The Option Premium Ratio And The DJIA by Christopher Cadbury
ARTICLE SYNOPSIS ...The Option Premium Ratio And The DJIA by Christopher Cadbury
The discussion on the option premium ratio continues, with more examples on forecasting short-term movements in the DJIA.
Previously, I introduced the option premium ratio, which is the ratio of price premiums on puts versus calls. If it seems familiar, there's a good reason: It's the fifth psychological variable on the General Markets Indicators page in Investor's Business Daily. The premium ratio, in my opinion, is the best of all the sentiment indicators. Let me explain one of the ratio's truly outstanding characteristics, the ...