Put call ratio can be used as additional confirmation for taking a trade, moreover it can be found easily on NSE’s website. Before explaining you put call ratio analysis, I will tell you most important fact about options trading it is: “About 95% option contracts expire worthless.” This means most profitable group of option trader is “Option Writers”. Now you will get put call ratio from this NSE’s link, this is updated daily and it’s only for nifty option.
How it is used in Technical Analysis:
Suppose today’s put call ratio is 1.5. Now this fig. is clearly above 1 so put option writing (shorting) is more than call option, in simple words smart people are expecting nifty future will move higher in coming sessions. Now suppose if Put call ratio is 0.8, here it is below 1 so call writing is more than put writing. This is because large traders are betting that nifty future may correct in near term.
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