The Put-Call Ratio (PCR) compares activity in put options with activity in call options.
- PCR (OI) = total put open interest ÷ total call open interest
- PCR (volume) = put volume ÷ call volume
A PCR of 1.2 means there are 1.2 put contracts open for every call contract.
How traders read PCR
Interpretations differ, and context matters:
- Rising PCR means more put positions relative to calls. Because put writers often sell puts when they expect support to hold, a moderately rising OI-PCR is frequently read as supportive.
- Very high or very low PCR is often read contrarian: positioning has become one-sided, which can come before a reversal.
- The trend of PCR across the day or week usually says more than one reading.
Limits of PCR
- It mixes hedges with directional bets.
- It depends on which expiry and which strikes are included.
- Extremes can stay extreme for a long time.
PCR is one input among many, best read alongside price, OI by strike and volatility.
The NEOGreeks terminal calculates PCR from the live option chain and flags when the chain data behind it is incomplete, instead of showing a misleading number.