Technicians that utilize the CBOE put/call ratio generally believe:
A)option investors are almost consistent losers.
B)option investors are almost consistent winners.
C)option investors are true technicians.
D)option investors possess inside information.

Question

Quizplus · Accepted Answer

Technicians that utilize the CBOE put/call ratio generally believe that option investors are almost consistent losers, as the ratio is used as a contrarian indicator. High levels of put buying relative to call buying are seen as a bearish signal, indicating that investors are betting on a decline in the market. Conversely, high levels of call buying relative to put buying are seen as a bullish signal, indicating that investors are expecting a rise in the market. Therefore, the CBOE put/call ratio is used to make trades that go against market sentiment, with the assumption that the majority of option investors are consistently wrong.

Technicians That Utilize the CBOE Put/call Ratio Generally Believe