Put-Call Ratio (PCR)

What the ratio is really counting

Every option contract has a buyer and a writer, so open interest counts positions, not opinions. When the PCR rises, it tells you that the number of open put contracts grew faster than open calls. It does not tell you whether those puts were bought by nervous investors or written by traders who expect support to hold. That ambiguity is the whole art of reading PCR, and it is why the number needs the rest of the option chain around it.

In India the ambiguity leans one way. Index option writing is a large, professional activity; put writing against a support level is one of the most common institutional trades on Nifty. So a high index PCR frequently means "a lot of puts have been sold below the market", which is bullish positioning, rather than "a lot of puts have been bought", which would be bearish. Stock-option PCR is thinner and swings more, so the same number carries less weight there.

Formula

PCR (by open interest) = total put open interest ÷ total call open interest

PCR (by volume) = total put contracts traded ÷ total call contracts traded

Both are computed for a single expiry across all strikes, or for all expiries combined. The OI version is the one quoted on most Indian chains because it reflects positions being carried overnight; the volume version is dominated by intraday round trips and spikes on expiry day for reasons that have nothing to do with sentiment.

Worked example (illustrative numbers)

Suppose NIFTY is at 24,000 on a Tuesday and the weekly expiry chain shows, across all strikes, 1,56,00,000 units of put open interest and 1,20,00,000 units of call open interest. NSE quotes open interest in units of the underlying; with the Nifty lot size of 65, that is 2,40,000 put lots against about 1,84,600 call lots.

PCR = 1,56,00,000 ÷ 1,20,00,000 = 1.30.

Now look at where the OI sits. If the put OI is concentrated at 23,800 and 23,900 and the call OI at 24,500 and 25,000, the picture is "puts written just below spot, calls written well above": a range with a floor close by. If instead the put OI is stacked far below at 23,000, the puts look more like cheap insurance bought by portfolio holders, and the same 1.30 says much less about the next few sessions. The ratio told you the crowd is put-heavy; the strike distribution told you why.

Why it matters to an options trader

PCR is fast to read and hard to fake. It compresses the positioning of every participant in one expiry into a single figure that you can compare with yesterday, with last expiry and with the level the market is at. Three practical uses on NSE:

• Trend confirmation. A rally in which PCR climbs alongside price usually means put writers are following the market up, rolling their strikes higher. A rally where PCR falls means calls are being piled on and the move is being chased.
• Extremes as a contrarian cue. When the ratio reaches the edge of its recent range, the trade that produced it is crowded. Crowded hedges tend to be unwound, which pushes the market the other way.
• Expiry positioning. In the last two sessions before a Nifty Tuesday expiry, a PCR that drifts toward 1 while OI shrinks is the signature of positions being squared off rather than new views being taken.

On TradePulse the ratio is shown next to the strike-wise OI so you can do the second step at once. The Nifty PCR, Bank Nifty PCR and Sensex PCR pages carry each day's end-of-day value; the PCR hub compares them.

Common mistakes

• Using a fixed threshold. "Above 1.3 is bullish" was a fair rule in one volatility regime and useless in another. Compare with the recent range.
• Reading PCR without the strikes. The same ratio can come from puts sold near the money or puts bought far away. Only the chain can tell you which.
• Mixing OI and volume. Volume PCR on an expiry day routinely prints extreme values because of intraday scalping. It is a different measure.
• Treating stock PCR like index PCR. Single-stock chains are thinner, lumpier and driven by a few large positions. A stock PCR of 1.4 may be two institutional hedges.
• Forgetting the hedging floor. Mutual funds, insurers and proprietary desks buy index puts as protection whatever their view. That keeps Nifty PCR structurally above where a pure sentiment measure would sit.

Indian-market specifics

• NSE publishes open interest in units of the underlying, not lots. Nifty's lot is 65, Bank Nifty's 30 and FinNifty's 60 after the January 2026 revision, so convert before comparing lots across indices.
• Nifty has weekly and monthly expiries, both on Tuesday; Bank Nifty and FinNifty have monthly expiries only (last Tuesday). Weekly PCR on Nifty therefore resets every Tuesday, while Bank Nifty's ratio builds over a full month.
• Sensex options expire on Thursday on BSE, so Sensex PCR and Nifty PCR are never at the same point in their expiry cycle.
• Index options are European and cash-settled, so put OI is never exercised early; it is either closed or expires. That makes the OI you see a cleaner picture of intent than in physically settled markets.

FAQ

What is a good PCR for Nifty?

There is no single good number. Nifty's OI-based PCR usually moves between about 0.7 and 1.5. The useful question is where today's value sits in its own recent range, and what the strike-wise OI behind it looks like.

Is a high put-call ratio bullish or bearish?

Literally, it means more put positions than call positions. In practice on NSE index options it usually means puts have been written below the market, which is bullish positioning, and when the ratio is extreme the hedge is crowded, which is the contrarian bullish reading. The bearish reading applies when the put OI is clearly bought protection stacked far from spot.

What is the difference between PCR by OI and PCR by volume?

OI counts positions still open at the end of the day; volume counts contracts traded during the day, including positions opened and closed within minutes. OI PCR reflects carried positioning and is the default on Indian chains.

Where does TradePulse get the PCR from?

From the option chain itself: total put OI divided by total call OI for the chosen expiry, computed from NSE and BSE data. The public pages show the end-of-day value; the app updates it through the session.

Related terms

• Open Interest, the number PCR is built from
• OI vs Volume, why the two PCR versions disagree
• Max Pain, the other expiry-positioning read
• India VIX, the fear gauge PCR is most often paired with