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What is PCR (put-call ratio) and how to interpret it
PCR is total put open interest divided by total call open interest for a defined expiry or universe. It measures matched inventory composition, not sentiment or a trade signal by itself.
In one line
PCR (put-call ratio) equals total put OI divided by total call OI, so 1.2 means 1.2 open put contracts per open call in the chosen scope; because every contract has a matched buyer and seller, the ratio alone is neither bullish nor bearish.
BazaarBaaziSource & method
Computing PCR and what moves it
PCR is calculated by dividing total outstanding put OI by total outstanding call OI. You can compute it for one expiry or across several, so the scope and timestamp must travel with the number. The ratio changes when the relative matched inventory on the two option sides changes.
A rising PCR means put OI grew faster, fell slower, or both relative to call OI. It does not reveal whether puts were bought for downside, sold for income, embedded in spreads, or used as portfolio hedges. A falling PCR has the same identity problem on the call side.
Why the usual sentiment labels conflict
Some desks call high PCR bearish because puts may reflect protection demand; others call it bullish because puts may have been sold. Those opposite stories can both be attached to the same aggregate number, which is exactly why identity cannot be inferred from PCR alone.
A useful PCR study must define expiry scope, sampling time, lot units, lookback and an out-of-sample rule before examining returns. Until such a test exists, pair the ratio with independent price and volatility evidence and treat it as descriptive inventory composition, not momentum or reversal proof.
FAQ3 reader questions · AEO-eligible
Common questions on what is pcr.
What is a good PCR level for the market?
There is no universal good level. A threshold must be calibrated to the same product, expiry scope, sampling time and lot regime, then tested out of sample before it can support a decision.
Is a high PCR bullish or bearish?
Neither by itself. A high PCR proves only that matched put OI exceeds matched call OI in the defined scope; it does not identify buyers, sellers, hedges or future direction.
Where do I find the PCR for Nifty?
The NSE website publishes the daily option chain with open interest for Nifty. You can calculate PCR yourself from those numbers, or read it from broker and financial-data platforms that compute it directly.
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