buying calls heavily, which indicates the the general public is extremely bearish and bullish respectively

since big boys and professionals hardly buys them, so the 90% buyer of options are general peoples, who are generally the fodder of the big boys so whenever we see a sharp rise in pcr, we can conclude that the general opinion is extremely bearish and since mostly the general public goes wrong in the market, so market is nearing its bottom, it will not go down any more, a trend reversal is on card, and when we see a sharp decline in pcr, we can conclude that the general opinion is extremely bullish, so market is likely to face its top now and start going down from here


now, just like OI, PCR is also too subjective as there is no scale to gauge what is extreme pcr, be it high be it low, so we need to track it every day to know if there is any significant movement in pcr or not

again, like OI, it will not help u by giving a buy call or a sell call, but by tracking it u can somewhat gauge the possible top and possible bottom of an otherwise heavily trending market


so this was a snap shot of PCR and its use, if u have any question plz feel free to ask

[jsargunam]

As regards OI, today there are positive changes in ICICI Bank calls 1000(+132,000), 1050(+82,250), 1100(+39,750), 1040(+900), 1020(+7750) and 980(3750). Also there are positive changes in lower level puts 950(+18250), 900(+17500), 980(7750), 940(3750) and negative changes in higher level puts 1000(-1750). How to interpret this information?

[vishytns]

Hi casper,
nicely explained. Could u please start a new thread "A Laymans approach to F&O"? It would be easier to learn f&o concepts in one place.
Thanks for education
vishy
we can discuss about the objectives of the thread, ravi, sherbazz, share ur thoughts

[casper]

[psri]

Dear Casper,

A great way to explain PCR...I was particularly interested in knowing the contrarian theory of PCR. U brought it out nicely... Thanks ... it would have been useful to many...

Regards
GS

[casper]

[casper]

[psri]

Dear Casper,

I have another query....

I see from your posts that most often the big boys, FIIs, the smmart money guys have an upper hand and the millions like us lose our money... Agreed... Now I also see that whenever these FIIs sell, the DIIs buy and vice versa. Obviously, only one could be making money...probably the FIIs.. who know the game better. Then does it mean that DIIs most often lose like us and the money we put in them is a sure loser?

Regards
GS

[casper]

[casper]

an update

the CAG has discovered a scam bigger than 2G scam, its S-band scam, apart from monetary magnitude, the department suspected to be involved in it is department of space and technology which is overseen by the prime minister himself


we may recall that before a few months, when 2G issue took the central stage, the market, fearing a resignation of the prime minister, shed almost 100 points in a single day, at that time, the allegation was against a qualition minister, this time, the head of the government is at the eye of storm!


though i dont want to create panic, but i would like to alert all of my brothers and sisters, specially those who has a plus positions viz long/buy trades open.


in my view, this is the time that we should plan to hedge our holdings by appropriate steps, such as buying nifty or concerned stock's put


thank you