Institutional Put-Call Ratio
How does it differ from retail put-call ratio?
The institutional put-call ratio is a specific variant of the put-call ratio that focuses on options trading activity by institutional investors. The institutional put-call ratio differs from the retail put-call ratio in several key aspects:
Options preference: Institutional investors tend to focus more on index options, while retail investors prefer equity options. This results in the institutional ratio typically having higher values than the equity put-call ratio, which is more influenced by retail activity.
Trading volume: The institutional put-call ratio typically involves larger trading volumes compared to the retail ratio, as institutional investors often make larger trades.
Purpose of trades: Institutional investors often use options for hedging their large stock portfolios, whereas retail investors are more likely to use options for speculative purposes.
Volatility: The retail put-call ratio tends to be more volatile and can reach more extreme values compared to the institutional…