Put/Call Ratio

2018-03-03 | John Carter

What Is The Put/Call Ratio?

The put/call ratio is the ratio of the volume in trading between the put option trading and the call options trading

How To Get The Put/Call Ratio

The symbol for the put/call ratio is $PCVA. You have to sign up for monthly access to the put/call ratio from Tradestation. The put/call ratio permission fee is called the OPRA fee and is about $1 for monthly access on Tradestation

Put/Call Ratio Rule

  • The put/call ratio is a little unreliable the first five to ten minutes of the trading day. The put/call ratio has a staggered open on options

Put/Call Ratio Basics

  • The put/call ratio is below .45 means it is severely negative
  • The put/call ratio is between .45 and .65 means it is negative, but not extremely negative
  • The put/call ratio is between .65 and .75 means it is slightly negative
  • The put/call ratio is between .70 and .85 is considered neutral. The put/call ratio between .70 and .85 means the market action and the prices of the Dow and s&P can go up or down equally as easy
  • The put/call ratio is between .85 and .95 is bullish, but moderate
  • The put/call ratio is above 1.0 means it is extremely bullish. If the The put/call ratio goes above 1.0, I look to go long

Put/Call Ratio Rule Of Thumb

If price action is going up, you’d like to see the The put/call ratio going up If price action is going down, you’d like to see the put/call going down

 

The main way I use put/call ratio is to make sure there is nothing out of whack in the trading market. The put/call ratio is like a tourniquet. If you are bleeding and you apply it correctly, you will survive. If the put/call ratio get above 1.0 when the market is selling off, it will hold. If put/call ratio is not, it will just slow down the bleeding.

Put/Call ratio video will explain this further.