The equity put/call ratio is the number of put contracts traded on individual stocks for every call. It rises when traders buy protection and falls when they chase upside. Twenty years of CBOE's daily readings, lined up against the S&P 500 and the Nasdaq 100.
Day to day, yes. The daily put/call moves against the market: the correlation with the same day's return is −0.31 for the S&P 500 and −0.30 for the Nasdaq 100. Down days bring put buying; up days bring call buying.
As a contrarian signal, the spikes are what count. A day at 1.00 or higher has been followed by better-than-normal returns: the Nasdaq 100 was up 81% of the time a month later, by +3.2% on average against +1.4% for any day.
Low readings are not a sell signal. The 10-day average sat under 0.45 for most of 2020 and 2021 while the market kept climbing. Complacency can last a long time.
Average total return after each signal, counted once per episode (a new one needs a 20-day gap), with the share of times the index was higher. Nov 2006 to Oct 2026.
Data: CBOE daily market statistics (equity put/call ratio; index and ETF options excluded). Index lines are SPY and QQQ closes from the OnlyAlpha site. CBOE posts each day's ratios after the close, so the latest reading can trail the market by a day. Not investment advice.