How to Read the Put/Call Ratio

The put/call ratio divides put activity by call activity (by volume, or by open interest when volume is too thin).

A higher ratio means relatively more put activity; a lower ratio means relatively more call activity.

Think of puts as more insurance tickets and calls as more upside reservations. The ratio is simply which line is longer today — not who will be right tomorrow.

Initial thresholds (see Methodology): about 0.7 or higher is labeled with a bearish bias reading; about 0.5 or lower with a bullish bias reading; in between is neutral.

We also compare today’s ratio with a recent average when history exists. Extreme readings are sometimes interpreted contrarian — both the conventional and cautionary framings appear in the phrase text.

Crowding can reverse quickly. Index options, single-stock options, and different venues are not identical — this site applies one transparent rule set across its fixed universe.

The ratio is positioning context, not a timing tool.