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The Put-Call Ratio compares total put activity to total call activity across an expiry, condensed into a single number widely used as a rough gauge of market sentiment — one of the first numbers many Nifty options traders check each morning.

PCR is calculated as total put activity divided by total call activity, summed across every strike for a given expiry:

PCR = Total Put OI ÷ Total Call OI

The same ratio can also be computed using Volume instead of Open Interest — "PCR (OI)" and "PCR (Volume)" measure related but distinct things, the same way OI and Volume themselves differ.

Using a hypothetical Open Interest snapshot across five Nifty strikes:

PCR = 2,000,000 ÷ 2,280,000 = 0.877

This is the section worth reading carefully — PCR is read two genuinely different ways, and traders disagree on which applies at any given moment:

1. The traditional reading. More puts relative to calls (PCR above roughly 1.0) is read as bearish — more market participants are positioned for or hedging against a fall. Fewer puts relative to calls (PCR below roughly 0.7) is read as bullish.
2. The contrarian reading. An unusually high PCR can signal excessive bearishness or fear, which some traders read as a contrarian bullish signal (the market may be oversold and due for a bounce). An unusually low PCR can signal excessive bullishness or complacency, read as a contrarian bearish signal.

Neither reading is "correct" in isolation — a PCR of 0.877, as computed above, sits close to a commonly cited neutral range and wouldn't strongly support either the traditional or contrarian case on its own. PCR is generally more informative as a trend (is it rising or falling over recent sessions) or as an extreme (is it far outside its usual range) than as a single snapshot number.

These bands are widely cited rules of thumb, not fixed rules — the "normal" range can differ by underlying and by market regime, and many traders track a given underlying's own historical PCR range rather than applying a single universal threshold.

• PCR is a sentiment gauge, not a trading signal on its own — it's typically used alongside other tools on this Glossary, like Open Interest concentration and Max Pain, rather than in isolation.
• Extreme readings sometimes precede range-bound strategies — if a trader reads an extreme PCR as a sign of an overextended move likely to stabilize, that view can inform strike selection for something like an Iron Condor.
• Rapidly changing PCR alongside a large price move can signal which OI-change category applies, tying back to the four-way buildup/unwinding classification covered on the Open Interest page.

• PCR can be read in opposite directions by different traders, as shown above — treating it as an unambiguous signal is a common mistake.
• A single day's PCR is noisy. Many traders find the trend over several sessions, or how far current PCR sits from its own recent range, more informative than one snapshot.
• PCR (OI) and PCR (Volume) can diverge and tell different short-term stories — worth checking which one a given source is quoting.