PCR in Trading

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However, no PCR can be considered ideal, but usually, a PCR below 0.7 is typically viewed as a strong bullish sentiment while a PCR more than 1 is usually considered as a strong bearish sentiment.

A high PCR indicates a bearish sentiment, as more traders buy puts, expecting the market to decline. Similarly, a low PCR suggests a bullish sentiment, with more traders buying calls in anticipation of a market rise.

PCR > 1: When the PCR is greater than 1, it suggests that there are more open put contracts than call contracts, indicating a bearish sentiment. Traders and investors anticipate the underlying asset's price to fall. PCR = 1: When the PCR is close to 1, it implies a balanced sentiment in the market.