Although the charts are still bullish for almost all indices and key stocks, I observed something interesting in the options data.
I jokingly call this study MRI scan, since this is not something that a chart reveals, and one needs to dig a bit deep to diagnose it.
So what is this MRI Scan? This is the Put Call ratio of individual strike prices for any index or stock PROVIDED the options are liquid for that stock.
Based on my observation over the years, a PCR above 1-1.2 is bullish for that strike price ( level), and a PCR below 0.8-0.9 is bearish for that strike price (level), especially when expiry approaches.
This means that if the PCR for a stock at a certain level is below 0.9, and yet the stock is trading at a price above that level, AND if the PCR for that level does not rise sharply over the next few days (through Put writing and / or Call covering), the stock can fall ..at least to a level where the PCR gives it support (0.9-1.0).
I am giving below MRI scans for some key stocks.
How to study this ? - note current price of a stock , and check PCR at that level and a couple of levels below and above cmp.
This post is not a call to go short at all, but to keep an eye on how the PCRs shape up in coming days.. there are only 12 trading days till expiry in March now.
I jokingly call this study MRI scan, since this is not something that a chart reveals, and one needs to dig a bit deep to diagnose it.
So what is this MRI Scan? This is the Put Call ratio of individual strike prices for any index or stock PROVIDED the options are liquid for that stock.
Based on my observation over the years, a PCR above 1-1.2 is bullish for that strike price ( level), and a PCR below 0.8-0.9 is bearish for that strike price (level), especially when expiry approaches.
This means that if the PCR for a stock at a certain level is below 0.9, and yet the stock is trading at a price above that level, AND if the PCR for that level does not rise sharply over the next few days (through Put writing and / or Call covering), the stock can fall ..at least to a level where the PCR gives it support (0.9-1.0).
I am giving below MRI scans for some key stocks.
How to study this ? - note current price of a stock , and check PCR at that level and a couple of levels below and above cmp.
This post is not a call to go short at all, but to keep an eye on how the PCRs shape up in coming days.. there are only 12 trading days till expiry in March now.
