finance Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of f ...

the put/call ratio (or put-call ratio, PCR) is a

technical indicator In technical analysis in finance, a technical indicator is a mathematical calculation based on historic price, volume, or (in the case of futures contracts) open interest information that aims to forecast financial market direction. Technica ...

demonstrating investor sentiment. The ratio represents a proportion between all the

put option In finance, a put or put option is a derivative instrument in financial markets that gives the holder (i.e. the purchaser of the put option) the right to sell an asset (the ''underlying''), at a specified price (the ''strike''), by (or at) a ...

s and all the

call option In finance, a call option, often simply labeled a "call", is a contract between the buyer and the seller of the call option to exchange a security at a set price. The buyer of the call option has the right, but not the obligation, to buy ...

s 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.

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.The Put/Call Ratio: A Useful Indicator of Sentiment
/ref> The lowest level of the index was 0.39x, set in March 2000 at the peak of the

dot-com bubble The dot-com bubble (dot-com boom, tech bubble, or the Internet bubble) was a stock market bubble in the late 1990s, a period of massive growth in the use and adoption of the Internet. Between 1995 and its peak in March 2000, the Nasdaq Comp ...

References

External links

The CBOE Put-Call Ratio: A Useful Greed & Fear Contrarian Indicator? – A Statistical AnalysisCBOE Volume & Put/Call RatiosOptions offer traders lots of… well, options!Historical Put/Call Ratio by Stock
{{DEFAULTSORT:Put call ratio Technical indicators Options (finance) Financial ratios

Readings

See also

References

External links