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To: Oeconomicus who wrote (12069)	7/30/1998 12:02:00 AM
From: Tim McCormick	Read Replies (1) \| Respond to of 164684

R. D. I've studied this for many years. The only reliable use of P/C ratios is when option volume of the four nearby strike series is at least equiv. to 1/3 avg. daily stock vol. Very few stocks trade this much option volume. It works well when call speculation on a widely rumored takeover gets out of hand. In fact, even P/C ratios on the indices appear to be less relevant than years ago. The volume is just not there. You also have to be careful how you measure it-after an extended up move, the out of the money put series are so plentiful that contract volume alone is meaningless. You have to calculate the dollar weighted volume values. Also, it is important to remember, the friday before the '87 crash P/C was screaming buy. I think what happens is a point is reached where the Delta hedge panic overrides all contrarianist sentiment strategy. Anyway, even after implementing volume constraints you have to use a 5 day MA to smooth out distortions and not be too early. Tim

To: Oeconomicus who wrote (12069)	7/30/1998 2:48:00 AM
From: Marconi	Respond to of 164684

Hello Mr. Buschman: Barron's reports two put-call ratios in their options listings. One is for equities, the other for a market index. They report certain ranges are taken as contrarian sentiment indicators--equities for the public, the market index for those in the industry. I followed it in the 80's for years, and could rarely divine any useful turning point information. Things may be different now with a largely one-way market. My experience with the ratios was not definitive, but with diligence on my own, I could average about a 20% return with options trading in the 80's..adequate for then. Best regards, m