What Is the Put Call Ratio and How Should Investors Interpret It?

The Put Call Ratio (PCR) measures put option activity relative to call option activity, calculated from either open interest or volume.

PCR above 1 indicates more put open interest, while below 1 indicates more call open interest, but interpretation is complex due to buyers and sellers.

Open interest PCR shows positioning over time, while volume PCR reflects intraday activity, which can be volatile.

High PCR can be bearish or contrarian bullish if extreme; low PCR can signal crowded optimism.

Combining PCR with price direction and option premiums is necessary for proper context.