If at all you have a doubt that your stock is going down in its value and you are guessing it right then this is the situation when the put option comes into the picture which is the best way to turn into a profit. With the help of put option, you will have the right, but you cannot get the responsibility of selling or putting the particular stock to any other investor within the assured amount of time span. As taking an advantage to the maximum it can be bet against the stock the put option can be moved up to the larger value greatly if there is a fall in the fundamental stock. However, if your bet is wrong then the other way round is true in such cases you might lose your whole investment.
Why should anybody pay attention to the put call ratio?
The put call ratio is the tool that is popular and is designed specifically for helping the individual investors and to estimate the mood of the market overall. It calculates the ratio in which the number of traded put options is divided by the number of traded call options. As there is an increase in this put call ratio it can be understood easily that investors are planting their money on the put options instead of call options.If the signals of the traded put options increase it means that the investors are either interpreting that the market will be moving lower or they are confining the portfolios in the case of a sell-off.
What is the use of a Nifty option chain?
The Nifty option chain will be listing the prices of all the options that are available for given amount of stock or the index option. By this it will allow you to get the track of all the premium prices, bidding and asking for the price, bidding and asking for the quantity for all the available put options and call option strike prices of the security for the particular period of maturity.
The Nifty option chain will show you all the details of the call options for Nifty which will be expiring for the particular maturity period of time. Each of this option will be having the expiry date, after which that particular option will be worthless. In this Nifty the expiry date is determined beforehand.
For buying the components of the Nifty which is the underlying asset this chain option is known as the call option. It means that when you are buying the call option, then your loss will be defined according to what you have paid for that particular option. So at the end, you cannot lose more amount than the investment that you have made on the transaction.
Put options for Nifty
For Nifty the put options details can also be viewed. It is similar to that of the call option but in the put option, you will be having the right of selling instead of buying. Hence, in the case of put option, you will be benefited from the contract at the time when the price of the fundamental asset goes down since you will behaving the right to sell the option at much higher price.
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