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Call/Put Options Ratio A leading indicator of the sentiments is the call-put ratio. This indicator is calculated by dividing the volume of call options by the volume of put options. A call option gives the holder a right to buy. If the number of call options are more than the number of put options, it indicates that more people are interested to own the stock. In other words, a call-put ratio of more than one indicates a bullish sentiment. The higher the ratio, more is the bullishness. A call-put ratio below 1 indicates a bearish sentiment. A call-put ratio of one indicates a neutral view prevalent in the market. While the call-put ratio indicates sentiment, a look at the trend over a period of time can also be a good indicator. Even though the call�put ratios are greater than one over a period of time, it may not really indicate bullishness if it is falling over a period of time. Conversely, call-put ratios even if it is always less than one need not indicate bearishness if it is a rising trend. Other words call/put ratio is a market sentiment indicator not a trend confirmation indicator.
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