How To Read Open Interest, Put Call Ratio, And Volatility

1 Apr 2008

Open Interest is an important indicator that can help one in ascertaining the flow of funds.

If the open interest rises with rise in price it is a bullish indication.
If open interest rises and prices fall it is a bearish indication.
If open interest falls and prices rise it is a sign of short covering by bears.
If open interest falls and prices also fall it is a sign of profit booking by bulls or liquidation of positions.

Put Call Ratio is an important indicator that can help one in gauging the future direction of the market.

If the Put call ratio rises then there is hope of higher prices in the near future.
If the Put call ratio falls it is a sign of weakness in the market.
Generally put call ratio is read along with volatility.
PCR can be calculated for Open Interest/positions or no of puts and calls traded.
Historically – 1.06 -2.00 is bullish. Above 2 and below 1.06 one may expect a sharp fall.

There are two types of Volatility – historic volatility and implied volatility. Historic volatility is based on historic prices of the futures and implied volatility is based on the volatility calculated from options i.e. volatility implied by premiums in options.

If volatility rises and PCR falls, it has bearish implications.
If volatility falls and PCR rises, it has bullish implications.

Tags: Investing

66 Responses to How To Read Open Interest, Put Call Ratio, And Volatility

DR.NITIN.BHUJBAL.

March 25th, 2009 at 09:36

GOOD WORK MAHESH SHORT AND SWEET EXPLAINATION OF BASIC THINGS IN MARKET ,I M INTRESTED IN READING MORE ON PCR, VOLATILITY & RELATION OF OI TO VOLUMES ,IF ANY LINK OR BOOKS FOR THE SAME PLEASE MAIL ME. THANKS.

Mahesh Mohan

March 25th, 2009 at 09:42

I’ve forwarded a power point presentation to your email. Please have a look.

Thanks!

gerald A

May 8th, 2009 at 12:30

a good article mr mahesh but how do you calculate the open interest put call ratio.

I hope you will clarify the same with an example thanks

my email address is gerald18@rediffmail.com

lok

May 30th, 2009 at 20:31

i too would like to have the ppt presentation on PCR. Kindly send it across. many thanks.

my email is loke12k@gmail.com

angsuman bhattacharya

June 13th, 2009 at 21:22

i want to now about open interest and pricing relationship and how do i come to a point of decision to purchase or sell a stock. also i want to know the relationship betweel future and option. for example one told me that when large no. of put option is there in a stock the price should go up because of hedging. that means in the future markets the stock must be purchased. is it so? pl. show me the light if u can.

June 13th, 2009 at 21:27

Hey angsuman,

But I am not that good in F&O. I suggest you to ask your broker. That question can be answered only by someone who are active in F&O.

- Mahesh

Ravi

June 30th, 2009 at 15:41

Clean work dude….I also interested in same articles.
Appreciate if could send me.

God Bless

-Ravi

sudhir

July 8th, 2009 at 20:29

Very good explation of basic thing but for me it is very short.

Can you please send me the ppt for the same.

For that I am very thankful to you.

-sudhir

Wei Lin

August 15th, 2009 at 19:52

I liked your article very much. Could you email me the powerpoint on Open Interest, Put Call Ratio, And Volatility and related topics? Thanks.

August 15th, 2009 at 19:53

It’s on the way!

PatrickTiew

September 5th, 2009 at 06:06

appreciate much if u would spend a little time to email me too!! patricktiew@gmail.com good day!

bob

September 15th, 2009 at 02:03

Good article, would like to see the ppt as well

Nazreen M

September 16th, 2009 at 14:53

Hi Mahesh,

I am little confused between open interest based ratio and trade volume. If we consider the trade volume to conclude on the market sentiment, then we are considering a contract, where there is a trader taking an opposite position which nullifies the effect. As for open interest, when there is nobody to close down the position, wont that confirm the fact that the market sentiments are shared by most people equally?

Kindly mail me the ppt too..
Thanks in advance!

