Article Executive Summary:Uncover how Put-Call Ratio (PCR), Open Interest (OI) buildup, and Max Pain points combine to reveal major institutional support and resistance zones.
Decoding Put-Call Ratio (PCR)
The Put-Call Ratio (PCR) measures total Put Open Interest divided by Call Open Interest. In option writing, institutions are primarily sellers (writers) rather than buyers due to capital requirements.
- PCR > 1.2: Bullish sentiment. Put writers are heavily defending lower strike prices.
- PCR < 0.7: Bearish sentiment. Call writers are aggressively capping upside potential.
Spotting OI Buildup vs Unwinding
By analyzing live Open Interest changes alongside spot price movements, option traders can classify market regime:
- Price UP + OI UP = Long Buildup (Strong Bullish)
- Price DOWN + OI UP = Short Buildup (Strong Bearish)
- Price UP + OI DOWN = Short Covering (Fast Rally)
- Price DOWN + OI DOWN = Long Unwinding (Fast Sell-off)
Tags:#Options Chain#PCR#Open Interest#Bank Nifty#Derivatives
