This isn’t related to OI. While OI on calls vs puts doesn’t mean bullish or bearish either. I may sell calls when I’m bearish or I may buy a combination of calls and puts when I’m bearish, neutral or bullish. Looking at OI is like trying too hard to come up with something, but with no result. Experience. And even then you may be wrong. Anyone who could figure it out to a great degree may have a huge advantage in the market, which automatically means it’s not something that everyone can just read about and become a millionaire. But generally VIX above 25 becomes too expensive. You can look at the average VIX level over some time to see where the fair price may be. You can also observe how fast VIX spikes on recent market moves to gauge its reactivity to changing market conditions. Everything else will come with continual observations and thousands of hours of experience. You’ll be wrong hundreds of times before you’ll be right 70% of the time. Though if you spend more time staring at my above answers than staring at OI then you may get there faster
BTW, so I just looked at my own SPX options, and I have around 400 SPX Put combos (for over 1000 of my SPX puts showing in the OI), yet I'm bullish but somewhat insured to the downside. And I'm trying to stay "insensitive to the sensitivity" of the put prices, yet I can't predict or fully neutralize whatever may happen. Also keep in mind that when someone sells a Call then they could still be bullish or neutral by holding SPY, or being bearish if they don't hold SPY. And usually it's both because when you're bearish and sell a Call then a market maker will buy it and immediately will sell/short SPY to become neutral. So the OI will show some Call trade, but without you knowing who is bullish vs bearish vs neutral with any of the Calls.
I'm long/short, and it's not much, more similar to butterflies that may cost very little and carry little risk, although that's just an example as mine are not exactly butterflies but various other types of spreads, ratios, back ratios and other combos, occasionally can have more risk though offset by other positions.
Yeah well that's what I felt like increased OI doesn't necessarily mean less reactiveness from a particular option as I had mentioned in the reply. But I feel like there I more probability for a call option to remain range in a bearish market compared to a put option being in a range in a bull market. What do you think?
It's really hard to tell and each situation/details may be different. I have to look at my specific positions and get a feel for what's happening and how to manage the situation. Generally Call & Put prices are correlated due to put-call parity and both may be "overpriced" when VIX is high, but this may not be enough if the market is moving against your direction. And option/VIX spikes can also be temporary thus making you think you're safe, but within hours the SPX/SPY price can settle at a new level while VIX dropping back where it was previously, thus your options may not hold value and only adjust to reflect the new SPX level. Other times there may be a bigger and more persistent level of fear where options/VIX may suddenly change their behavior entering a new "VIX regime" where both puts and calls can be overpriced. But some of the smartest traders and hedge funds lost millions and sometimes billions being caught off guard with VIX/SPX options behavior, so making assumptions can be more dangerous than admitting that we don't know shit...
On indexes, below the money options have a higher volatility in general. I'd say this gives them greater vega. Try to compare equivalent strike options calls and puts to see if they change roughly the same.