The PutCall graph – finding the option strike tipping point

The PutCall data at various strikes if seen as bar graphs ( especially the ‘change’ data) can give a birds-eye view of how the open interest is building up across Put/Calls at various strikes / expirys and where the buy-sell pressure should take place at which tipping point .

all explained in our one-pic selfies –>






markets look to sustain now & can rise from here as the putcall ratio seems to be turning up again ! 🙂

Magic of the PCR (putcall-ratio)

the magic of PCR

The Put-Call ratio (PCR-OI) has a very simple definition

PCR = Open Interest of ALL Puts
           Open Interest of ALL Calls

Albeit its simplicity, it is a very powerful indicator, as it actually gives a sense of where the market is heavy –> on the buy or sell side.

Remember we use the PCR of OI (open int.)  and NOT volume.

Since OI by its nature itself is cumulative, (i.e. builds up over trading sessions) and has the inherent property of quantifying positions being ‘open’ i.e. how much money is at stake.

So, any pressure from either bulls or bears can take the market in their direction.
It is just that who has the upper hand & takes the lead, and of which we can get a sense of understanding through the magic of PCR 🙂

My observations are highlighted in the picture below.

the magic of PCR
the magic of PCR

NOTE: Like any other indicator, this is not to be seen in isolation, but used as a confirmation along with other parameters to confirm any view on the market.

Today on 18 Sep 2014, Markets again went up almost 2%.. but just see what was happening in PCR ( a U-turn) a day before from 16th to 17th sep. which is generally a signal of trend reversal in the making –>