Put to Call Ratio

What is this Indicator

It's a quick way to measure the sentiments of market participants using options. By analyzing the ratio of Puts to Calls, we get valuable insights into where the markets might be heading. Unlike other indicators like McClellan, Hi-Lo Index, or Vix, this one is all about the overall market sentiment - pure and straightforward.

Why this indicator works

Many traders actively use options to participate in the market, and this is where our edge lies. By monitoring this activity, we can gauge the direction of market sentiment. Of course, it doesn't always predict where the market is going to move, but boy, does it help us find those crucial pivot points! Whether it's an upward shift or a downward one, this indicator has proven its worth time and again.

How are signals generated

Whenever the 10SMA of the PCR (Put to Call Ratio) climbs above 1 and then starts heading back down towards 0.95, it's like a beacon signaling that sentiment is shifting back towards the upside. It's no random guess,this signal is a result of real traders putting their hard-earned money into the market.

On the flip side, when the signal drops below 0.75 and starts creeping up towards 0.8, it's a clear indication that more puts are entering the scene, and we need to be cautious.

How to read the signals

When it's go time, the signals are as clear. A red line indicates sentiment shifting to the downside, and green when sentiment is shifting to the upside.

Timeframe

This indicator is all about the daily time frame. It's not your typical price action indicator. This is a sentiment indicator and it is meant to give you a sense of where the market is at.

Settings Available

Just a quick note – for now, I haven't got any fancy settings to tweak. Crafting this script and explanation took hours of love and dedication. But hey, who knows, in the future, we might have some more customization options! So stay tuned for updates (and, um, donations might light a fire under my coding fingers! 😂).