Wavelength conversion using a nonlinear optical loop mirror (NOLM) is investigated, Our interest is in considering nonreturn-to-zero (NRZ) and return-to-zero (RZ) signals with a high-duty ratio resulting in a nonlinear phase shift of the counterpropagating wave that is not negligible and reduces the extinction ratio considerably compared to signals with a low-duty ratio, It is shown how the NOLM can be used for high-duty signals anyhow by configuring/adjusting the NOLM, particularly the polarization controller inserted in the loop, This paper gives a mathematical description of the NOLM utilizing the Jones calculus and considers different ways of adjusting the polarization controller, The nonlinear phase shifts are calculated and a reasonable confinement for the walk-off is given, Furthermore, the probability density function of the extinction ratio depending on the duty ratio of the control signal and the configuration of the NOLM for either parallel or orthogonal polarizations of the counterpropagating signal waves is derived and evaluated for some exemplary parameters.