There is no fixed number, historical data needs to be compared i.e. Get Live Stock Price, Stock and Share market news, Finance News, Sensex, Nifty Live, Commodity Market, IPO news, economy news, and personal finance news. No such conclusions can not be drawn, interpretation depends on the market situation and historical PCR data of the Index or stock in order to take a contrarian bet What is a bullish put-call ratio? It’s an indicator that’s best made use of during market extremes, traders try to identify periods where a reversal could occur in the markets. Put/Call ratio is a derivative indicator, it looks at option build-up, helping trader gauge whether a recent rise or fall in the markets is excessive and if the time is correct to make a contrarian call. Put Call Ratio - FAQs Why should we pay attention to the put-call ratio? As the ratio is calculated both in terms of open interest and volume, the entire trading behaviour of market participants can be analysed using the Put/call ratio. Being a contrarian indicator, it helps traders not to get trapped with Herd Mentality. Put/call ratio help traders decide the price movement of an underlying security and guides them to place directional bets on the stocks. Put/Call ratio is an important tool used by traders to gauge the overall sentiment of the market. Furthermore, Call volumes are used to indicate the total initiated Call options over that period. Put volumes are the financial market indicator for the total initiated Put option over a specific time frame. PCR (Volume) = Put trading volume/Call trading volume Here, PCR is calculated by dividing the total Put trading volume by the total call trading volume on a specific day PCR (OI) = Put open interest/Call open interestī. PCR is calculated by dividing the current open interest in a Put contract on a specific day by the open Call interest on the very same day. Based on Open Interests of a specific day PCR is calculated by two methods which are as follows:Ī. The interpretation of this ratio differs as per the type of investor. It means option writers are aggressively selling the call option strikes. If put-call ratio decreases during down trending marketīearish indication. It means call writers are building fresh positions, expecting a limited upside or a correction in the market. If put-call ratio decreases while markets testing the resistance levelsīearish Indication. It means the put writers are aggressively writing at dips expecting the uptrend to continue If put-call ratio increases as minor dips getting bought in during an up trending marketīullish Indication.
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