Put-call Ratios Near Extreme Lows (Preview)

By Lawrence G. McMillan

With euphoria abounding in the stock market, call buying has been rampant. That has forced the put-call ratios to drop precipitously. The weighted ratio is at a multi-year low, and the standard ratio is heading lower quickly as well. Let’s look at six-year charts for each – and include the CBOE equity-only ratio as well. First, consider the weighted ratio. The graph above goes back to 2019.

Let’s begin at the lower right on this chart – the current date. The rectangle there is the same chart as Figure 3 in the Market Commentary above. The weighted ratio is currently at its lowest level since the point marked as “A,” which was back in 2024. One can see that the weighted ratio has bottomed in this general area many times since 2019. Sometimes it has led to a modest correction (9% or 10%), but at other times it’s been the precursor to a much nastier move. However, it is not a sell signal until...