The put-call ratio, or PCR, compares activity in put options with activity in call options. It is a quick way to see whether the options market is leaning towards puts or calls.

PCR is simple to calculate, which is why it appears on almost every options dashboard. It is also easy to misread, so it helps to understand what it actually measures.

How PCR is calculated

Most traders refer to OI PCR when they say 'PCR'.

  • OI PCR = total put open interest ÷ total call open interest (for one expiry).
  • Volume PCR = put volume traded today ÷ call volume traded today.
  • Change-in-OI PCR = puts added today ÷ calls added today; useful for intraday reading.

What high and low PCR usually suggest

In Indian index options, a large share of OI comes from option writers. More put writing pushes PCR up, and put writers expect the market not to fall much. So a rising PCR is often read as supportive, and a falling PCR as writers leaning on the call side.

Very extreme readings are watched for the opposite reason: when almost everyone is positioned one way, the market can become stretched. There is no fixed 'right' number; traders compare today's PCR with its own recent range.

Limits of PCR

  • It mixes every strike together, so a large position far from the spot can distort it.
  • It does not separate buyers from writers.
  • It changes through the day; a morning reading can look very different by the close.
  • It works best alongside price, OI at key strikes and buildups, not alone.