By Joe Duarte

The put volume indicator (PVI) is a sentiment tool created by John Bollinger that measures relative put activity levels. It’s similar to a P:C ratio, with extreme readings used to identify periods of excessive fear or complacency. PVI can also be applied to individual stocks, indexes, or an entire exchange.

The PVI is calculated using daily put option volume data, which is available from a number of sources, including the OCC and options analysis software. It’s calculated by dividing daily put volume by the 10‐day simple moving average (SMA) of that volume. A rising ratio indicates the following:

  • Put volume is increasing

  • Bearish sentiment is increasing

The figure displays a daily chart of PVI values for the S&P 500 Index (SPX) with an overlay of SPY, the exchange‐traded fund (ETF) based on the index. Very high readings identify extreme pessimism, which sets the tone for a reversal.


The chart includes the following:

  • Daily price data for SPY

  • PVI line across the bottom

  • Central mean line at approximately 1.0

  • +2SD line above the mean at 1.80 & –1SD line below it at 0.60

The vertical lines help view bearish extremes. Four of six of these extremes coincided with, or occurred shortly before, an acceleration of the selling and a subsequent bottom reversal in the market. These readings should not necessarily be interpreted in contrarian fashion, immediately, but as signs that the bears are gaining the upper hand, at least in the short term, and that an acceleration of the down trend may be near.

So, when you see these high readings, it’s a time to pay even closer attention to the action in the market, especially because down trends tend to be shorter in duration than up trends and that, because there is an extreme in sentiment, a big move to the down side is increasingly likely, but also that a reversal may be close at hand.

If you have data to create a put to call ratio, you can also create the PVI.