What is the Put/Call Ratio?
The put/call ratio (PCR) is a widely watched sentiment gauge that divides the number of put options traded by the number of call options traded. A version built from open interest instead of volume divides open puts by open calls. When more puts trade than calls, the ratio rises above 1.0; when more calls trade, it falls below. Those readings are conventionally described as bearish and bullish sentiment, but a put can be a hedge, a speculation or the closing of an earlier position, and the ratio cannot tell them apart.
The exchange publishes several versions of this ratio daily:
Total put/call ratio: Includes all options on that exchange, covering equities, ETFs, and indices. This is the broadest measure.
Equity-only put/call ratio: Includes only individual stock options, excluding index and ETF options. Many traders prefer this because index options include a large amount of institutional hedging that can distort the signal.
Index put/call ratio: Includes only index options (SPX, etc.). This primarily reflects institutional hedging behavior.
How to Interpret the Put/Call Ratio
The PCR is usually read as a contrarian gauge: the idea is that extreme readings reflect crowded positioning. That is an interpretation, not a measured property of the ratio:
High PCR: Heavy put volume relative to calls. Contrarian readers take it as a sign that hedging demand is already high. Whether the puts were bought or sold, opened or closed, is not in the ratio.
Low PCR: Heavy call volume relative to puts. Contrarian readers take it as a sign of crowded upside positioning, with the same caveat.
The thresholds that get quoted for "high" and "low" differ by source and by which version of the ratio is used, and each symbol has its own normal range. A reading means more against that symbol's own history than against a fixed number.
Historical Extremes and Reversals
Extreme readings get cited around notable market turns, and that is where the evidence usually stops: a chart of the ratio beside a turn, picked after the fact. A list of episodes is not a hit rate. It leaves out the extreme readings that were followed by no turn, and the turns that came with no extreme reading.
A high PCR describes how heavily puts traded relative to calls. It does not say that the market is oversold, that a reversal is coming, or when. Readings can stay extreme for long stretches.
Equity-Only vs. Total: Which to Use?
The equity-only PCR is generally more useful for gauging retail and speculative sentiment. Individual stock options are traded more heavily by retail traders and directional speculators. When this ratio spikes, more puts than usual traded relative to calls in single stocks; the reasons behind those trades are not in the number.
The total PCR is muddied by index options, which are heavily used for portfolio hedging. A pension fund buying SPX puts as insurance is not expressing a bearish opinion, it is prudent risk management. This hedging activity inflates put volume and makes the total ratio less reliable as a sentiment indicator.
The index PCR, on its own, primarily reflects institutional hedging behavior. High index PCR combined with low equity PCR is often described as a divergence between institutional hedging and retail optimism. That reading assumes who trades which product; the ratios themselves do not identify the traders.
Moving Averages and Smoothing
Single-day PCR readings are noisy and can be distorted by a single large trade, so the ratio is often smoothed with a short moving average (5-day and 10-day are common) to show shifts in the level rather than one day's noise.
A smoothed ratio still needs a reference point. Comparing it with the same series' own median over a long window says whether the current level is unusual for that symbol; a fixed threshold borrowed from another market or another decade does not.
Combining PCR with Other Indicators
The PCR is often read beside other measures, each of which answers a different question:
PCR + VIX: The ratio counts contracts; the VIX prices index volatility. A high PCR with a rising VIX means both the contract mix and the price of protection moved the same way. Neither one predicts the other.
PCR + breadth: Breadth counts advancing against declining stocks. It describes the cash market, not options positioning, so the two can disagree without either being wrong.
PCR + GEX: GEX is a model of dealer hedging built on an assumed dealer side. A high PCR alongside negative GEX describes the contract mix and the modelled hedging regime at the same time; it is not a forecast of a reversal.
SquawkFlow publishes put/call ratios by expiry on its options flow hub, from chain data delayed 15 minutes, and for Nifty and Bank Nifty from public end-of-day exchange open interest on the India pages, with no direction attached.