The put-call ratio of the stock options market on the NSE decreased to 0.13 in December 2007 from 0.15 in January 2007. This reflects that a bullish sentiment has played in the market with buyers outnumbering sellers since January 2007. The put-call ratio is one of the best gauges in these oversold (too bearish) or overbought (too bullish) zones. The put-call ratio decreased from 0.15 in January to 0.13 in December after reaching its highest of 0.20 in March 2007.
A derivatives analyst said, ?Sentiment has been positive over the period and it is resulting into lower put-call ratio.? The volume of call options have decreased from 98.86 crore in January to 64.53 crore in March, thereafter reaching a higher level of 217.57 crore in October and declined to 131.08 crore in December. Call option is an agreement that gives an investor the right (but not the obligation) to buy a stock, bond, commodity, or other instrument at a specified price within a specific time period. On the other hand, volume of put options also decreased from 15.16 crore during January to 13.16 crore during March, increased thereafter to 30.16 crore in October and finally reached a lower level of 16.95 crore in December.
Here the buyer have the right but not the obligation to sell the underlying security at a pre-determined price (called the strike or exercise price) on or before a particular date (expiry date). Similarly in terms of value, call options showed a steady decline from Rs 16,704 crore during January to Rs 9,530 crore during March, increased thereafter to Rs 47,981 crore in October and finally declined to Rs 27,303 crore in December. On the other hand , the value of put options showed a different trend. The total value decreased from Rs 2,697 crore in January to Rs 2,576 crore in March, increased thereafter to Rs 6,347 crore in October and finally reached reached a level of Rs 3,059 crore in December. Top five companies in terms of call options in December 2007 are Reliance Industries (Rs 3,035 crore), Reliance Petroleum (Rs 2,282 crore), Reliance Natural Resources (Rs 2,184 crore), Reliance Energy (Rs 1,558 crore) and IFCI (Rs 1,236 crore).
Similarly in terms of value of put options, the top five were Reliance Industries (Rs 464 crore), Reliance Natural Resources (Rs 309 crore), Reliance Petroleum (Rs 206 crore), IFCI ( Rs 193 crore) and Tata Steel (Rs 155 crore).
