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Strategies & Market Trends : Classic TA Workplace

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To: AllansAlias who wrote (26441)1/2/2002 10:23:04 AM
From: velociraptor_  Read Replies (2) of 209892
 
While I agree to a point, I also think those P/C ratios don't tell the whole story. Basically, they are a ratio of the number of puts and Calls being bought, but does not accurately reflect sentiment. The more accurate assessment would be a dollar weighted P/C ratio because all those Puts being bought may be far out of the money Puts while the Calls could be near or at the money. In this case, even if a large number of Puts are being bought, there is still more money being Put into calls, and those Puts would simply be a hedge since only the cheap ones are being bought.

An analysis of which strike prices the Put and Call volume is going would be telling.
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