Brahmaiah

September 27th, 2009 at 01:14

sir, i am very much impressed by this article. please send ppt on pcr to my mail id . thank you si.

venkat

October 1st, 2009 at 21:03

sir your article is very good. please send me the ppt to my mail id.
thank you sir.

KaRtHiK

October 4th, 2009 at 00:47

I liked your article very much. Could you email me the powerpoint on Open Interest, Put Call Ratio, And Volatility and related topics?

By the way Mr. Mahesh How do u calculate PUT CALL RATION AND OPEN INTEREST

PLZ SEND ME THE PPT TO MY MAIL ID

Thanks

October 4th, 2009 at 00:49

Please check your email. It’s sent. Thanks!

naushad

October 9th, 2009 at 01:40

Its OUTSTANDING WORK DEAR. KEEP IT UP.
Could you send me PPT

October 9th, 2009 at 01:42

It’s done Naushad! Thanks!

Mahesh Balki

October 24th, 2009 at 18:55

Could u please send me more detials on PUT call buying and how to read the open interest call.

Thanks
mahesh

Shri

October 26th, 2009 at 23:09

Please send me the PP presentation link too

A Patel

October 27th, 2009 at 01:35

Great explanation. Thank you very much.

Could you please email me the presentation link too.

raman aggarwal

November 2nd, 2009 at 20:47

hi mahesh ji
very useful article for me. pls. tell me high pcr and low pcr. and send me ur great work on pcr ppt copy on my mail asap. thanks

sankar

November 15th, 2009 at 22:13

can u please send ppt to me also

November 15th, 2009 at 22:14

my mail id is complexno@yahoo.com. thank u in anticipation.

Robert Griebel

November 26th, 2009 at 19:20

Where can I get weekly historical spx index data as well as weekly spx options open interest and volume going all the way back to their start in the nineties? To make this task harder I want to find a source much cheaper than the CBOE!

December 15th, 2009 at 14:38

dear sir

kindly send me the power point presentation which you have sent others thanks

looking forward to receive it

gerald a

Pruthiv

December 29th, 2009 at 16:14

Nice work Mahesh …

if you have any other things for options or anything which can help us to define levels then please share with me.

Also invited to share the books name as well.

Thanks & regards
Pruthiv

Pratik Thakkae

December 30th, 2009 at 16:03

PLz send me some stuff on PCR,OI and Volatility.

Sanjay

March 10th, 2010 at 18:40

Sir,
Very good article. Can u pl. send me too the ppt. presentation on Open Interest.Also give any web site from where I can have more stuffs. Thanx.
Sanjay

rajesh

March 28th, 2010 at 13:42

wow! easiest way to teach yaar please send me too ppt

John

April 23rd, 2010 at 22:37

Hi, I also think it is a nice short exposition on how to understand the PCR. Would it be possible perhaps to also send me the PPT on PCR and volatility?

Thanks in Advance,
John

Sham

May 22nd, 2010 at 19:30

Very nice reading, can you please send me the article also, your explanation is very clear and easy to understand

Amol

June 3rd, 2010 at 00:53

Thanks in Advance,
Amol Kulkarni

nitish

June 6th, 2010 at 06:50

pcr & open int how can use in stock market

vinod kumar.v

June 16th, 2010 at 15:56

can you please send me the ppts on open interest……

sri

July 30th, 2010 at 09:25

hi mahesh

late visitor ..on google search found your site…
wld like to have ppt presentation ..can u send me a copy please…
thanks

monil shsh

August 24th, 2010 at 00:48

i m a day trader in cash segment and also call put can u suggest me any book for basic knowledge or any ppt file of trading.

my email id is monil_007@yahoo.com

DHAVAL SANGHVI

October 12th, 2010 at 13:43

,I M INTRESTED IN READING MORE ON PCR, VOLATILITY & RELATION OF OI TO VOLUMES ,IF ANY LINK OR BOOKS FOR THE SAME PLEASE MAIL ME. THANKS.

J Paul Gaskill, Kennesaw Ga USA

October 29th, 2010 at 00:21

Masesh

Please send the PPT presentation Re: PCR and any further info/links available.

