The formula
PCR (OI) = total put open interest ÷ total call open interest, usually for one expiry of NIFTY, BANKNIFTY or a stock. Some platforms also show a volume-based PCR (put volume ÷ call volume); TradingWatch uses open interest.
Reading the number
- PCR above 1 — more puts are open than calls.
- PCR below 1 — more calls are open than puts.
- PCR near 1 — puts and calls are roughly balanced.
Many traders assume option writers (sellers) are the larger, better-funded side, so they read a rising PCR as put writers adding positions below the price, and a falling PCR as call writers adding above it. Others treat very high or very low PCR as a contrarian sign.
Limits of PCR
PCR is a snapshot of positioning, not a forecast. It changes through the day, differs between expiries, and can be pulled by a few large strikes far from the price. Look at where the OI sits as well as the overall ratio.