PCR in trading

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The Put-Call Ratio (PCR) is a popular technical indicator used by investors to assess market sentiment. It is calculated by dividing the volume or open interest of put options by call options over a specific time period. A higher PCR suggests bearish sentiment, while a lower PCR indicates bullish sentiment.

A PCR at one (=1) suggests that investors are purchasing the same amount of put options as call options and signals a neutral trend going forward. No PCR is considered ideal, but a PCR below 0.7 is typically viewed as a strong bullish sentiment while a PCR above 1 is typically viewed as a strong bearish sentiment.