Options Basics
Put-Call Ratio (PCR): What It Is and How to Read It
Put-Call Ratio (PCR) compares total put activity to total call activity to gauge whether the options market is leaning bearish (more puts) or bullish (more calls) — and, read carefully, is often used as a contrarian sentiment indicator.
Updated 2026-09-15 · 5 min read
The Put-Call Ratio (PCR) is a simple ratio: total put activity divided by total call activity, for a given underlying and expiry. It can be calculated using either Open Interest (PCR-OI) or traded volume (PCR-Volume) — PCR-OI is the more commonly watched version because it reflects outstanding positioning rather than a single day's turnover.
How PCR is calculated
PCR = Total Put Open Interest ÷ Total Call Open Interest, summed across all strikes for the chosen expiry. A PCR of 1.0 means put and call positioning are roughly balanced. A PCR above 1.0 means there is more put interest than call interest outstanding, and a PCR below 1.0 means the reverse.
What different PCR levels typically indicate
- PCR above 1.2 — historically associated with elevated put writing. Since writing (selling) a put profits if the underlying stays above the strike, heavy put writing is often read as an implicit bullish support signal, not a fearful one.
- PCR between roughly 0.8 and 1.2 — broadly neutral positioning, no strong lean either way.
- PCR below 0.7 — historically associated with heavier call writing/interest relative to puts, which is often read as resistance building or a more cautious/bearish undertone.
Why PCR is often used as a contrarian indicator
At market extremes, PCR is frequently interpreted the opposite way from how it sounds. A very high PCR can reflect excessive put buying driven by fear, which some traders read as a contrarian bullish setup (sentiment overly pessimistic, due for a bounce). A very low PCR can reflect excessive optimism (heavy call buying), which some traders read as a contrarian bearish setup. This is why PCR is typically described as a sentiment gauge rather than a directional signal on its own — the same number can mean different things depending on whether it's driven by option buying or option writing, and by whether it sits near a historical extreme for that underlying.
In practice, PCR is most useful as one input alongside Open Interest buildup patterns, Max Pain, and price action — not as a standalone trigger.
Frequently Asked Questions
What is Put-Call Ratio (PCR) and how does it measure market sentiment?
Put-Call Ratio (PCR) measures the volume or open interest of puts relative to calls. A PCR above 1.0 indicates higher put interest, often suggesting bullish support from put writing, while a PCR below 0.7 signals call dominance and potential resistance.
Is a high PCR bullish or bearish?
It depends on context. A high PCR driven by put writing (selling) is often read as bullish support. A high PCR driven by panic put buying at a market extreme is sometimes read as a contrarian bullish signal instead — the underlying driver matters more than the raw number.
Should I use PCR-OI or PCR-Volume?
PCR-OI (based on Open Interest) reflects standing positioning and is the more commonly watched version for gauging overall sentiment. PCR-Volume reflects only the current session's activity and can be noisier intraday.