Volatility Index (VIX)

Volatility Index is a measure of market’s expectation of volatility over the near term. Volatility is often described as the “rate and magnitude of changes in prices” and in finance often referred to as risk. Volatility Index is a measure, of the amount by which an underlying Index is expected to fluctuate, in the near term, (calculated as annualised volatility, denoted in percentage e.g. 20%) based on the order book of the underlying index options.

India VIX is a volatility index based on the Nifty 50 Index Option prices. From the best bid-ask prices of Nifty 50 Options contracts, a volatility figure (%) is calculated which indicates the expected market volatility over the next 30 calendar days.






source:www.nseindia.com

Put Call Ratio

Put Call Ratio is the ratio of the amount of put options traded versus the amount of call options traded.
Put Call Ratio is one of the two indicators directly derived from options trading,the other one is VIX.Put Call Ratio is used by options traders around the world as a contrarian indicator of market sentiments.As a indicator of market sentiment,Put Call Ratio tells you when investors are in a bullish or bearish mood.
Here is a simple formula for calculating Put Call Ratio.

Volume of Put options/Volume of call options

FINAL STAGES OF BULL MARKET

A Bull market starts in a gloom and ends in glory.Charles Dow had pointed out that one way of recognising the final stages of the bull market is when the 'cats and dogs' begin moving up.Cats and dogs in trading parlance mean stocks that are speculative with low intrinsic worth.

EPS - Earning Per Share

EPS is how much a share earns for its company.First you must know how much number of shares a company issued in the market.For example we will assume a company has issued 10 lakh shares in the stock market and the companies net profit for the financial year is Rs 50 lakhs.
Now 10 lakh shares have earned Rs 50 lakhs so one share of the particular company has earned Rs 5 for the year.This is one of the basics of fundamental analysis.

PE Ratio

PE Ratio is Price Earning Ratio.To calculate PE Ratio divide the market price of a share by EPS.For example EPS is Rs 9/share and the share price is Rs 108.
PE Ratio=market price of share/EPS
=108/9
=12
This means that the share price is 12 times to its earnings.PE Ratio differs from country to country and economy to economy..

STOP LOSS ORDER

It takes a man a long time to learn all the lessons of all his mistakes.There are two sides to everything.But there is only one side to the stock market and it is not the bull side or the bear side,but the right side.
My losses have taught me that I must not begin to advance until I am sure.But if I cannot advance I do not move at all.A man should limit his losses when he is wrong.History repeats because of human nature.Every experienced stock trader knows that over trading is his greatest weakness,but he continues to allow this weakness to ruin himself.There must be a cure for this greatest weakness in trading,and that cure is STOP LOSS ORDERS.The weakest point must be overcome and the stop loss order is the cure for trading.