Question

Which of the following statements about the put/call ratio is most accurate? Question 8 options: A...

Which of the following statements about the put/call ratio is most accurate?

Question 8 options:

A negative ratio is bullish.

Investors interpret a ratio greater than 1 to be a bearish indicator.

Investors interpret a relatively low ratio to be a bearish indicator.

Investors interpret a relatively high ratio to be a bearish indicator.

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Answer #1

Put/Call ratio is the ratio of the number of puts and number of calls bought during a day for a given underlying stock or asset.

That means if the ratio is greater than 1 then the number of puts bought is higher than the number of calls and if it is lower than 1 then opposite is the case. Therefore, If it is greater than 1 that means market is expecting a price fall in the future, which is being bearish so a ratio of less than 1 means a bullish sentiment.

Therefore the last option is correct that a relatively high ratio is a bearish indicator

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