Put-Call Ratio

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DEFINITION of 'Put-Call Ratio'

A ratio of the trading volume of put options to call options. The put-call ratio has long been viewed as an indicator of investor sentiment in the markets. Times where the number of traded call options outpaces the number of traded put options would signal a bullish sentiment, and vice versa.

INVESTOPEDIA EXPLAINS 'Put-Call Ratio'

Technical traders have used the put call ratio for years as an indicator of the market. Most importantly, changes or swings in the ratio are seen as instances of great importance as this is commonly viewed as a change in the tide of overall market sentiment. By being able to get ahead of the tide, traders may be able to reap the rewards of taking positions at prices below future projections.

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RELATED FAQS
  1. Where can traders and investors find most recent Put-Call indicator ratios and charts?

    There are a number of information sources that provide up-to-date information on the put-call ratio. Additionally, traders ... Read Full Answer >>
  2. How is the Put-Call Ratio calculated and where does the information come from?

    Traders and analysts use the put-call ratio as an indicator of market sentiment. They use the relationship between the demand ... Read Full Answer >>
  3. What are the most common momentum oscillators used in options trading?

    Perceptions about the momentum behind short-term price movements hold an especially crucial role in options trading. Technical ... Read Full Answer >>
  4. When does one sell a put option, and when does one sell a call option?

    The incorporation of options into all types of investment strategies has quickly grown in popularity among individual investors. ... Read Full Answer >>
  5. How is a put option exercised?

    A put option is a contract that gives the option holder the right, but not obligation, to sell a set amount of shares (1 ... Read Full Answer >>
  6. What is the put-call ratio and why should I pay attention to it?

    The put-call ratio is a popular tool specifically designed to help individual investors gauge the overall sentiment (mood) ... Read Full Answer >>
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