Institution Option Trading Part-3

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PCR means Put-Call Ratio
It compares how many Put options are traded versus Call options.
Simple formula: Put Volume ÷ Call Volume.
This helps understand market mood.
Institutions use options heavily
Big players like banks, hedge funds, mutual funds often use options for hedging and positioning.
So PCR can give clues about what smart money may be doing.
Shows fear vs confidence
High PCR = More puts than calls = Fear, protection, bearish mood.
Low PCR = More calls than puts = Confidence, bullish mood.

Institutions often buy protection before market falls.

Helps read hidden sentiment
Price may look strong, but if PCR rises sharply, institutions may be hedging quietly.
That means caution is needed.
Useful for contrarian signals
Extreme PCR values can signal crowd panic or overconfidence.

Example:
Very high PCR may mean panic selling near bottom.
Very low PCR may mean greed near top.
Improves entry and exit timing
If price is near support and PCR is high, market may bounce soon.
If price is near resistance and PCR is too low, reversal may happen.
Shows hedging activity
Institutions do not always speculate. They protect portfolios using puts.

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