# Put/call ratio and put-call parity

Canonical: https://halfonadouble.com/learn/put-call-ratio
Data through: 2026-10-02 close
Publisher: Half on a Double

## The put/call ratio

The put/call ratio divides put activity by call activity. There are two
common versions:

- **Volume-based**: puts traded today ÷ calls traded today. Noisy, reacts
  within a session.
- **Open-interest-based**: put open interest ÷ call open interest. Slower,
  reflects positions actually held.

A ratio above 1 means more puts than calls. For index products a ratio
near 1 is ordinary, because puts are bought as insurance; for single
stocks the typical ratio is lower, often 0.5 to 0.8. What matters is the
change against the ticker's own history, not the absolute number: a spike
in the put/call ratio is a spike in hedging or bearish speculation.

The ratio says nothing about _who_ holds the positions. A high put ratio can
be a market maker short puts to customers who bought protection, and the
hedge that market maker runs is what moves the stock, which is why this
site looks at [open interest](/learn/open-interest) as a portfolio rather
than at the ratio alone.

Ticker pages publish put and call open interest separately and their ratio.
The [put/call open interest extremes](/screens/put-call-open-interest-extremes)
screen ranks both tails for chains with at least 50,000 open contracts. The
older [listed-contract count screen](/screens/call-put-contract-extremes) is
kept separately because a count of available instruments is not open interest.

## Put-call parity

For European options with the same strike and expiry, a call and a put are
tied together by an arbitrage relation:

    C − P = F·e^(−rT) − K·e^(−rT)

where `C` and `P` are the call and put prices, `K` the strike, `F` the
forward price of the underlying, `r` the risk-free rate and `T` the time to
expiry. In words: a long call plus a short put is the same thing as owning
the forward and borrowing the strike.

Two consequences are useful in practice:

1. **Across strikes, `C − P` is a straight line in `K`.** Its slope gives the
   discount factor (and so the interest rate the market is using), and its
   intercept gives the forward. That is how a market-implied risk-free rate
   and a market-implied forward, including dividends and borrow costs, can
   be read straight off an options chain.
2. **The strike where `C = P` is the forward price.** Above it calls are
   cheaper than puts, below it the reverse.

American-style single-stock options break the equality slightly (early
exercise), so the relation is used on index options, which are European,
to read the rate, and on each stock's own chain to read its forward.

## Related

[Open interest](/learn/open-interest) · [Max pain](/learn/max-pain) · [Methodology](/methodology)