Put-call ratio
PCR = total put open interest ÷ total call open interest for an expiry. Because most index OI is written (sold) by institutions, a high PCR means heavy put writing — sellers betting the market won't fall — and is read as supportive.
- Above 1.2–1.3: put writers dominate; often bullish, but extreme readings can mean complacency.
- 0.8–1.2: balanced.
- Below 0.7: call writers dominate; the upside looks capped.
PCR of change in OI
Comparing today's added put OI with added call OI shows the direction of fresh positioning, which reacts faster than the total PCR.
Max pain
Max pain is the strike at which the total payout to option buyers at expiry would be smallest — equivalently, where writers keep the most premium. Some traders expect prices to gravitate towards it into expiry, especially in range-bound markets.
Limits
- Both are contrarian/sentiment tools, not timing signals.
- Large hedging trades can distort PCR.
- Max pain is least useful far from expiry and in trending markets.