# Put/Call Ratio

A put/call ratio is a quantity of puts divided by a quantity of calls. This platform uses put/call ratios measured for two different option quantities:

• Volume is calculated by dividing the sum of all puts transacted during that trading day by the sum of all calls. For example, if a total volume of 10 puts were transacted and a total volume of 20 calls were transacted during that day, the overall put/call ratio by volume would be 10 / 20 = .5.
• Open interest is calculated by dividing the sum of all puts outstanding at the end of that trading day by the sum of all calls outstanding. For example, if the total open interest at the end of a given day were 10 puts and 5 calls (regardless of when they were opened), the the overall put/call ratio by open interest would be 10 / 5 = 2.

The put/call ratio is a metric that is commonly used to measure market sentiment based on the relative interest in puts vs. calls. For many stocks, calls typically outnumber puts. As a result, a ratio around .6 (3 puts to every 5 calls) is considered to indicate a bullish sentiment, whereas a ratio around 1 (1 put per call) is considered to reflect a bearish sentiment. However, when the ratio pushes the extremes, the sentiment flips and high readings are viewed as bullish signals and vice versa.

Note that when there are no calls available for a given term, the value is null. If there are calls but no puts, the value is 0.

The video below discusses an example.