Put-Call Ratio

The Put-Call Ratio (PCR) is a market sentiment indicator that measures the relative volume or open interest of put options to call options traded on an underlying asset — such as Nifty 50 or individual stocks — over a given time period. It is calculated as: PCR = Put Volume (or Open Interest) ÷ Call Volume (or Open Interest). A PCR above 1.0 indicates that more puts are being bought than calls — suggesting bearish sentiment or heavy hedging demand in the market. A PCR below 0.7 indicates greater call activity — signalling bullish positioning and optimism. Contrarian investors often interpret an extremely high PCR as excessive pessimism — a potential buying opportunity — and an extremely low PCR as excessive optimism — a potential selling signal. In Indian equity markets, the PCR on Nifty 50 options is one of the most closely watched sentiment indicators, particularly during weekly and monthly expiry cycles, when institutional positioning dominates and shifts in PCR often precede significant price moves in either direction.