Define: Put/Call Ratio

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Definition: Put/Call Ratio



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Full Definition of Put/Call Ratio


The put/call ratio is the volume of put options divided by the volume of call options for a specified period of time. Technical analysts use the put/call ratio to predict market turning points. The put/call ratio is generally considered a contrarian indicator. A high put/call ratio occurs when there is a high volume of put options being traded, and a low put/call ratio indicates that a larger percentage of call options are being purchased. To a contrarian investor, a significantly high put/call ratio suggests that investors are overly pessimistic and therefore indicates a market bottom, while a significantly low put/call ratio suggests that investors are overly optimistic and therefore implies a market top. The put/call ratio must be used with caution as unusual market conditions can cause short-term anomalies in apparent market sentiment, giving analysts a misleading put/call ratio indication.


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Definition Sources


Definitions for Put/Call Ratio are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 6th February, 2020