Put Call Ratio (PCR): Meaning, Calculation & How Traders Use It

What Is Put Call Ratio (PCR)?

The Put Call Ratio measures the ratio of put option contracts traded versus call option contracts.

• Put Options: Bets that the market will go down.
  
  

• Call Options: Bets that the market will go up.
  
  

Formula:

Put Call Ratio (PCR)=Put Option VolumeCall Option Volume\text{Put Call Ratio (PCR)} = \frac{\text{Put Option Volume}}{\text{Call Option Volume}}Put Call Ratio (PCR)=Call Option VolumePut Option Volume​

Example: If 80,000 put contracts and 100,000 call contracts are traded, PCR = 0.8.

How to Interpret Put Call Ratio

• PCR < 1 (Low Ratio): More calls than puts → bullish sentiment.
  
  

• PCR > 1 (High Ratio): More puts than calls → bearish sentiment.
  
  

• PCR around 1: Neutral market sentiment.
  
  

👉 Traders often use PCR as a contrarian indicator:

• Extremely high PCR → Market may be oversold (potential bounce).
  
  

• Extremely low PCR → Market may be overbought (possible correction).

The Put Call Ratio is a simple yet powerful way to measure market mood. It tells you whether traders are leaning bullish or bearish and can highlight potential turning points. However, it’s most effective when used with other indicators rather than as a standalone tool. For options traders in 2025, PCR remains a vital sentiment gauge in both global and Indian markets.