InvestorQ : How to get cues from the PCR and apply to the real market situation?
sarah Leo made post

How to get cues from the PCR and apply to the real market situation?

Answer
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Arusha Ray answered.
2 years ago


The PCR has to be actually interpreted with respect to the real market situation. It is not just the value of the PCR but also the direction of the PCR that matters. If PCR is sharply decreasing when the market is close to the resistance, then it is an indication of aggressive writing of calls and is a bearish indication. On the other hand if the PCR is rising in a higher-top / higher-bottom market, it is an indication that puts are being written at each dip and that is bullish signal. To be more precise, one can also combine this with the IV data and get more precise indications