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What Are P/C Ratios and How Do I Use Them?
What Are P/C Ratios and How Do I Use Them?

Understanding P/C ratios and finding your edge

Team Sang Lucci & Wall St. Jesus avatar
Written by Team Sang Lucci & Wall St. Jesus
Updated over a week ago

Jesus posts a chart of the Put/Call (P/C) Ratios throughout the day.

P/C Ratios display the total amount of put buying vs. call buying.
When the P/C Ratios spike, there is more put buying than call buying and vice versa.

Many traders consider a long bias when the P/C ratios are elevated and a short bias when low. When P/C ratios are elevated, there is a good amount of hedging taking place, and these hedges eventually have to be unwound.

When P/C ratios are low, there is not enough hedging, which could lead to some downside in the market as players scramble to add hedges into pullbacks.

As seen above, the ratios are represented as follows:

  • PCQE: Put/Call for Nasdaq equities

  • PCCE: Put/Call for CBOE equities

  • PCC: Put/Call for the CBOE

  • PCE: Put/Call for US equities

  • ADVDEC.US: Breadth in US stocks

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