Put-Call Ratio
Barron's Finance & Investment Dictionary:
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Put-Call Ratio
ratio of trading volume in put options to the trading volume in call options. The ratio provides a quantitative measure of the bullishness or bearishness of investors. A high volume of puts relative to calls indicates investors are bearish, whereas a high ratio of calls to puts shows bullishness. Many market technicians find the put-call ratio to be a good contrary indicator, meaning that when the ratio is high, a market bottom is near and when the ratio is low, a market top is imminent. This reading assumes that the majority of options investors are making the wrong move.
| Put-Call Parity, Put to Seller | |
| Pyramiding, Q Ratio |
Investopedia Financial Dictionary:
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Put-Call Ratio
A ratio of the trading volume of put options to call options. It is used to gauge investor sentiment.
Investopedia Says:
For example, a high volume of puts compared to calls indicates a bearish sentiment in the market.
Related Links:
Options are not only trading instruments but also predictive tools that can help us gauge the feelings of traders. Forecasting Market Direction With Put/Call Ratios
An introduction to the world of options, covering everything from primary concepts to how options work and why you might use them. Options Basics Tutorial
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Barron's Finance & Investment Dictionary
Dictionary of Finance and Investment Terms. Copyright © 2010 by Barron's Educational Series, Inc. All rights reserved.
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