By Nummius · October 31, 2026
The put/call ratio divides the volume of put options traded by the volume of call options. Puts are mostly bought for protection or to bet on falling prices, calls to bet on rises, so the ratio is a quick read on fear versus greed. Traders usually read it as a contrarian indicator: when the ratio spikes, fear is high and selling may be near exhaustion; when it’s very low, complacency is high and the market may be vulnerable. It’s a context tool, not a timing signal.
How it’s calculated
Put/call ratio = put volume ÷ call volume (for a day, or as a moving average).
- Ratio above 1: more puts than calls traded.
- Ratio below 1: more calls than puts.
Which put/call ratio to watch
Cboe publishes several versions:
| Ratio | What it includes | How it’s used |
|---|---|---|
| Equity put/call | Options on individual stocks | Closest to retail sentiment; the most used contrarian gauge |
| Index put/call | Options on indexes like the S&P 500 | Heavily used by institutions for hedging, so it runs higher |
| Total put/call | Both together | A blend of the two |
Because index options are used heavily for hedging, the index ratio normally sits higher than the equity ratio. Compare each ratio with its own history, not with the other.
How to read high and low readings
There are no universal thresholds. Normal levels shift over years as options trading changes. So read the ratio relative to its recent range:
- Spikes well above the recent range: heavy demand for puts. Fear is high. Many traders watch for a bottom forming once price stops falling.
- Drops well below the recent range: heavy call buying. Optimism is high. Pullbacks become more likely, though markets can stay complacent for a long time.
- In the middle: neutral. Not much information.
Smooth it
Daily readings are noisy, especially around options expiration. A 5-day, 10-day or 20-day moving average of the ratio shows sentiment shifts more clearly. Look for the average reaching extremes and then turning.
Using the put/call ratio in a trading routine
- Check the trend first. In a strong uptrend, spikes in fear often mark pullback lows worth buying. In a downtrend, fear can stay high for a long time.
- Look for extremes and turns, not single readings.
- Confirm with price and breadth. A fear spike followed by a strong breadth day is more convincing. See market breadth indicators.
- Use it to adjust exposure, not to place trades. Extreme greed is a reason to tighten stops; extreme fear is a reason to build a watchlist.
Common mistakes
- Using fixed thresholds from old articles.
- Treating it as a timing signal. Extremes can last.
- Mixing equity and index ratios.
- Ignoring expiration-day distortions.
Other sentiment gauges to pair with it
- The VIX, the implied volatility index for the S&P 500.
- Breadth extremes, like the share of stocks above their 50-day moving average.
- Sector leadership: defensive sectors leading often reflects caution. See sector rotation strategy.
The put/call ratio in Nummius
Nummius Markets shows the put/call ratio with 60 days of history, so you see each reading in context, alongside sector rotation graphs, breadth and macro data. It’s part of Core, with a 14-day free trial; see pricing.
Frequently asked questions
What is a good put/call ratio?
There’s no single good number. Compare the ratio to its own recent range: readings far above it suggest fear, far below it suggest complacency.
Is a high put/call ratio bullish or bearish?
Traders often read extreme highs as contrarian bullish, because fear may be close to peaking. It’s context, not a buy signal.
What’s the difference between the equity and index put/call ratio?
The equity ratio covers options on individual stocks and reflects speculative sentiment more closely. The index ratio is dominated by hedging and usually runs higher.
This article is for educational purposes only and is not financial advice. Trading involves risk, including the loss of money. Past performance, backtests and practice results do not guarantee future results.