Trading term

What is Put/call ratio?

The put/call ratio is the number of put options divided by the number of call options, measured either on the day's trading volume or on open interest. A ratio above 1 means more puts than calls. It's read as a sentiment gauge — more puts, more fear — though on bitcoin the volume ratio has never averaged above 1 for a year.

There are two versions and they answer different questions. The volume ratio is puts traded over calls traded on a given day: what's active. The open-interest ratio is puts outstanding over calls outstanding: where the positions are. The open-interest version, read by expiry on the chain, is the more useful one, because it shows which strikes and dates the market is actually holding.

On bitcoin, calls dominate. Since 2021 the median day's volume ratio on Deribit's monthly and quarterly expiries has been about 0.66, with puts around 40% of contracts traded; the open-interest ratio on the live chain sits in the 0.5–0.6 range. The put share rises in bear markets and falls in bull markets, which makes the ratio a description of the regime the market is in rather than a forecast of the next one.

For example

On a given morning Deribit carries 282,000 BTC of open interest in bitcoin calls and 156,000 in puts: a put/call ratio of 0.55. On the weekly expiry due tomorrow the ratio is 0.79; on the big quarterly it is 0.53. Short-dated protection is being bought while longer-dated upside is being held.

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Why it matters to you

By expiry and by strike, the open-interest ratio shows where the walls of positioning are — the strikes with the most puts below the price and the most calls above it — which is where dealers' hedging is thickest and price tends to slow. As a single headline number it says much less: on bitcoin its level has tracked the trend and said nothing about the following month.

⚠ Reading a rising ratio as a sell signal

A higher put/call ratio means more puts are trading or held relative to calls. That can be protection being bought, calls being sold against positions, or simply a quieter call market. On bitcoin the ratio was highest in 2022, during the bear, and lowest in 2023, at the start of the bull — it followed the move rather than leading it.

Frequently asked questions

What is the put/call ratio?

Puts divided by calls, on either volume or open interest. Above 1 means more puts than calls; below 1, more calls.

What is a normal put/call ratio for bitcoin?

Below 1. The median daily volume ratio on Deribit's monthly and quarterly expiries since 2021 is about 0.66, and the open-interest ratio on the live chain usually sits between 0.5 and 0.6. Ether's is lower still.

What is max pain?

The strike at which option holders on a given expiry would collect the least in total if price settled there. It's read off the same open-interest data and describes where the positions sit; it is not a price target.

Read the full guide

DerivativesHow to Read Options Skew and the Put/Call RatioOptions skew is the gap between what the market pays for puts and for calls. The put/call ratio is how many of each are trading. Both are sold as fear gauges. Reconstructed from every Deribit option close since 2021, bitcoin's skew was on the put side only 45% of the time, its most lopsided days marked bottoms rather than tops, and it was on the call side the evening before seven of the twelve biggest one-day falls.12 min read

Related terms

Call optionA call option is a contract giving the buyer the right — but not the obligation — to buy an asset at a fixed 'strike' price before a set expiry date. Call buyers are betting the price will rise; their risk is capped at the premium paid, while the potential profit is open-ended.Cash-secured putA cash-secured put is an options strategy where you sell a put option while setting aside enough cash to buy the stock if you're assigned. You collect the premium as income; in exchange, you agree to buy the stock at the strike if it falls there. It's a way to get paid to buy a stock you want at a lower price.Covered callA covered call is an options strategy where you own 100 shares of a stock and sell a call option against them. You collect the premium as income; in exchange, you cap your upside at the strike. It's a popular way to generate income on shares you're happy to hold or sell.DeltaDelta measures how much an option's price moves for each $1 change in the underlying. A delta of 0.60 means the option gains about $0.60 if the stock rises $1. It ranges from 0 to 1 for calls (0 to −1 for puts) and doubles as a rough probability the option finishes in the money.
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