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Strategies & Market Trends : Options

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To: Teflon who wrote (4772)3/14/2000 10:44:00 AM
From: Seeker of Truth  Read Replies (2) of 8096
 
RE: PUT/CALL Ratio
The person selling the put wants to make money and expects that the stock price will rise so the put will never be exercised and the cash from selling the put is free money. The person buying the put expects the stock price to fall, otherwise he/she can't make any money.
Similarly for the call. The seller thinks the stock can't rise. The buyer is optimistic. So the level of puts and the level of calls is neutral, not an index of sentiment. That said, I doubt that the ratio of these two neutral indexes has any importance.
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