Using The Put Call Ratio With Weeklys
Just watched a great little video on the analyzing the put / call ratio (the link for this in our free members newsletter that you can join by clicking here)
The put call ratio can be used a contrary indicator – when everyone is buying puts it’s time to take a look at going long – or making bullish plays. On the other side of the coin, when everyone is buying calls it’s time to take a look at going short.
Having an indicator like this helps because it allows you to measure the amount of put buyers and call buyers and compare that data to past statistics to help in making your trading decisions.
Looking back over the past year, towards the middle of the year everyone was buying puts and what happened? The market has gone straight up since then.
Now, call option buying is starting to dominate and while it might not be time just yet, we are starting to look for the signals to ‘roll over’ and tell us it’s probably time to go short.
When using weekly options this type of indicator and data can be used to help establish longer term option trading positions that weekly options trading can be an important part of like our weekly medium term calendar and diagonal back spreads as well as of course covered call type plays and longer term leap option positions, both to the long side and the short side.
Be sure to join our free options trading newsletter to learn more about how we use the put call ratio in our trade selection and weekly options trading strategies along with a lot of other very cool option trading strategies that can be used to help generate consistent income.
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