put-call ratio - Investment & Finance Definition
The volume of puts that traded on a given day divided by the volume of calls. The ratio can be calculated for the overall volume of options trade or for a certain futures, stock, or stock index. The ratio is used as an indicator of investor sentiment. When the ratio is too high, or near the top of the chart, it can signal a time to buy, and vice versa. Technical traders believe that the ratio is a good contrarian indicator. The reasoning assumes that most options investors will be wrong.