Put/call ratio

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. Ponciano, Jonathan (12 February 2021). "Is The Stock Market About To Crash?". Forbes. Retrieved 14 February 2021.
This article is issued from Wikipedia. The text is licensed under Creative Commons - Attribution - Sharealike. Additional terms may apply for the media files.