The Put Call Ratio is one of the most common technical indicators used by investors and traders. Why? Well, it is designed to quantify investor sentiment, which many market technicians believe is the primary factor in market turns and trends.

It is calculated using the activity of options buyers, who are focused on anticipating moves within a certain time period. The most common method of measuring the Put Call Ratio is to divide the number of put contracts by the number of call contracts traded during a set time period. Investors buying puts are anticipating lower prices, while call buyers expect the market to rally.

A high Put Call Ratio is a sign that the market has reached an oversold extreme and a turn might be at hand. A low put call ratio, however, indicates that the market has reached an overbought condition and could see a price correction soon.

We have created this site to help educate people on the calculation and application of the Put Call Ratio. In the updates section, we’ll post examples of stocks that have very low and high readings. Also, please consider joining our email list to receive notifications of interesting Put Call Ratio activity.