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  #11 (permalink)  
Old 14-03-2009, 11:15 AM
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alex,

Gr8 post,if you would have started teaching me earlier then by now these GREEKS would have become atleast Hindi if not Bengali.Thks.

Asish
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Old 14-03-2009, 11:34 AM
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Originally Posted by uasish View Post
alex,

Gr8 post,if you would have started teaching me earlier then by now these GREEKS would have become atleast Hindi if not Bengali.Thks.

Asish

ahh asish da now u embarrassing me, u r our guru, glad that i am returning sumthing as if gurudakshina
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Old 14-03-2009, 02:19 PM
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Originally Posted by AW10 View Post
Thanks Alex for starting this thread. Looking forward for some classy stuff from a smart money tracker like you.

Just to add 2 cents from my side.. (these are my views and experience)

1) Calls are written at Resistence level.. (with the reasoning that resistence will hold, the price will stay below this level and finally the option will expire worthless).
If nothing then atleast mkt will loose 1 or 2 days while attempting to break a resistence level.
More calls written at a level, indicates stronger resistence level as percieved by mkt players.
2) Same logic applies to puts and support level.
3) If we extend above 2 points in terms of PCR, then if PCR > 1 at a particular strike, means more puts written then calls, i.e. a support level for mkt. Bigger the PCR number, stronger the support.
If PCR < 1 for a strike = Resistence level for the mkt.
4) As mkt approches the particular price level and sentiments indicate that the level might be broken, then PCR starts shifting to next level.
5) Some people try to calculate PCR for a strike price by taking near and far month contracts for same strike and adding the numbers. The strategy like Calender spread (selling front month option and buying far month option of same strike) will give wrong impression if you look at only near month. But if u take 2 months view, the PCR will be more balanced. This approach also gives smooth rollover of PCR which is affected due to of option expiry.

Happy Trading


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  #14 (permalink)  
Old 14-03-2009, 02:47 PM
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Originally Posted by jovi View Post
increase in put open interest is bullish
increase in call open interest is bearish

INCREASE IN PUT OPEN INT. DOES NOT MEAN BEARISH AS MORE PEOPLE R BUYING PUT
INCREASE IN CALL OPEN INT. DOES NOT MEAN BULLISH???

option writters are more smart guys [as the thread name indicate, but dont count me] than option buyers. Buyers most probably lose money 10 months out of 12 months.
Rest 2 months they are winner but writer knows how to protect themselves.
Right now in india most trader lose money in options because of

1) First and foremost they attract towards buying cheep OTM options. They dont evaluate just a simple fact that probabilty of getting profit is higher in ATM options than OTM options.

2) They really cant evaluate the risk-reward ratio with the passage of time. [ option geeks ki to baat hi chhod do]

3) If they passed above two points then mostly trapped by wrong directional assessment:bounce:

[ Let me share my most recent experience: In last week( or before that, not remeber now) i wrote 2600PE March @ 109 when NF was hovering around 2630 levels. With some passage of 2-3 days NF falls to levels of 2560 levels, but still 2600PE was trading around 100 rs. In evening i met some clients of my local brokers, and they told they had bought 2600PE @ 106 ( unfortunately they qulified all three points i mentioned above) but getting profit from that is measurable event, they said --" are yaar nifty jab 2640 thi tab 109 mein kharida, aur ab nifty 70-80 point neech hai to bhi 100 rs hi mil rahe hain ..." I didnt answer but smiled a littile.]
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Old 14-03-2009, 03:58 PM
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In simple terms to buy a call or put, it is worth when 15th or after in a month according to bullish and bearish stance respectively and writhing a call or put at begining of a month will be worthwile.IMO.
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Old 15-03-2009, 01:50 PM
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PCR ratio is construed as contrarian indicator as traders use it to take the contra positions.This can be used along with other overbought/oversold indicators like Wider's RSI and able to give a clue of possible reversal.
Though the interpretation of PCR(OI) and PCR(vol) is different but the results conform.

PCR(vol): when this ratio is higher, this means more puts have been traded in comparision to calls.When PCR crosses well above average value (over a time period we are considering), a reversal is expected.So bullish trend lies ahead.


Similarly vice versa.

PCR(OI):When this ratio is higher this means more Puts have been written, this means flow of newer money indicates bullishness ahead.
similarly vice versa.
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Last edited by mahesh; 15-03-2009 at 01:57 PM. Reason: typo
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Old 17-03-2009, 03:10 AM
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just a observation, if u dont know what is open interest is ( in single word 'commitment of a trader' ) plz go through czar's thread on open interest.
what i found is todays oipcr was 1.80 at market close and when i refresh data sfter 9 o/clock it shows 3.10 am.
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Old 17-03-2009, 10:15 AM
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pcr(vol): .91
pcr(oi): 1.62

shows persistence of bullishness till thesr ratio turns unfavourable.
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Old 17-03-2009, 12:48 PM
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pcr vol= .97
pcr oi=1.29
shows some unwinding of put's writen and more put's have been traded.
these ratios indicate-little bearish than earlier.
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Old 17-03-2009, 05:42 PM
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thanks mahesh, plz do keep updating, really appreciate ( my oipcr calculations r bit different hence so the reading, so new members plz dnt get confuse with diff oipcr values )
some time back was speaking with czar on how oi pcr changes at closing hours and after maket close say 8,9 pm ..yesterday my oipcr was 1.89 at 3.30 yesterday then checked after 6 hours oipcr was 1.60, since open interest is nothing but commitment of a trader, on nse trminal it takes time to reveal all option induced info, there must have been call written just before the closing bell
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