Let's delve into the concept of put/call ratio, which is derived by dividing the put trading volume by the call trading volume. A put/call ratio of 0.74 indicates that for every 100 calls purchased, 74 puts were also acquired. This ratio is considered a contrary indicator, meaning that a reading of 1.0 or higher is perceived as a bullish signal. This is because when the majority believes the market will decline, it often ends up moving in the opposite direction. It's a reminder that going against the crowd can sometimes lead to success in the world of finance.
