In finance the put/call ratio (or put-call ratio, PCR) is a technical indicator demonstrating investor sentiment.[1] The ratio represents a proportion between all the put options and all the call options purchased on any given day. The put/call ratio can be calculated for any individual stock, as well as for any index, or can be aggregated.[2]

Readings

Generally, a lower reading (~0.6) of the ratio reflects a bullish sentiment among investors as they buy more calls, anticipating an uptrend. Conversely, a higher reading (~1.02) of the ratio indicates a bearish sentiment in the market. However, the ratio is considered to be a contrarian indicator, so that an extreme reading above 1.0 is actually a bullish signal and vice versa.[2]

The lowest level of the index was 0.39x, set in March 2000 at the peak of the dot-com bubble.[2]

See also

References

  1. ↑ Put–Call Ratio
  2. 1 2 3 Ponciano, Jonathan (12 February 2021). "Is The Stock Market About To Crash?". Forbes. Retrieved 14 February 2021.
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