Ask Colin

Have you had any experience in using put/call ratios to buy and sell shares?

I collected the data for a number of years and played around with it. I did not find it that useful for what I do.

The basic idea is to use it as a contrary opinion indicator, based on the idea that when the crowd runs to an extreme, they are usually wrong and we should look for a reversal. So, when the proportion of calls is high, the market tends to be high and we look for a correction. When the proportion of puts is high, the market will be falling and we look for a rally.

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