Wednesday, August 11, 2010

Puzzling Options Activity

The equity and even index put/call ratios on the ISE are very low, which is puzzling considering the big downdraft today.  The put/call ratio is usually a contrarian indicator, but the put/call ratios have been correct in predicting the future trend of the market lately.  There was a lot of call activity at the lows in early July. 

I still believe this isn't the start of the downtrend, but there is probably only one rally left before we go down for the count and head for 1040.

3 comments:

  1. still have loads of september and november iwm puts.....hope you remember...

    selling half of september puts today

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  2. I went 100% long again, after selling & repurchasing.

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  3. ISEE is more of a call/put ratio, actually a call/put %. I've found that the previous day can be faded if it is an extreme. True that yesterday the put buyers were right, but it was only slightly tilted that way.

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