Put-Call Ratio (PCR)
Total put open interest divided by total call open interest — a rough sentiment gauge, read contrarian more often than literally.
How PCR readings are conventionally read
- Below 0.7
- Call-heavybullish positioning; read contrarian as a crowded long
- 0.7 – 1.0
- Mildly call-heavycommonly treated as the normal resting range
- 1.0
- Balancedequal put and call open interest
- 1.0 – 1.3
- Mildly put-heavyoften protective hedging rather than directional bearishness
- Above 1.3
- Put-heavybearish on its face; read contrarian near extremes
These bands are convention, not a rule, and they drift with the instrument and the regime — a level that is extreme on NIFTY is ordinary on a thinner contract. PCR is one input among several and is not a signal on its own.
A PCR well above 1 is conventionally read as bearish sentiment building — but because a large PCR often reflects protective put buying or put writing at support rather than outright bearish conviction, it's traditionally read as a contrarian signal near its extremes rather than taken at face value. It's one input among several, never a signal on its own.
PCR is most often watched on the index as a whole rather than at a single strike, since one strike's ratio can be skewed by a single large order — the aggregate reading across the full chain is traditionally treated as the more reliable sentiment gauge of the two.
Example: a PCR of 1.4 (more puts than calls in open interest) looks bearish on the surface — but if that OI is concentrated in near-the-money puts written for premium right at a support level, it can just as easily mean writers are confident that level holds, the opposite conclusion from a purely literal reading.
PCR 1.4 — read alongside where that OI actually sits, not on its own
Frequently asked
What is a good PCR ratio?
There is no single good value — PCR is read relative to its own recent range, not against a fixed target. Readings between roughly 0.7 and 1.3 are conventionally treated as the normal resting band; what traders watch for is a move to an extreme relative to where that instrument has been sitting, rather than any absolute number.
What does it mean if PCR is less than 1?
More call open interest than put open interest, which on its face reads as bullish positioning. Because it also means the long side is crowded, a PCR well below 1 is traditionally read contrarian — as a market with little hedging in place and more room to fall on bad news.
Is a high PCR bullish or bearish?
Literally bearish, conventionally read bullish near extremes. A high PCR often reflects protective put buying or put writing at a support level rather than outright bearish conviction — so a reading of 1.4 concentrated in near-the-money puts written for premium can mean writers expect that level to hold, the opposite of the surface reading.
Should PCR be read on one strike or the whole chain?
The whole chain. A single strike's ratio can be skewed by one large order, so the aggregate reading across the full index chain is treated as the more reliable of the two.
Related terms
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