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What is PCR (put-call ratio) and how to interpret it
PCR is the put-call ratio, computed as total put open interest divided by total call open interest. A high PCR can signal bearish sentiment or, read contrarily, a potential market bottom where fear is at an extreme.
In one line
PCR (put-call ratio) equals total put open interest divided by total call open interest, so a PCR of 1.2 means 1.2 put contracts are open for every call; a reading above 1 is generally read as bearish but can also signal a contrarian long opportunity when fear is extreme, while a reading well below 1 signals call-heavy positioning that can mean complacency.
BazaarBaaziSource & method
Computing PCR and what moves it
PCR is calculated by dividing the total outstanding put open interest across all strikes by the total outstanding call open interest. You can compute it for a single expiry or across all expiries; most traders watch the near-month PCR because that is where the most active money sits. The ratio changes through the day as fresh positions are opened and existing ones are closed.
A rising PCR means more puts are being added relative to calls. Traders who expect the market to fall buy puts, and traders who want to hedge their portfolios also buy puts. Both of these push the ratio higher. Conversely, a falling PCR means calls are being added faster, either by buyers expecting a rally or by put-holders covering their positions. The direction of change in PCR is often more informative than the absolute level.
The two readings: sentiment and contrarian
The straightforward reading is directional: a high PCR signals fear and bearish positioning, a low PCR signals greed or complacency. Used this way it is a momentum confirmer. If the market is falling and PCR is rising sharply, the falling move has active sellers behind it.
The contrarian reading flips that logic. When PCR reaches an extreme high, it can mean most participants who want to sell have already sold, and the fuel for more downside is limited. Markets have a tendency to punish the crowded trade, so an extremely high PCR can precede a bounce rather than more selling. The honest answer is that PCR is a probabilistic input, not a reversal signal by itself. Pair it with the price structure, the option chain, and the broader market context. Treat single-number extremes as a reason to pay closer attention, not as a trading signal in isolation.
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, because the baseline shifts with market conditions. Traders treat extreme readings in either direction as a caution signal. A PCR well above 1.3 for an extended period often marks a bearish or fearful market, while a PCR persistently below 0.7 can flag complacency. Context and trend matter more than any single threshold.
Is a high PCR bullish or bearish?
A high PCR is directly bearish, showing more put positions than call positions. Contrarily, a very high PCR can also signal that too many traders are already positioned for a fall, which can set up a bounce when the selling is exhausted. Both readings are valid depending on whether you are following or fading the crowd.
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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