Monday, August 04, 2014

Massive Bearish Put Volume On Friday May Have Been An Error

Over the weekend we noted the big spike in the put/call ratio to 1.04. Generally, when the put/call ratio exceeds 1.0, from a contrarian perspective, this overly bearish activity can be a positive for stock prices. Was the increased volume an error?

Reuters is reporting the trades could be an error. In the article lead in they note, "A barrage of bearish options contracts costing an estimated $8 million and set to expire worthless in a few hours were purchased across multiple stocks Friday afternoon in a move that traders said made no sense." If these trades are an error, maybe bearish sentiment is not has elevated as the data suggested.

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