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Options Basics · Lesson 3

Put/call ratio and open interest

Reading the crowd's bets

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Put/call ratio and open interest

In this lesson

Read the put/call ratio and open interest as positioning and sentiment clues, including the contrarian view.

Key takeaways

  • Put/call ratio = puts traded ÷ calls traded (by volume or open interest).
  • Below 1: calls dominate (bullish lean); above 1: puts dominate (bearish lean or hedging).
  • Extreme readings can be contrarian: crowded optimism or panic.
  • Open interest shows where positions sit; large strikes can attract or block price near expiry.
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