Put Call Ratio Skew

Definition ∞ Put call ratio skew measures the relative demand for put options compared to call options at different strike prices or maturities. It reflects the market’s perception of future price direction and potential downside risk. A higher skew towards puts typically indicates a bearish sentiment, while a skew towards calls suggests bullishness.
Context ∞ In digital asset derivatives markets, the put call ratio skew provides insights into the hedging activities and speculative positioning of institutional and retail investors. A notable increase in put demand can signal concerns about an impending price drop for an underlying cryptocurrency. News reports often analyze this metric to gauge market participants’ expectations for future volatility and price action.