Put-Call Ratio

What is the 'Put-Call Ratio'

The put-call ratio is 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.

BREAKING DOWN '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. 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 Answer >>
  2. Why is the Put-Call Ratio important for investors and economists for tracking market ...

    Discover why the put-call ratio is considered a useful measure for investors and economists when they are determining market ... Read Answer >>
  3. How is the Put-Call Ratio calculated and where does the information come from?

    Discover how major exchanges and financial websites, such as the Chicago Board of Exchange, compile data for their respective ... Read Answer >>
  4. Where can traders and investors find most recent Put-Call indicator ratios and charts?

    Learn about how the put-call ratio is calculated and interpreted, and discover where traders and analysts can obtain current ... Read Answer >>
  5. Are put options more difficult to trade than call options?

    Learn about the difficulty of trading both call and put options. Explore how put options earn profits with underlying assets ... Read Answer >>
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    Understand the difference between financial ratio analysis and accounting ratio analysis. Learn why ratio analysis is important ... Read Answer >>
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