What is Option OI Ratio/PCR /Call Put Ratio or Put Call Ratio?

Call Put Ratio is a widely used market sentiment indicator in options trading. It is the ratio of the number of call options being traded to the number of put options being traded. Options are contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a predetermined price, known as the strike price.

A call option gives the holder the right to purchase an underlying asset at the strike price, while a put option gives the holder the right to sell an underlying asset at the strike price. The call put ratio can provide insight into market sentiment and traders' expectations for the direction of the underlying asset's price.

A high call put ratio indicates that there is strong bullish sentiment in the market, as more traders are buying call options with the expectation that the underlying asset's price will rise. Conversely, a high put call ratio suggests that there is strong bearish sentiment in the market, as more traders are buying put options with the expectation that the underlying asset's price will fall.

It's important to note that the call put ratio should not be used in isolation as a trading signal, as it can be influenced by a number of factors, including volatility, implied volatility, and market liquidity. However, it can be used in conjunction with other technical and fundamental analysis tools to form a more comprehensive view of market sentiment.

In conclusion, the call put ratio is a useful tool for options traders to gauge market sentiment and make informed trading decisions. By monitoring the ratio, traders can gain insight into the expectations of other market participants and make trades accordingly.