Why is the Put-Call Ratio (PCR) important for traders ?
Hello friends lets understand Why is the Put-Call Ratio (PCR) important for traders ? The PCR acts as a contrarian indicator for traders. When the ratio reaches extreme levels, traders often see it as a buying or selling opportunity, predicting that the market sentiment may soon reverse. Now what does a high or low Put-Call Ratio (PCR) signify in the market? A high PCR suggests that option writers are more inclined to write puts, indicating bullish market sentiment. Conversely, a low PCR shows bearish sentiment, as traders prefer to write calls, signalling caution about potential market declines. Why Option Writers? Because Option Writers are generally market players with deeper pockets compared to option buyers. live example of 24/01/2025 Why should a trader bother about PCR and Nifty Open Interest? The put-call ratio (PCR) is primarily used by traders as a contrarian indicator when the values reach relatively extreme levels. This means that many traders will cons...