Put/Call Ratio

What Is the Put/Call Ratio?

The put/call ratio divides the volume of put options (bets on price declines) by the volume of call options (bets on price rises) traded in a given period. The CBOE publishes total, equity-only, and index-only versions daily.

Put/Call ratio = Put volume / Call volume

A ratio above 1.0 means more puts than calls are being traded; below 1.0 means more calls than puts.

How to Interpret It

The put/call ratio is primarily a contrarian sentiment indicator:

• High ratio (>1.2): Elevated bearishness, heavy hedging activity — often near market bottoms as fear peaks. Historically bullish for equities on a 1–3 month horizon.
• Low ratio (<0.6): Elevated bullishness, speculative call buying — often near market tops or when complacency is high. Historically a caution signal.
• Equity-only PCR: Excludes index puts (often used for institutional hedging), giving a purer read on retail/speculative sentiment

The Contrarian Logic

When everyone has bought puts and positioned defensively, much of the selling has already been absorbed. Conversely, when call buying is rampant and few hedges are in place, the market is vulnerable to negative surprises.

Limitations

The put/call ratio can give false signals during unusual market regimes:

• Zero-day-to-expiration (0DTE) options have dramatically increased call volume, structurally compressing the PCR
• Large institutional hedging programmes can distort the index PCR
• During strong trends, extreme readings can persist longer than expected

PCR in This Analysis

The sentiment tracking system monitors the CBOE total put/call ratio as one component of the crowd psychology composite score, inverting it so that high put/call → low sentiment score (fear) and low put/call → high sentiment score (greed).