Traders watch the put-call ratio because it can provide insight into what’s driving the market at a more technical level. Simpler Trading VP of Options Danielle Shay notes that the put-call ratio “got extremely elevated” this week as short investors were forced to cover their positions. But now, as the week comes to a close, she observes that the ratio is “getting low again, which is not great if you’re long.” But there is an upside. Shay tells Yahoo Finance that the short covering pushed the Nasdaq Composite (^IXIC) through some technical resistance, which means “that the rally can continue even though a lot of the short sellers have covered.”
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