4 replies to this topic

[OEXCHAOS]

I'm writing away, and don't have time to post a chart, but I thought I'd let you know. The Relative VIX is at the highest levels in 17 years. We may have been higher in 87 or that mini-crash in 89, but my data doesn't go back that far. I'd not be surprised if the Relative VIX made an all time high. Meanwhile, Thursday, the $-weighted OEX P/C was at 4.72. That means there was almost 5 times more money being spent on puts than on calls. More after the paying customers get what they need. And btw, nice work below, Kisa! Best, Mark

[kaiser soze]

Mark, If I understand your comments elsewhere on TT, the high dollar weighted OEX P/C ratio is bullish ? Even though OEX option traders are supposedly the smart money, when they overpay for puts versus calls, that is still dumb. Is this the correct interpretation ? Thanks, KS.

[traderpaul]

Not an expert on this.....Looks like hedging to me.....Can't sell big blocks without dragging the prices down.....Let's hedge.....

[OEXCHAOS]

Mark,

If I understand your comments elsewhere on TT, the high dollar weighted OEX P/C ratio is bullish ?

Even though OEX option traders are supposedly the smart money, when they overpay for puts versus calls, that is still dumb. Is this the correct interpretation ?

Thanks,

KS.

There are really only two reasons that those guys pay up for options. One is that they are panicked/overconfident (a huge fade), or they have been FORCED to pay up (margin call, stop out of a spread, etc.).

If it's the latter, it's just neutral.

Mark

[Cirrus]

Great post Mark. Given the recent selling, especially market breadth, the declines should have been much worse. I've been theorizing for a long time that the Fed may have found away to inject liquidity into the system directly via stock index futures. I'm not saying they are doing it, just that it is a possibility I've considered. Heck, they just bought some worthless CMOs last week. This market should have sold off much harder on these breadth days. In 2001-02 just 3 to 1 negative would produce horrific % declines. We've seen substantially worse than that and only down 1 to 2% many days.