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Put Call Ratio

Watch here, How to use Put Call Ratio?

What is Put Call Ratio?

Put Call Ratio (PCR) is a financial indicator that shows the ratio of the total number of put options traded to the total number of call options traded. It helps traders assess market sentiment and predict potential price movements.

Features available in Put Call Ratio

  • Put Call Ratio (PCR) is a measure used to assess market sentiment by comparing the number of put options to call options traded on a specific stock or index.
  • It helps traders identify potential opportunities or risks in the market based on the ratio.
  • A high PCR suggests a bearish sentiment, indicating more investors are betting on a stock's decline.
  • A low PCR indicates a bullish sentiment, with more investors expecting the stock to rise.

How to interpret Put Call Ratio?

On the TalkOption website, traders can access a feature that categorizes stocks or indexes as bullish or bearish based on their put-call ratio (PCR). The feature provides detailed information such as the stock/index name, expiry date, call option open interest, put option open interest, and the PCR value. When the PCR is high, indicating a value above 1, it signifies a bearish sentiment as more traders are inclined towards buying put options, which bet on a stock's decline. Conversely, a low PCR, below 1, suggests a bullish sentiment with more traders buying call options, anticipating a stock's rise. For example, traders can select the Bearish tab on the website to view stocks that exhibit bearish sentiment based on the PCR. By choosing the desired expiry date, they can access the stocks' PCR values by selecting the Stocks tab and clicking anywhere on the screen to update the results. The PCR feature on the TalkOption website offers traders valuable insights into market sentiment, enabling them to detect potential trend reversals, make informed trading decisions, and adapt their strategies accordingly. It helps traders stay updated with market dynamics and assists in identifying trading opportunities aligned with the prevailing sentiment.

How to calculate Put Call Ratio?

To calculate the Put Call Ratio (PCR) in the Indian stock market, divide the total open interest of put options by the total open interest of call options for a specific stock or index.