What is the put-call ratio?
In one line: The put-call ratio divides the number of put options traded by the number of call options traded, as a rough gauge of how cautious traders feel.
A simple example
A Put option gains when price falls. A Call option gains when price rises. The ratio compares how many of each changed hands.
Say on one day 1.2 million puts and 1.0 million calls traded. Divide: 1.2 ÷ 1.0 = 1.2.
Now say the next day 600,000 puts and 1,000,000 calls traded. 0.6 ÷ 1.0 = 0.6.
- Above 1: more puts than calls. Traders are buying more protection.
- Below 1: more calls than puts. Traders are leaning the other way.
Exchanges such as Cboe publish versions of it. Some count only stock options, some only index options, and the "normal" level is different for each.
Why it matters
It gives you a quick read on mood. When fear is high, people buy puts to protect what they own. When excitement is high, call buying jumps.
Some traders read extremes the "contrary" way. Very heavy put buying can show up near the end of a sharp drop, when most worried sellers are already out. That's an idea to test, not a rule.
The chart still comes first. Look at where price last turned around and which way the Trend points, then use mood as background. Our options trading basics guide explains what puts and calls actually do.
A common mistake
Treating one reading as a buy or sell signal. A put is not always a bet on a drop. Big funds buy puts to protect stock they plan to keep, so a high ratio can mean "careful," not "bearish."
Compare the ratio with its own recent average, on the same version (stock, index or total). A single number on its own tells you very little.
Questions
What is a good put-call ratio?
There isn't a "good" one. The useful part is how today compares with that same ratio's usual range. Index options often run higher than stock options because funds use them to hedge.
Is a high put-call ratio bullish or bearish?
It shows caution. Some traders see extreme caution as a sign that selling may be nearly done, but it can stay high while price keeps falling.
Where can I see the put-call ratio?
Cboe publishes daily figures, and many charting platforms show it as a symbol you can chart.
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