It appears traders are expressing their bullishness on the market in an extreme way through the options market. While the bulk of sentiment data comes from polls taken from AAII, NAIM, and Investor Intelligence, we also can use the options market to get a feel of the sentiment within the market through the use of Put/Call Ratios.
Below is a chart that shows the S&P 500 ($SPX) in the top panel with the Put/Call Ratio for index options in green, Put/Call Ratio for equities in red, and finally the Put/Call Ratio for all options in blue. When the line goes down we know that more calls are being purchased than puts for that set of securities. As you can see we’ve seen the Put/Call Ratio for index options drop to one of the lowest levels in the last year. The ratio for all options has also seeing heavier interest in calls relative to puts.
To see the chart and keep reading: Traders Abandon Puts As Equities Hit New Highs (TraderPlanet)
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