How to Use Put Call Ratio in Your Trading Strategy

Abhifinowings12 Jul, 2025Finance

The Put Call Ratio (PCR Ratio) or Call Put ratio is one of the important ratios that analyzes options markets to measure investors' sentiment and predict future pricing of the stocks. Observing the volume of put options compared to call options allows traders to ascertain whether the market is bullish or bearish. 1. Contrarian Approach: A subset of traders may use extreme readings (over 1.5) bearish readings to take positions expecting a market rally. 2. Trend Confirmation: Growing PCRs could confirm the existing down trend while falling PCRs confirm the up trend. The Put Call Ratio (PCR Ratio) is a powerful indicator that helps traders read market sentiment and anticipate trends. However, it works best when used alongside other technical tools and sound risk management strategies. By understanding and applying the put call ratio effectively, you can make smarter and more confident trading decisions.