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Put/call ratio

Put volume divided by call volume, used as a gauge of market sentiment.

OptionsIntermediate

Definition

A high ratio means more put buying, read as defensive or bearish. A low ratio means more call buying. Some traders read extremes as contrarian signs.

Formula

Put/call ratio = put volume / call volume

Watch out for

Puts are also used to hedge, so a high ratio does not always mean bearish views.

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