What Is PCR (Put-Call Ratio)?
In the stock market, PCR stands for Put-Call Ratio, one of the most reliable indicators of trader sentiment. It helps traders understand whether the market is turning bullish, bearish, or nearing a reversal zone.
Meaning of PCR
PCR is calculated by dividing the total number of Put Open Interest by the total number of Call Open Interest.
In simple terms:
PCR = Total Put OI ÷ Total Call OI
If more traders are buying Put options, PCR rises. If more are buying Calls, PCR falls.
How to Interpret PCR
A low PCR value indicates that traders are mostly buying Call options — meaning they expect the market to rise.
A high PCR value indicates that traders are buying more Puts — showing fear or expectation of a market fall.
But here’s the twist: when PCR becomes too high or too low, it often signals an upcoming reversal.
Approximate Interpretation
When PCR is below 0.7, it usually means the market is overconfident and can correct anytime.
When PCR is between 0.7 and 1.0, it reflects a balanced and neutral sentiment.
When PCR is above 1.0, it means fear is increasing — traders are hedging or betting against the market. If it crosses 1.5, the market often becomes oversold and may bounce back.
Example
Suppose on NIFTY, total Put Open Interest is 1.2 crore and total Call Open Interest is 0.8 crore.
So, PCR = 1.2 ÷ 0.8 = 1.5
This shows that traders are buying more Puts, so sentiment is bearish — but since the PCR is already high, a short-term bounce could happen as fear peaks.
Use of PCR in LTP Calculator
In the LTP Calculator, PCR is dynamically analyzed along with Reversal Prices, EOS/EOR Zones, and Volume-OI Shifts.
When PCR crosses extreme levels, it signals potential reversal points.
For example, if PCR is high (above 1.5) and price is near EOS (Extension of Support), it indicates a bullish reversal zone.
If PCR is very low (below 0.6) and price is near EOR (Extension of Resistance), it signals a bearish reversal zone.
Why PCR Matters
PCR represents market psychology in numbers.
When everyone is buying Calls, the market becomes greedy — a sign of caution.
When everyone is buying Puts, fear dominates — a signal that a rebound may soon come.
Smart traders don’t follow the crowd; they use PCR to read the crowd.
Key Takeaway
A rising PCR shows fear, a falling PCR shows greed.
When both reach extremes, reversals become more likely.
PCR is not just a number — it’s a mirror of trader emotions.
š Useful Links
• NSE India: https://www.nseindia.com
• BSE India: https://www.bseindia.com
• AMFI India: https://www.amfiindia.com
• Open your mutual funds account on below link & get your funds suggested by Dr. Vinay Prakash Tiwari: http://p.njw.bz/44600
• Open your demat account in Punch: https://punn.ch/ltp-on-punch
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Written by Dr. Vinay Prakash Tiwari, Founder – LTP Calculator Financial Technology Pvt. Ltd & Daddy’s International School & Hostel, Bishunpura Kanta, Chandauli, UP
ā Disclaimer: This blog is for educational purposes only. Option trading involves high risk and volatility. PCR should always be used along with price action, open interest, and volume data before taking any trading decision.
