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Strategies & Market Trends : Options
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To: Seeker of Truth who wrote (4938)3/14/2000 11:05:00 AM
From: Seldom_Blue  Read Replies (1) of 8096
 
I have always wondered about the put/call ratio.

What you said is correct, except the MMs are at the other end of the trade in many instances. Once they publish the bid/ask, they HAVE to take the trade. So even if they are bullish on the stock, they still have to buy puts if people want to sell them. That is why they sometimes lose money if the market goes in one direction for too long. They will have created a short position for themselves.

The problem for using the puts/calls ratio (for me) is that I do not know how many is people buying puts vs. people selling puts. If we can find that data somewhere, it will be a more useful indication. I suspect more and more people are getting the idea of selling puts to generate income in a rising market like we are doing here. Hence the put/call ratio goes up.

JMHO.

Seldom Blue
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