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What the put call ratio is and how to read market sentiment with it — a complete guide. Understand PCR analysis, interpretation and trading strategy.
Published by The Retail Trader · AUG 13, 2026 · Features
What the put call ratio is and how to read market sentiment with it — a complete guide. Understand PCR analysis, interpretation and trading strategy.
The Put Call Ratio is a sentiment indicator that tells you whether more puts or more calls are being traded in the market. It shows the mood of the market — whether it is bullish or bearish.
PCR = Total Put OI / Total Call OI
PCR (Volume) = Total Put Volume / Total Call Volume
Keep these five points in mind:
• > 1.5 — Market Sentiment: Very Bullish, What It Means: A very large number of puts are being sold → support is strong
• 1.2-1.5 — Market Sentiment: Bullish, What It Means: Slightly more puts → the market is expected to go up
• 0.8-1.2 — Market Sentiment: Neutral, What It Means: Balanced → no clear direction
• 0.5-0.8 — Market Sentiment: Bearish, What It Means: More calls → resistance is strong
• < 0.5 — Market Sentiment: Very Bearish, What It Means: Extreme call buying → the market will fall (or has already fallen)
Extreme PCR = Contrarian signal:
• PCR > 2.0 → The market has fallen a lot, everyone is bearish → BOTTOM near (BULLISH signal)
• PCR < 0.4 → The market has risen a lot, everyone is bullish → TOP near (BEARISH signal)
Why? When everyone bets in one direction, the market moves the opposite way. "When everyone is on one side, the boat tips."
Nifty Option Chain Analysis:
Keep these five points in mind:
• 20,500 — Call OI: 50,000, Put OI: 10,000
• 20,200 — Call OI: 80,000, Put OI: 20,000
• 20,000 — Call OI: 60,000, Put OI: 1,00,000
• 19,800 — Call OI: 30,000, Put OI: 70,000
• 19,500 — Call OI: 15,000, Put OI: 40,000
Total Call OI: 2,35,000 Total Put OI: 2,40,000
PCR = 2,40,000 / 2,35,000 = 1.02
Interpretation: Neutral to slightly bullish. The market is balanced.
Setup:
• Nifty is moving up
• PCR is also rising (puts are increasing)
• Confirmation: The bullish trend is strong (put sellers supporting the rally)
Action: Hold long positions. Put sellers are providing support.
Setup:
• Nifty is moving up
• PCR is falling (puts are decreasing, calls are increasing)
• Signal: The rally is weakening, reversal possible
Action: Tighten the trailing stop loss. Consider booking profits.
Setup:
• PCR > 2.0 (extreme bearish sentiment)
• The market has already fallen a lot
• Signal: Bottom near. Sellers are exhausted.
Action: Add quality stocks to your watchlist. BUY on reversal confirmation.
Opposite:
• PCR < 0.4 (extreme bullish sentiment)
• The market has already risen a lot
• Signal: Top near. Buyers are exhausted.
Action: Trailing stop loss. Profit booking. Avoid fresh buying.
Strategy 4: PCR + India VIX Combo:
• > 1.2 — VIX: < 15, Market State: Calm bullish, Strategy: Hold longs
• > 1.5 — VIX: > 20, Market State: Fearful but supported, Strategy: Strong buy signal
• < 0.8 — VIX: < 15, Market State: Complacent bearish, Strategy: Caution
• < 0.5 — VIX: > 25, Market State: Panic + bearish, Strategy: Strong contrarian buy
• > 2.0 — VIX: > 30, Market State: Extreme fear, Strategy: Bottom signal
Keep these four points in mind:
• Look at the option chain (stock or index)
• Calculate total put OI and call OI
• Work out the PCR
• Compare it with the previous PCR (trend)
Pro tip: Build a 5-day moving average of PCR. The trend will look much clearer.
PCR is a sentiment indicator — it does not tell you direction. Confirm with price action, RSI and volume.
PCR > 2.0 = bottom signal, but nobody knows when the bottom will actually come. Wait for price confirmation.
PCR is OI-based. OI data lags (15-30 min delay). Trading on intraday PCR is risky.
Nifty PCR and Bank Nifty PCR sit at different levels. Analyze the two separately.
Keep these points in mind:
• 📌 PCR QUICK REFERENCE
• LEVELS:
• 📊 > 1.5 = Very Bullish (strong support)
• 📊 1.2-1.5 = Bullish
• 📊 0.8-1.2 = Neutral
• 📊 0.5-0.8 = Bearish
• 📊 < 0.5 = Very Bearish (strong resistance)
• CONTRARIAN:
• 📊 > 2.0 = Extreme → BOTTOM signal (buy)
• 📊 < 0.4 = Extreme → TOP signal (sell)
• STRATEGIES:
• ✅ Rising PCR + Rising Market = Strong uptrend (hold)
• ✅ Falling PCR + Rising Market = Weak rally (caution)
• ✅ Extreme PCR = Contrarian (reversal expected)
• ✅ PCR + VIX combo = Strongest signals
• AVOID:
• ⚠️ Do not use PCR alone
• ⚠️ Do not trade on intraday PCR (OI data is delayed)
• ⚠️ Do not turn contrarian immediately on extreme PCR (wait for confirmation)
Here are five articles to read next:
• How to Read an Option Chain?
• What Is Implied Volatility?
• What Are Option Greeks?
• What Is India VIX?
• How Does F&O Expiry Work?
The Retail Trader — educational market analysis. Not investment advice.
This article is for educational purposes only — it is not a buy or sell recommendation, it makes no claim of guaranteed returns, and it is not advisory. Rules, rates and mechanics are changed from time to time by the exchanges, SEBI and RBI, so verify every number yourself with your broker or an official source.