Put-call ratio

The put-call ratio, abbreviated PCR, is an options-sentiment gauge that divides put activity by call activity in an underlying, computed from the option chain data published by the National Stock Exchange . A reading above 1 means more put activity than call activity, conventionally read as bearish positioning or heavy hedging; a reading below 1 means call activity dominates, read as bullish positioning. It is one of the most widely watched single numbers in Indian derivatives.

PCR comes in two forms that measure different things. OI-based PCR divides total put open interest by total call open interest and reflects standing positions. Volume-based PCR divides put traded volume by call traded volume and reflects fresh flow in the current session. The two can disagree, and knowing which one a screen is showing is the first step to reading it correctly.

This article defines both versions, explains the contrarian interpretation that gives PCR most of its value, sets out the typical ranges including the Nifty band, and details the limitations that make PCR a confluence tool rather than a standalone signal. For the open-interest data that underlies OI-based PCR, see open interest and change in open interest .

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OI-based PCR and volume-based PCR

The two PCR variants share a formula shape but use different inputs, and they answer different questions.

OI-based PCR is total put open interest divided by total call open interest, summed across the strikes of an expiry. Because open interest is a standing stock of live positions, OI-based PCR is the steadier of the two and is the version most often quoted for the Nifty and Bank Nifty . It reflects where positioning has accumulated, not what traded in the last few minutes.

Volume-based PCR is total put traded volume divided by total call traded volume over the session. Because volume resets daily and reacts to fresh flow, volume-based PCR is more reactive and noisier. It can swing sharply intraday on a burst of put buying or call buying that does not yet show up in open interest. Traders who want the freshest sentiment read use volume PCR; those who want the positioning backdrop use OI PCR.

A worked example clarifies the arithmetic. If an expiry shows aggregate put OI of 60 lakh contracts and aggregate call OI of 50 lakh contracts, OI-based PCR is 1.2, a mildly bearish-leaning reading. If the same expiry traded 40 lakh puts against 50 lakh calls in the session, volume-based PCR is 0.8, a bullish-leaning intraday flow. The divergence, OI PCR at 1.2 and volume PCR at 0.8, says standing positioning is put-heavy while the day’s fresh flow leaned to calls.

Contrarian interpretation

PCR earns most of its value when it is read against the crowd rather than with it. The raw number is sentiment; the edge is in spotting when sentiment has gone too far.

At a very high PCR, the crowd is heavily positioned in puts, meaning broad bearishness or heavy hedging. When that reaches an extreme, the market is often oversold: most of the selling and hedging is already in place, so there is little fresh selling left to push price lower, and a bounce becomes likely. Extreme fear frequently precedes a reversal higher. At a very low PCR, the crowd is heavily positioned in calls, meaning broad bullishness; at an extreme this can mark an overbought market with little fresh buying left, ripe for a pullback.

A documented recent instance: on 13 March 2026, the Nifty fell toward 22,800 and PCR-OI spiked to an extreme near 1.84, signalling oversold fear; by 17 March the Nifty had bounced to about 23,158, a gain of roughly 358 points in four trading sessions from the low. The extreme PCR reading aligned with the reversal, which is the contrarian pattern PCR is meant to flag, though it is one instance and not a rule.

PCR is also read through divergence against price. A bullish divergence is the Nifty making a new low while PCR does not make a new high, hinting that selling pressure is exhausting. A bearish divergence is the Nifty making a new high while PCR does not make a new low, hinting that buying enthusiasm is fading. Divergences are where many traders feel PCR adds the most edge, because they flag a turn before price confirms it.

Typical ranges and key levels

PCR has no universal threshold, but several bands are widely used as reference points.

A PCR between roughly 0.7 and 1.0 is generally treated as neutral, a balanced reading where neither puts nor calls dominate decisively. A reading above 1.0 leans bearish, and a reading below 0.7 leans bullish. The more actionable signals come at the extremes: above about 1.3 and below about 0.5 are often where reversals are flagged, because sentiment at those levels is lopsided enough to snap back.

For the Nifty specifically, PCR-OI historically oscillates between about 0.8 and 1.3 in normal conditions. The 0.8 lower bound is treated as a bullish signal and the 1.3 upper bound as a bearish one. An alternative framing puts the neutral broad-market band at 0.7 to 1.0, with readings above about 1.15 signalling fear and below about 0.50 signalling greed. The exact numbers vary by source and by underlying; what is consistent is that the extremes, not the mid-range, carry the contrarian signal.

These bands are starting points, not fixed lines. PCR that is considered extreme in one regime can be normal in another, which is why context and historical comparison matter more than a single threshold.

Limitations of PCR

PCR is useful but imperfect, and reading it without its caveats produces false signals.

It is a sentiment gauge, not a price target. PCR cannot tell you when to buy or sell; it tells you the mood of the option market, which has to be combined with price action and other tools. It is also context-dependent: the same value can be extreme in one market or timeframe and ordinary in another, so a reading divorced from its own history is easy to misread.

Index PCR is distorted by hedging. Large institutions buy index puts to hedge equity portfolios rather than to bet on a fall, which keeps index PCR structurally elevated. A high index PCR can therefore be routine portfolio insurance, not fear, and reading it as a contrarian buy signal in that case misfires. PCR is also pushed up around expiry, when option rollouts inflate the ratio, and before binary events such as earnings or an RBI policy meeting, when traders hedge as prudent risk management rather than out of fear.

PCR produces false signals when used alone. What counts as an extreme level is subjective and varies between traders, and any single indicator can mislead without corroboration. Trends can also extend: a high PCR sustained through a downtrend may simply be confirming continued weakness rather than flagging a reversal. Best practice is to combine PCR with an oversold or overbought reading from a momentum indicator, with price structure, and with India VIX for a fuller, higher-conviction picture.

Where to read PCR

PCR is derived from the NSE option chain, which Kite displays for each underlying and expiry through its option chain interface, with the open-interest and volume columns that feed both PCR variants. Sensibull , integrated with Kite, surfaces PCR and related positioning analytics directly. Most active Indian traders track PCR-OI for the Nifty and Bank Nifty through the session, but treat it as one input alongside price, open interest shifts, and India VIX rather than reading it on its own.

See also

• Open interest
• Change in open interest
• Max pain theory
• Implied volatility
• India VIX
• Futures and options
• How to use the options chain on Kite
• How to read option Greeks on Kite
• Option premium
• Delta of options
• Gamma of options
• Theta and time decay
• Vega of options
• ITM, ATM and OTM moneyness
• Strike selection for options
• Nifty 50
• Bank Nifty
• National Stock Exchange
• Reserve Bank of India
• Expiry-day options trading
• Weekly versus monthly expiry
• Zerodha F&O segment
• Kite by Zerodha
• Zerodha Varsity
• Sensibull
• Volatility indicators overview

External references

• Zerodha Varsity: Options module
• NSE: Option chain and equity derivatives data
• NSE: Derivatives daily reports
• SEBI: Investor education on derivatives
• NSE: Equity derivatives market data

References

1. National Stock Exchange of India, option chain data for the Nifty 50 and Bank Nifty (source for OI-based and volume-based PCR).
2. Zerodha Varsity, Options Theory module, on options sentiment and open-interest reading (accessed June 2026).
3. Nifty PCR-OI levels for 13 to 17 March 2026 (NSE option chain history; Nifty near 22,800 with PCR-OI near 1.84 on 13 March, recovering to about 23,158 by 17 March).
4. SEBI investor education materials on the use and limits of derivatives sentiment indicators.