Put/Call Ratio

Discussion in 'Trading' started by ig0r, Jun 3, 2004.

  1. ig0r


    What do you think of the recent historically high/remarkable put/call ratio? An excellent buy opportunity? Never before have such high readings been sustained for so long, not to mention the small move down that has accompanied it. Strange indeed.
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  2. Could be some low volume days coupled with aggressive put buying as funds purchase some "insurance", especially going into a weekend, or three-day weekend.
  3. Analyzing pc ratio w/o analyzing the IV changes that transpired is kinda dangerous. Case in point.. Brazil comes in and sells a ton of sugar puts for next 2 weeks, Put OI goes up since they are opening trades hence ratio goes up, is that bearish..of course not. You can't discern that w/o analyzing IV for it changed from 50 down to 40 together with PC ratio which suggest hi prices instead of low .
  4. ig0r


    Right but when looking at CBOE total put/call, should we care so much about IV? P/C here tends to be contrarian, btw, higher ratio would indicate the approach of a bottom. Could this be because of low vix then (using the reasoning that low VIX = low premium = cheap protection)? seems kind of weak considering the ratio has been floating between 1.1 and 1.2 for about a month, unheard of for CBOE p/c