The Put-Call Ratio calculated from outstanding open interest in puts versus calls, reflecting positions built up over time rather than a single day's trades.
OI-based PCR is the traditional and most widely quoted form of the Put-Call Ratio, calculated by dividing total put open interest by total call open interest for an underlying such as Nifty or a stock. Unlike volume, which resets to zero each session, open interest is cumulative: it represents contracts that remain outstanding, whether built up in the last hour or over several days leading into a weekly or monthly expiry.
Because it reflects accumulated positioning rather than a single day’s flow, OI-based PCR is generally read as a proxy for conviction rather than momentary activity. A steadily rising OI-based PCR over several sessions, as put writers and buyers keep adding positions relative to calls, is typically interpreted as growing hedging demand or bearish positioning building in the market, while a persistently low ratio suggests call-heavy, more bullish or complacent positioning. Many traders treat readings meaningfully above 1 as tilted toward put-heavy positioning and readings well below 1 as call-heavy, though the useful threshold varies by underlying and by market regime, so it is better read as a trend than as a fixed number.
A widely cited nuance among Indian options traders is that OI-based PCR is often used as a contrarian signal near extremes, since very high put OI relative to calls can also mean a large volume of covered or protective put writing rather than pure directional bearishness, and can precede a squeeze higher if those puts get unwound. This is why the ratio is usually read alongside strike-level detail, such as where the heaviest OI sits, rather than as a single aggregate number.
Compared with Volume PCR, which reacts within minutes to fresh trades, OI-based PCR moves more slowly and is better suited to multi-day or expiry-to-expiry analysis. It is also frequently checked alongside India VIX, since a rising OI-based PCR combined with rising VIX more strongly suggests genuine building anxiety in the market, whereas a rising ratio with flat or falling VIX may just reflect routine hedge accumulation.
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