Chapter 29: Introduction to Index Option Products and Futures 523 
is less reliable than the equity ratio, but is still helpful in determining market tops 
and bottoms. 
In summary, the put-call ratio is an easily calculated one. Daily fluctuations can 
be smoothed out into 10-, 20-, or 50-day moving averages. The ratio should be inter­
preted bullishly when there is too much put buying and bearishly when there is too 
much call buying. The phrase "too much" is not easily interpreted, but looking for 
local maxima or local minima in the chart pattern is a reasonable way to approach the 
problem. When the put-call ratio moving average is increasing, a buy signal would 
not be given until the average rolls over and begins declining; a sell signal would be 
generated when the average which is declining bottoms out. 
SUMMARY 
There are several kinds of indices and several kinds of trading vehicles: cash-based 
options, futures options, and futures. These various underlying securities have dif­
fering terms in the way they trade and also in the way their options are designed. This 
variety creates many opportunities for astute option strategists.