Thank YOu

Bishnu Pandey

November 14th, 2010 at 13:30

Thanks a lot for helping and sharing knowledge.

I would also be very much grateful to you if you can send me PPT on PCR.

Anil

November 28th, 2010 at 22:48

good work Mahesh sir short and script… i want to know something more about open interest and pcr. please forward me the ppt and tell me any book where i can get very cleared picture of these.

siva

December 1st, 2010 at 11:26

good work sir,

pls forward me the PPT if possible.
Many thanx in advance

December 1st, 2010 at 11:27

my mail id is shivajidulla@yahoo.com.

pls forward the ppt
thanx

very nice

December 10th, 2010 at 13:56

i also need ppt can you please send me on my id
thank you …
OM SAI RAM

Prasanna

December 30th, 2010 at 00:06

Very interesting article, thanks. Please e-mail the PPT, thanks.

KAPIL

January 23rd, 2011 at 18:32

why dont we calculate calls to put ratio? e.g. cpr

PATEL SHAILESH

February 12th, 2011 at 02:52

Pl send your ppt.

jignesh

February 16th, 2011 at 17:30

hi,mahesh pcr & poen interset how can use in stock market & how calculate pcr & open interset only nifty trade

RAMAR

April 12th, 2011 at 15:54

GREAT……VERY USEFUL AND POWERFUL WORD

RAKESH YADAV

April 23rd, 2011 at 14:21

Dear sir
I read your article and I am impressed. I shall be highly grateful if you can send me your powerpoint presentation on PCR,OI and volatility on my email yadavrakesh1967@gmail.com. Thanking you in anticipation.

April 23rd, 2011 at 16:47

Sir
Thank you very much for the powerpoint presentation sent by you

suchita

April 23rd, 2011 at 19:05

Sir I read your article.it is really very useful.plz send me ppt my email id is shah_shuchita@yahoo.com

Jay

April 30th, 2011 at 04:16

May I please request the powerpoint also? My email is sa02000@gmail.com

Thank you

Ranjan Kar

May 7th, 2011 at 20:19

Respected Sir , I want to more about PCR , Volatility and Open Interest .
Please let me know Links and Books for the Same .

Ranjan Kar .

Amitava

May 18th, 2011 at 13:33

Sir, Can you pls forward me the PPT? I will appreciate if you kindly provide me 1-2 good books or documents where I can get more information on OI, Put-Call.

Thanks
Amitava
asarkar04@yahoo.com

dhiraj

May 24th, 2011 at 20:40

i want to understand volality ie historical & imlied and how to master derivatives trading

raj

July 8th, 2011 at 17:40

dear sir..

very useful article for new nifty traders specially…

pls send me too a copy of ppt on pcr

thank you.

Atirudra Katkar

July 19th, 2011 at 16:53

sir, i am very much impressed by this article. please send ppt on pcr to and volatility to my mail id . thank you si.

jamal

July 21st, 2011 at 02:36

hi
mahesh sir
i am very impressed by your article on put cal ratio.could you please send me the ppt on pcr on my mail jamal21in@gmail.com.pls be kind for me

Ellen

July 26th, 2011 at 22:50

Heckuva good job. I sure aprpeiatce it.

Rachan

September 17th, 2011 at 14:22

Hi! Mahesh, pls send me the PPT on PCR / open interest & VIX , could u also pls send me the link from where can we get these levels on daily basis …..
thanks & regards

Paresh

September 29th, 2011 at 10:34

Many thanks for this article. May I too request for the same ppt. I’ll be grateful if syou can send additional similar inputs. I do not hesitate to share that I have lost considerably due to lack of such knowledge in options trading.

michail

October 1st, 2011 at 15:53

Sir, Very good article.
PLz send me some stuff on PCR,OI and Volatility.
michail2217@mail.ru

harshvardhan

December 3rd, 2011 at 13:19

can anyone please tell me from where i can see the current PCR?
please email me :
harsh.pahel@gmail.com

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How To Read Open Interest, Put Call Ratio, And Volatility

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