The put-call ratio can be a powerful contrarian sentiment tool, but only when used in context. The article makes it clear: this ratio isn't a standalone signal. So what do you pair it with?
Do you lean on market breadth, volatility indexes like the VIX, or valuation indicators to confirm what the sentiment is saying? And when sentiment hits an extreme-either fear or euphoria-how do you decide when (or if) to act?
Let's compare approaches. If you haven't read the full article yet, it's a great deep dive into how to use the ratio more effectively: The Put-Call Ratio: Viewing Market Sentiment Through Options Activity (June 2025, by Wayne A. Thorp).
------------------------------
Jenna Brashear
AAII Community Manager
Chicago, IL
------------------------------