What is the Full form of PCR in Share Market?
The PCR Full Form in Share Market is Put Call Ratio. The share market is a dynamic beast, constantly shifting and evolving. Investors, ever in pursuit of an edge, seek tools to gauge market sentiment and predict potential trends. One such valuable tool is the Put-Call Ratio (PCR). This comprehensive guide delves into the intricacies of the Put-Call Ratio, exploring its calculation, interpretation, and importance in navigating the ever-changing market landscape.
Puts and Calls
Before understanding the Put-Call Ratio, you must understand Puts and Calls. Right but not obligation to sell a stock, index, etc. at a strike price by expiry. Puts are frequently used to hedge or profit from price declines. Holders have the right but not the obligation to buy assets at strike prices by expiry. Calls are used to speculate or benefit from price increases.
Explaining Open Interest:
Open interest is number of expired or unexecuted options contracts. It displays asset or index market sentiment. The PCR is simple, but market or security context and average historical values help comprehend it. Put options trade more than call options.
Investor Put-Call Ratio Importance:
PCR is a quick and simple market bullishness or bearishness test. This may help investors choose investments and find opportunities. This strategy may confirm market trends found by other technical analysis methods.
Effective Use
Know the market or security’s typical PCR range. This shows extremely high or low current ratios. Avoid PCR alone. Add it to technical and fundamental research tools for a full market picture. Avoid investing only on PCR data owing of its limitations.