The put call ratio, weighted by premium

Options Sentiment Screener, 28 September 2026

The put call ratio is one of the oldest sentiment measures in the options market. In its usual form it is simple: puts traded divided by calls traded. More puts than calls, and the ratio is above one; more calls, and it is below. Options Sentiment Screener computes it differently, by premium rather than by contract count, and this guide explains why that matters and how to read the number.

Counting contracts versus counting money

The classic ratio counts contracts. A thousand puts at five cents and a thousand calls at twenty dollars give a ratio of one, as though the market were evenly split. But fifty thousand dollars went into the puts and two million into the calls. Someone put forty times more money behind the bullish side, and a contract count hides it.

The app's ratio is put premium divided by call premium, summed over the session's tracked prints. Premium is contracts times price times one hundred, the money that actually changed hands. Weighted this way, the ratio answers the question a trader cares about: where did the conviction go? A large trade moves it more than a small one, and an expensive contract more than a cheap one, because those are the trades that cost something to put on.

What the ratio covers

The number on the Pulse is computed over unusual prints only, the trades that stood out by size, premium or execution. It is not the market wide ratio published by the exchanges, which counts every contract traded. The two can differ sharply on the same day. The market wide ratio is dominated by routine hedging and market making; the app's ratio is dominated by the trades that were deliberate enough to stand out. Neither is wrong. They measure different populations, and it helps to know which one you are looking at.

Reading the level

Above one means more premium went into puts than into calls among today's unusual prints. Below one means calls took more. That much is arithmetic. The interpretation is where care is needed.

Puts are bought for two reasons: to profit from a fall, and to protect a position against one. Heavy put premium in index options after a strong rally is very often the second kind. A fund that has made money is paying for insurance, not calling a top. The same trade in a single stock the day before its earnings report reads differently. So a high ratio is a question about what the puts were for, and the tape answers it: open the top tickers and look at the prints behind the premium.

Calls carry a similar ambiguity. A large call purchase can be a bullish bet, or a short seller hedging, or the long leg of a spread whose short leg printed elsewhere. Execution helps here. Calls swept above the ask are harder to explain as anything but urgency to be long.

Reading the change

The ratio is more useful as a series than as a level. A reading of 0.8 means little on its own. A reading of 0.8 on a day when the ratio has been running near 1.4 for a week means the unusual money shifted, and that shift is the signal. The Pulse shows the current session; the habit worth building is noting the number at the same time each day so today's reading has something to be compared with.

Extremes are the other thing to watch. When the ratio runs far above its usual range, put buying has become one sided, and one sided positioning has a history of resolving the other way. This is the contrarian reading of the ratio, and it works often enough to be worth knowing and rarely enough that it should never be traded alone.

The pieces underneath

The Pulse shows the call premium and put premium the ratio is made from, so you can see whether a ratio of two came from two hundred million in puts against one hundred million in calls, or from two million against one. The first is a session with a real lean. The second is a quiet day where a single print decided the number. The tracked premium and the print count give the same context in another form.

Net premium, the figure above the ratio on the Pulse, is the companion measure. It uses sentiment rather than option type, so a put sold at the bid counts as bullish money there while it still counts as put premium in the ratio. When the two disagree, a lot of the day's puts were sold rather than bought, and that is a very different session from one where they were bought.

A working rule

Use the ratio to ask a question, not to answer one. Above one: what were the puts for, and in which names? Below one: were the calls bought or sold, and were they swept? Then read the prints. The number is a temperature reading on the unusual tape. The tape is the patient.