A Surfeit of Bulls -- and a Bet on Volatility
You may think market sentiment is totally one-sided, but be aware that it is not. The put-call ratios for equities and indices are at rather low levels, which implies folks are betting on higher markets -- yet, to offset that, the put-call ratio on the CBOE Volatility Index (VIX) is at 20%. That implies folks are betting an increase in volatility, which is typically associated with lower markets.
The index put-call ratio -- which is not as good an indicator now as it was before the CBOE decided to reconfigure the method they use to calculate it -- was at a very low 77% Monday. That tends to mean that many more calls were bought vs. puts, hence the implicit bet on higher markets....315 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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