98% of These Call Options Are Lottery Tickets. Here's How to Filter Them. Here is a number that should bother you: when you look at raw put/call ratios, you are looking at the wrong thing. P/C ratio is supposed to tell you where the smart money is positioning. A low ratio means call-heavy — bullish. A high ratio means put-heavy — defensive. Clean signal, right? Except most of those calls are garbage. I found this out the hard way when I started logging every options trade my scanner flagged. The call volume was there. The bullish signal was there. But when I filtered for what I call "lottery calls" — contracts with strike prices so far out of the money that they need a 3-sigma move to ever pay off — the picture looked completely different. CEG (Constellation Energy) hit my scanner with a P/C ratio of 1.06. Neutral read. Nothing exciting. I almost skipped it. But I ran the lottery filter. Here's what the raw numbers looked like vs. the filtered numbers: CEG Options Analysis — Week of May 12, 2026 --- RAW DATA --- Total Call Volume: 47,832 Total Put Volume: 50,701 Raw P/C Ratio: 1.06 [NEUTRAL] --- AFTER LOTTERY FILTER --- Lottery Calls Removed: 46,976 (98.2% of all calls) Real Call Volume: 856 Adjusted P/C Ratio: 59.2 [EXTREME BEARISH] Nearly every call option traded that day was a lottery ticket. Retail buyers loading up on low-delta, far-OTM contracts that expire worthless 90%+ of the time. Remove them, and the signal completely reverses: institutions were quietly buying puts while retail chased calls. The raw ratio said neutral. The filtered ratio said extreme bearish. One of those is the real signal. The filter I use has three criteria. A call is classified as "lottery" if it meets any of these: Delta below 0.15 — less than 15% probability of expiring in the money Strike more than 20% above current price — needs a massive move just to break even Days to expiration under 7 — weekly lotto tickets with no time value These aren't arbitrary thresholds. They're the parameters where win rates collapse. Below delta 0.15, the average retail buyer loses money on over 85% of trades. The contracts exist because people buy them — not because they're good bets. Institutions know this. They sell premium into retail lottery-buying. When you see a spike in OTM call volume, you're often watching the other side of an institutional premium-selling operation. The problem is that P/C ratio was designed for a different market. In the 1990s, options were expensive and mostly used by sophisticated hedgers. Volume was lower, participants were more informed. Now, zero-commission trading and weekly expirations have flooded the market with lottery activity. On a given day, 60-80% of total options volume on individual names can be retail-driven, low-delta, near-expiry contracts. They move the P/C ratio dramatically without conveying any real information about positioning. When you see RXRX at P/C 0.38 (what my scanner flagged this week), that could mean: Institutional accumulation via calls Retail piling into lottery calls Both simultaneously The raw ratio can't tell you which. The lottery filter can. Here's what the adjusted P/C looked like across my watchlist after running the lottery filter: Options Flow — Week of May 12, 2026 (Lottery-Adjusted) SPY Raw: 0.44 → Adj: 0.51 [BULLISH — confirms, retail not distorting] QQQ Raw: 0.54 → Adj: 0.58 [BULLISH — clean signal] RXRX Raw: 0.38 → Adj: 2.14 [REVERSAL — lottery calls hiding bearish pressure] TEM Raw: 0.50 → Adj: 0.47 [NEUTRAL — no distortion] IREN Raw: 0.83 → Adj: 0.91 [NEUTRAL — minor adjustment] XLI Raw: 5.32 → Adj: 5.28 [BEARISH HEDGE — puts are real, not retail noise] The interesting one here is RXRX. Raw P/C of 0.38 looks extremely bullish. Adjusted P/C of 2.14 says the opposite — there's significant put positioning once you strip out the OTM call lottery activity. That's a completely different trade thesis. XLI barely moves from 5.32 to 5.28. The puts there are institutional — they're real contracts, not lottery noise. That's actually a confirming signal: the XLI hedge is genuine. The Options Flow Analyzer skill runs in Claude Code as a daily command. Here's the core logic: def is_lottery_call(contract): return ( contract['delta'] contract['underlying_price'] * 1.20 or contract['days_to_expiry'] < 7 ) def adjusted_pc_ratio(chain): real_calls = [c for c in chain['calls'] if not is_lottery_call(c)] real_call_vol = sum(c['volume'] for c in real_calls) total_put_vol = sum(p['volume'] for p in chain['puts']) if real_call_vol == 0: return float('inf') # All calls are lottery — extreme bearish signal return total_put_vol / real_call_vol The skill runs on my full watchlist every morning before market open. Output hits Telegram. Takes about 90 seconds end to end. Most retail options analysis — including what you see on Reddit, StockTwits, and financial Twitter — uses raw P/C ratios. The tools are built on raw data because it's easy to source and easy to display. This means every time someone says "the P/C ratio is bullish on XYZ," there's a real chance they're reading lottery noise as signal. The more retail-heavy the name, the worse the distortion. I don't think most people publishing options analysis are lying. I think they don't have a lottery filter. The raw number looks clean, so they report it. The filter changes what you trade. It changed mine. The Options Flow Analyzer with lottery call filtering is open source: github.com/tellmefrankie/ai-investment-skills The full implementation including adjusted P/C calculations, Telegram alerts, and watchlist configuration is in the Pro Bundle: jaehyunpark.gumroad.com/l/tcyahy Not financial advice. Personal research and tooling. Options trading involves substantial risk of loss.