Put Call Ratio: Meaning, Use & Calculation

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Put Call Ratio
The Put Call Ratio (PCR) is a market sentiment
indicator that compares the number of put options
to call options traded on a specific asset.
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High PCR
A high PCR indicates more pessimism in the
market, as investors are buying more put options,
which profit from a decline in the underlying
asset.
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Low PCR
A low PCR suggests that investors are more
optimistic, as they are buying more call options,
which profit from an increase in the underlying
asset.
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PCR Use
The PCR can be used to gauge market sentiment and
potentially identify overbought or oversold
conditions, but it is not a foolproof predictor
of market direction.
PCR Summary
The Put Call Ratio is a simple yet powerful
indicator of market sentiment, providing insights
into investor psychology and potential market
direction.