The put/call ratio is a commonly used indicator of market sentiment and potential future market direction. This ratio is calculated by dividing the total number of put options traded on a particular security by the total number of call options traded on the same security.
A ratio above one indicates that more put options than call options were traded during the day, which may suggest a bearish outlook for the underlying security and its options. A ratio below one indicates greater call option activity, which may reflect a more bullish view of the market.
The put/call ratio is updated continuously throughout the trading day as transactions occur. In addition, a put/call open interest (OI) ratio is calculated at the end of each trading day using the open interest for put and call options on the security. Both ratios can be viewed by searching for the underlying security on the Exchange Traded Options (ETO) page.