ADVANCED PCR TRADING #NSE #BSE #Option's

What is the PCR Ratio?

The PCR measures the relative trading volume of put options (bearish bets) to call options (bullish bets) in the market.

It’s calculated as:PCR=Open Interest of Call Options / Open Interest of Put Options​


Interpretation:

PCR > 1: Indicates bearish sentiment. More put options are being traded, suggesting traders are hedging against potential declines or speculating on downward moves.

PCR < 1: Signals bullish sentiment. More call options are traded, indicating traders expect price increases or are hedging short positions.
PCR = 1: Suggests a neutral sentiment where buying and selling pressures are balanced.



Why PCR Matters:

Sentiment Gauge: The PCR reflects market sentiment. Tracking changes helps you gauge optimism or pessimism.

Contrarian Indicator: Extremely high PCR may signal excessive pessimism, potentially leading to reversals.