Definition of put-call ratio

ratio of trading volume in put options to the trading volume in call options. The ratio provides a quantitative measure of the bullishness or bearishness of investors. A high volume of puts relative to calls indicates investors are bearish, whereas a high ratio of calls to puts shows bullishness. Many market technicians find the putcall ratio to be a good contrary indicator, meaning that when the ratio is high, a market bottom is near and when the ratio is low, a market top is imminent. This reading assumes that the majority of options investors are making the wrong move.