Put/Call Ratio
What Is the Put/Call Ratio? An indicator that displays put volume in relation to call volume is the put/call ratio. Put options are used to wager on a decline or to protect against market weakness.You can wager on an advance or hedge against market strength with call options. When put volume surpasses call volume, the put/call ratio is greater than 1, and when call volume surpasses put volume, it is less than 1. This indicator is usually used to measure the mood of the market.When the Put/Call Ratio is trading at relatively high levels, sentiment is considered overly negative; when it is trading at relatively low levels, sentiment is considered excessively positive.To smooth the data and extract signals, chartists can use moving averages and other indicators. Calculating the Put/Call Ratio The calculation is straightforward and simple.Copy Put/Call Ratio = Put Volume / Call Volume Options Exchanges Chicago Board Options Exchange (Cboe) Put/Call Ratios are available for research on StockCharts.com.The largest options exchange is Cboe, and its statistics are the most extensively used.The options are divided into three categories by the Cboeindicators: equity, index, and total.Options traded…
