Option - Put/Call Ratio (PCR) indicator

In our quest to update our knowledge in stock market trading & in turn to maximize our profits, we will study yet another tool to gauge the future trend.

After understanding Open Interest(OI), it’s the turn of Put/Call Ratio indicator.

Often Options are used by large players to hedge their positions & small investors used them to for their Low Risk High Return principles. Some of the experience trades use different strategies using options; like straddle, strangle for arbitrage returns. Ironically, on records 90% of options expire in loss. Well, is it because of the same principle for which small investors invest in it – low risk or because of the human tendency of “UMEED PE DUNIYA KAYAM HAI”. There are more psychological reason then technical for it which are out of the scope of this article & can be discussed some times ahead.

Options; apart from other reason; can be watched as a very effective predictive tool for the market trend.
This PCR indicator serves as a contrarians tool for market direction. PCR is basically an ratio of total number of PUT options traded against total number of CALL options per day basis. Higher ratio indicates more PUT options traded than CALL & vice versa.

As mentioned earlier, it’s a contrarian’s tool; so when the ratio is highest it’s the time to start bottom fishing & when the ratio is lowest its better to cash in on your profits.

Observe the PCR line & Nifty on a same scope & you will be amazed by the predictive power of this indicator.

As always, it goes without saying that other indicators need to be observed along with PCR for further confirmation & proper timing. Initiating action without proper understanding of Options & other indicators can lead to wrong trading decisions.

Please go through Disclaimer on this blog.

Teledata - good Risk/ Reward Ratio

Teledata Info had a sharp run up from Rs.10 to Rs.96/- & then it was in consolidation mode between 50 - 70 levels. Now there seems to be a good Fibonacci support around 58 which for last few days have hold well. More over there is a good support right below it around 52 where stock has made double bottom. Break above 73 can take stock to 81+.
Strict Stop loss of 51 is must as fundamentals of Teledata are still debated in market circles. We necessarily not subscribe to market ideas about the fundamentals of stock & above are the technical perspective.




Readers can draw their own conclusion about the promise and potential.


Please go through Disclaimer on this blog.

Disclosure: I may have position in above said stocks for myself/ family members / friends.

3I Infotech - Good Upside Possible

3i-Infotech, the fourth largest Indian software company has largely focused its attention on the domestic market.
3i has rather low presence in the US market which in current scenario is been proved to be boon in disguise as it is not highly vulnerable to rupee appreciation.
It generates revenues from India, Europe, US , Middle East and Africa & has more concentration in the Indian market. The domestic revenue of the company is almost 35% of its total revenues.
3i also have diversified products in the kitty for various sectors across the globe.








Technical Analysis:

There is a positive divergence between price & MACD as shown in chart below, which indicates underlying bullishness in the script.

Readers can draw their own conclusion about the promise and potential.


Please go through Disclaimer on this blog.

Disclosure: I may have position in above said stocks for myself/ family members / friends.