The put-call ratio is the total open interest of all puts divided by the total open interest of all calls, usually for the nearest expiry.
A PCR of 1.2 means there are 1.2 open put contracts for every open call.
How traders read it
- Option writers (sellers) hold most open interest. When writers sell many puts, they expect the price to hold above those strikes, so a rising PCR is often read as support building.
- A falling PCR means calls are being written faster, often read as resistance or caution.
- Extreme values (very high or very low) are sometimes treated as signs the market is overstretched in one direction.
PCR is best watched as a trend through the day and compared with previous days, not as a single number. It says nothing certain about where the price will go.