Put To Call Ratio 101

If you’ve ever wondered how to better understand market sentiment in options trading, you’re not alone. Many traders struggle to identify whether the market is leaning bullish or bearish. The put to call ratio is a powerful tool that can give you this insight. 

In this article, we’ll explain exactly what the put to call ratio is, how to interpret it, and how to use it to make smarter trading decisions using a completely free tool. By the end, you’ll know how to spot high-activity expiration dates and gauge market conviction for more confident trades.

What is the Put to Call Ratio?

The put to call ratio measures the relationship between put and call options. Specifically, it divides the number of puts by the number of calls based on open interest. Here’s what you need to know:

• Above 1: More puts are being traded than calls, typically signaling a bearish market.
• Below 1: More calls are being traded than puts, usually indicating bullish sentiment.
• Important note: Not all puts signal bearish moves—sometimes traders are selling puts, which is actually bullish.

The ratio can give you a quick snapshot of market sentiment, helping you identify whether traders are generally leaning bullish or bearish.

How to Access the Put to Call Ratio Tool

This tool is available for free on the Options Trading Toolbox website. Here’s how to use it:

1. Go to the website and click on Put to Call Ratio.
2. By default, the tool shows the ticker SPY, but you can type in any ticker you want.
3. The tool will display:
   • Overall put to call ratio
   • Total open interest in the market
   • Breakdown of puts and calls
   • Expiration-date-specific ratios

This simple setup allows you to analyze different tickers quickly without paying for expensive software.

Understanding Expiration Dates and Ratios

The tool doesn’t just show overall ratios—it breaks them down by expiration dates. Here’s why that matters:

• Expiration dates are listed from 1 DTE (days to expiration) up to about 191 DTE (roughly a year).
• Each expiration date has its own put to call ratio, allowing you to spot where most trading activity is happening.

For example:

• A 33-day expiration with a ratio of 9 shows that puts are heavily traded compared to calls.
• The average ratio might be 1.76, so a ratio of 9 is extremely high, indicating strong activity on the put side.

By tracking these numbers, you can identify which expiration dates have the most action and consider them for potential trades.

One-Day Open Interest: Measuring Market Conviction

The put to call ratio shows market direction, but the one-day open interest change shows how strongly traders are moving.

• Positive numbers: New contracts are being added, showing strong conviction.
• Negative numbers: Contracts are being closed, indicating low conviction.

For example, a +$322,000 change in one day suggests significant activity and new contracts being opened, signaling a confident move by traders.

This helps you not only see which side of the market is favored but also how strongly traders are acting on their positions.

Using the Put to Call Ratio to Find Trades

Once you know which expiration date has high activity, you can dive deeper into potential trades. Here’s how:

1. Check GEX Data: Click on GEX Data to see metrics like total gamma, max pain, put wall, and call wall for a specific expiration date.
2. Use the Strategy Screener:
   • Go to the Strategy Screener section.
   • Filter by expiration date (for example, between 55 and 70 DTE if the 60 DTE is active).
   • Look for strategies, strike prices, or specific options that fit your trading plan.

This combination allows you to match your trades with market sentiment and activity levels, increasing the likelihood of successful trades.

Practical Tips for Traders

Here are some actionable tips for using the put to call ratio effectively:

• Focus on high ratios for potential bearish plays and low ratios for bullish plays.
• Check open interest changes to see how strongly traders are committing to a move.
• Look at expiration-specific data to find where the most opportunities exist.
• Combine with other tools like GEX data and the strategy screener to refine trades.

These steps make it easier to turn raw market data into actionable options trading strategies.

The put to call ratio is an essential tool for options traders looking to understand market sentiment. By examining ratios, open interest, and expiration-specific data, you can identify high-activity dates, gauge trader conviction, and find potential trades that align with the market.

If you’re serious about options trading, start using this free tool on the Options Trading Toolbox website today. Focus on the ratios, track open interest, and combine insights with strategy screeners to make smarter, more confident trades. Don’t guess at market sentiment—use data to trade with clarity.