Put/Call Ratio

A sentiment indicator that divides the total volume of put options traded by the total volume of call options. A ratio above 1.0 indicates more puts are being traded than calls, suggesting bearish sentiment, while a ratio below 1.0 suggests bullish sentiment. Contrarian traders watch for extreme readings -- a very high put/call ratio can signal excessive fear and a potential market bottom, while a very low reading may warn of complacency near a top.