Debit put spreads inside put-call regimes

The debit put spread as a payoff identity

A debit put spread is long a higher-strike put and short a lower-strike put for a net debit. The defined maximum profit is the strike gap minus that debit.

The worked debit put spread is built by buying the 450 put for 45.90 and selling the 440 put for 40.40, so the net debit is 5.50. The stated maximum profit is 4.50, equal to the 10-point strike gap minus the 5.50 debit.

Remaining time value and the holding calendar

Remaining time value is the extrinsic premium still left in both legs. That is why an early print below the short strike is not the same event as collecting the expiration payoff.

While both long-dated puts still hold substantial remaining time value, early assignment of the short put is treated as unlikely even if the underlying is already below the 440 short strike.

The full 4.50 payoff is described as arriving only if the underlying stays at or below 440 near expiration, after remaining time value has decayed. When the expected decline is near-term rather than multi-month, shorter-dated puts are presented as the construction more able to reach that full payoff.

Put-call volume as a regime reading

A put-call volume ratio is put volume divided by call volume at market, index, or single-name level. It is used as a regime reading of relative put versus call activity.

A market-wide example is 800,000 puts and 1,000,000 calls, which produce 0.80. High readings are read as put-heavy activity. Low readings are read as relatively heavy call volume, including at single-name and index level.

Purchase-only demand and sentiment moving averages

A purchase-only call-put index is call purchases divided by put purchases and scaled by 100, so the print isolates opening demand rather than total volume. One million call buys and 800,000 put buys produce 125.

That purchase-only index is used as a contrary regime gauge. A reading of 200 or higher is treated as extreme call buying. A reading of 125 or lower is treated as relatively heavy put buying. A contrary regime extreme is a very high purchase-only reading framed as crowded call demand, or a very low reading framed as crowded put demand, as context rather than as a standalone entry rule.

The series is also tracked with 10-day and 21-day sentiment moving averages, used to compare a one-day print with a slower regime path.