The Put Call Ratio

Creating a Strategy on the S&P500 Using the Put-Call Ratio in Python

Sentiment Analysis is a vast and promising field in data analytics and trading. It is a rapidly rising type of analysis that uses the current pulse and market feeling to detect what participants intend to do or what positions they are holding.

Imagine you are planning to go see a movie and you want to anticipate whether this movie will be good or not, therefore, you ask many of your friends — whom have already seen the movie — about their opinions. Assuming 75% said the movie was good, you will have a certain confidence level that you will like it because the sentiment around this movie was mostly good (ignoring tastes and preferences). The same analogy can be applied to the financial markets through many ways either quantitative or qualitative.

Sometimes, indicators will be classified as more than one type, meaning a technical indicator can also be a sentiment indicator (e.g. the On-Balance Volume). And the way we analyze can also be technical (e.g. drawing support and resistance lines) or quantitative (e.g. mean-reversion).

This article will discuss an the famous Put-Call Ratio and how is it used to predict the direction of the S&P500. For this study, we will use the signal quality as a judge.

Start your Free Trial now at O’Reilly and start reading the Early Release of my upcoming book “Mastering Financial Pattern Recognition” which covers everything you need to know about candlestick patterns and how to code them in Python! (Bonus points: You will discover new never-seen-before patterns). You will also find technical indicators, risk management, and even behavioral finance covered in the book!

Sentiment Analysis is a type of predictive analytics that deal with alternative data other than the basic OHLC price structure. It is usually based on subjective polls and scores but can also be based on more…

Related posts:

Not a week ago I was on a bike ride through my home, Denver, on a particularly exhausting day, thinking back to my last milestone…and then the one before it, and the one before it, and… Before I got…

Night lays heavy on the land. The earth slumbers. This far north, the sun affords little time between its rising and its setting. Colors dissolve into grey, shadows build upon each other, shapes blur…

Your domain name is where your site lives on the internet. Just like youtube.com. Obviously you want something different. Ideally, you can get a domain name that aligns with your business and…