How to Use Put Call Ratio
Interpret the put/call ratio for sentiment and risk management.
The put/call ratio contrasts bearish and bullish options activity to infer sentiment extremes.
Key Insights
Point 1
Important
Use moving averages to smooth noisy data
Point 2
Important
Context matters: spikes differ in uptrends vs downtrends
Point 3
Important
Best as a filter, not a standalone trigger
Practical Applications
1
Watch for divergences at key market levels
2
Combine with VIX structure and breadth thrusts
3
Size positions smaller around sentiment extremes
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