One of the oldest contrarian sentiment indicators. Extreme readings often coincide with market turning points.
Above 1.0 = more puts than calls (bearish sentiment, contrarian bullish). Below 0.5 = more calls than puts (bullish sentiment, contrarian bearish). Best used with a 10-day moving average.
Equity PCR: individual stock sentiment (retail-heavy). Index PCR: broad market hedging (institutional). Total PCR: everything combined but noisier.
When everyone is buying puts (fear), the bottom is often near. When everyone is buying calls (greed), the top is often near. Extreme readings are the signal.
Overlay put/call ratios with price data, add SMA smoothing, embed in your analysis. Free to start.
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