1. What is Put Call Ratio?

The Put Call Ratio (PCR) is a popular sentiment indicator that compares the trading volume of put options to call options. It helps investors gauge market sentiment - whether investors are bullish or bearish.

2. How Does the Calculator Work?

The calculator uses the Put Call Ratio formula:

Where:

• Put Volume — Number of put options traded
• Call Volume — Number of call options traded

Explanation: The ratio shows how many puts are traded for each call. Values above 1 indicate more puts than calls (bearish sentiment), while values below 1 indicate more calls than puts (bullish sentiment).

3. Importance of PCR Calculation

Details: PCR is widely used by traders to identify potential market turning points. Extreme high values may indicate oversold conditions, while extreme low values may indicate overbought conditions.

4. Using the Calculator

Tips: Enter put and call volumes (must be positive numbers). Call volume cannot be zero as division by zero is undefined.

5. Frequently Asked Questions (FAQ)

Q1: What is a normal PCR value?
A: Typically around 0.7 for equity options. Values vary by market and security type.

Q2: How is PCR used in trading?
A: Traders watch for extreme values as contrarian indicators - high PCR may signal buying opportunities, low PCR may signal caution.

Q3: Should PCR be used alone?
A: No, it's best combined with other technical and fundamental indicators for better context.

Q4: What time period should be used?
A: Common periods are daily, weekly, or monthly. Some traders also look at moving averages of PCR.

Q5: Are there different types of PCR?
A: Yes, PCR can be calculated using volume or open interest, and can be for specific strikes or the entire options chain.