Put-Call Ratio: Sentiment Through the Options Market
Macro Glossary, Indicators and Reads
By Ken Chigbo, macro trader and founder of KenMacro, 18+ years in markets.
Updated 2026-05-20
The desk’s answer
The put-call ratio is the volume of put options divided by call options over a defined period, usually one trading day. A ratio above 1.0 means more puts than calls trading, signalling defensive or bearish positioning. Below 0.7 means call-heavy, bullish positioning. The CBOE total equity put-call ratio (CPCE) is the standard reference. As a contrary indicator, extreme high prints (above 1.3) often mark short-term lows, and extreme low prints (below 0.5) often mark short-term tops, because they reflect crowded one-sided positioning that can reverse.
Defined term, Put-call ratio
The put-call ratio is the ratio of put option volume to call option volume over a defined period, usually one trading day, on a single underlying or aggregated across an exchange. It is used as a contrary sentiment indicator: extreme readings in either direction (very high put volume or very high call volume) often precede mean-reverting moves in the underlying.
Which put-call ratio to read
Three exist. CPC (total options put-call) is everything on the CBOE including index and equity options. CPCE (equity-only) strips out index hedging and reflects retail and corporate equity-specific positioning, the cleaner sentiment read for most uses. CPCI (index-only) reflects institutional macro hedging on SPX and is contaminated by structural hedging flows that do not represent sentiment changes. For sentiment work, CPCE is the standard. For institutional hedging pressure, CPCI matters but is less directionally useful.
Reading extremes
Mean values for the CPCE since 2010 have averaged around 0.65 to 0.75 (more call volume than put volume on average, because equity buyers outnumber put hedgers). Above 1.0 is elevated put activity, often coincident with sharp equity declines and signalling fear. Above 1.3 is rare and historically marks short-term lows when combined with other capitulation signs. Below 0.55 is unusually call-heavy, signalling complacency, and below 0.45 has historically preceded local tops. The signal is contrarian: extreme one-sided positioning sets up the conditions for reversal, but it does not give precise timing.
Limitations and what to cross-check
Put-call ratios have become noisier since 2020 as 0DTE (zero-day-to-expiration) options became dominant. 0DTE trades skew the daily ratios in ways that are unrelated to genuine sentiment, particularly into Friday opex. A spike in put volume can be 0DTE hedging or systematic selling rather than bearish sentiment. The signal is more reliable when cross-checked against the AAII sentiment survey, the VIX term structure (contango vs backwardation), and credit spreads. Single-day extreme prints are often noise; sustained multi-day prints in the extreme range are the useful signal.
Frequently asked
What is the put-call ratio?
The volume of put options divided by call options over a defined period, usually one trading day. It is used as a sentiment indicator, with the CBOE total equity put-call ratio (CPCE) the standard reference.
How is the put-call ratio used as a contrary indicator?
Extreme readings often mark reversal points. CPCE above 1.3 has historically preceded short-term lows, signalling capitulation defensive positioning. Below 0.45 has preceded local tops, signalling complacency. The signal is positioning extremity, not directional momentum.
Has 0DTE trading affected the put-call ratio?
Yes, materially. Since 2022 the rise of 0DTE option trading has injected daily noise unrelated to genuine sentiment, particularly into opex Fridays. The ratio is more reliable when cross-checked against survey sentiment, VIX term structure, and sustained multi-day prints rather than single-day extremes.
What this means at the desk
Read sustained put-call extremes alongside other gauges; single-day spikes are 0DTE noise.
Read next from the desk
Educational glossary entry only,
From the desk
Knowing the term is step one. The next question is always which broker actually serves you well. The desk audits eight brokers on regulation by entity, true cost, and honest fit, with the regulatory caveats the comparison sites bury.
not financial advice and not a trade signal. The desk teaches a reading framework, never entries, targets or recommendations. Trading forex, indices and leveraged products carries significant risk and may not be suitable for all traders. Some broker links on this site are commercial partnerships and KenMacro may receive compensation, which does not change the editorial view. Only trade with capital you can afford to lose.
From the desk, free
Get the macro framework the desk actually trades
The same regime-first framework behind every call on this site, plus the weekly macro brief. Free. No spam, unsubscribe anytime.
Continue reading
From the desk
Where this gets traded
Reading the macro driver is half of it. The other half is an account that holds execution when the driver actually moves the tape. See the KenMacro desk guide to the best brokers for macro traders.
Read the desk guide →