Put/call ratio definition

Put/call ratio is a term used in technical analysis. Put/call ration is calculated by dividing the volume of puts for a specific time frame by the volume of calls for the same time frame. The higher Put/call ratio, the more there are puts relative to call.

Very high Put/call ratio means people are very pessimistic about stock. In technical analysis it is used as a contrarian indicator signaling possible bottom.

Very low Put/call ratio means people may be overly optimistic about the stock, and that may mean possible top.

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