The CBOE Equity Put/Call Ratio chart, at the top of the blog's right column, tracks daily sentiment by measuring equity put volume relative to call volume. Calculated by dividing puts by calls, the latest November 13 reading of 0.63 means 63 puts traded for every 100 calls. The data are published daily by the Chicago Board Options Exchange (CBOE) in its Daily Market Statistics summary, which reports equity, index, and total put/call ratios, typically the evening after the close or the following morning. Tracked for decades, the series provides a long-standing gauge of options-market positioning.
On Friday, November 13, 2026, the equity ratio closed at 0.63, down 0.09 (12.5%), slightly below its blue 5-day average of 0.65 and near the shared Nadaraya–Watson midline at 0.64. It remained within both the inner blue (0.58–0.70) and outer red (0.53–0.75) envelopes, following an earlier November spike toward 0.88. The reading indicated neutral sentiment, neither extreme fear nor complacency, while its retreat from the recent peak suggested that put-buying pressure had eased. With daily swings remaining wide, the ratio offered no meaningful directional bias and served as a neutral backdrop pending confirmation from price action and volatility.
The contrarian interpretation of the ratio rests on the observation that options traders often get it wrong at emotional extremes: heavy put buying can signal potential bottoms in stock indices such as the S&P 500, while heavy call buying can signal potential tops. Popularized in technical-analysis literature and options-trading manuals from the 1980s onward, notably by practitioners such as Larry McMillan, this approach remains a standard tool in sentiment analysis.
The Equity Put/Call Ratio primarily reflects retail and speculative activity rather than institutional hedging. It is naturally call-biased, historically averaging 0.60–0.64, with a typical range of roughly 0.45–0.80 and a long-term 200-day average near 0.61 (YCharts historical series). By contrast, the Index Put/Call Ratio is put-biased, often exceeding 1.0, as institutions use index puts for portfolio protection. The Total ratio combines both. The equity ratio is therefore a more direct gauge of speculative sentiment extremes, although the equity and index series frequently diverge on any given day.
Contrarian Interpretation and Levels
The ratio is interpreted contrarily: elevated readings reflect heavy put buying and fear, often near short-term lows as hedging demand peaks; depressed readings reflect heavy call buying and complacency, often near short-term highs or pullback zones. Approximate equity-ratio thresholds vary by market regime and 0DTE activity (options expiring on the day of trading): extreme fear above 0.80–0.90, elevated fear at 0.75–0.85, neutral at 0.55–0.75, complacency below 0.55, and extreme complacency below 0.50.
A multi-year iPresage study (2017–2025), using the 5-day average (blue in the chart above) found the strongest predictive edge over 21 trading days: top-quintile fear readings preceded average forward S&P 500 returns of 1.72%, versus 0.83% following bottom-quintile complacency readings. Results were weaker over 1-day and 63-day horizons. Because daily readings are distorted by expirations and one-off flows, practitioners favor 5-, 9-, or 10-day moving averages. Nadaraya–Watson Envelopes further help identify regime-adjusted sentiment extremes.
Short-Term Trading Application
Treat the smoothed equity ratio as a timing filter, not a standalone signal. When the 5-day average rises to elevated levels following a decline and price stabilizes, the setup favors looking for long entries or reducing short exposure. Conversely, when the average or lower envelope reaches depressed levels after an advance, consider tighter stops, smaller positions, or added hedges. Confirmation from price relative to short-term moving averages, VIX behavior, and market breadth improves reliability.The ratio is most useful for multi-day to multi-week swings rather than pure day trading. Elevated readings may also favor selling downside premium once a low is established, while depressed readings suggest reducing long exposure. Position size should reflect the degree of sentiment extremity, but a strong prevailing trend should never be overridden solely because the ratio reaches an extreme.
Limitations
The signal is modest, regime-dependent, and horizon-specific. Structural changes in options volume have reduced the reliability of historical fixed thresholds. The ratio is best used alongside price action and other sentiment measures, not in isolation.