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Strategies & Market Trends : Options

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To: edamo who wrote (4948)3/14/2000 11:28:00 AM
From: Seldom_Blue  Read Replies (1) of 8096
 
only way a ratio can be deemed neutral is if 1:1.....excessive number of puts versus calls is strong indication of sentiment and trend reversal...

what you haven't considered is that the derivitives at some point in time must be converted into the tangible underlying...


Ed, can you expand on that a bit? I am interested to hear how you use put/call ratio. When you select a particular strike price, do you look at the put/call ratio at that strike? I have not read much on this subject that makes sense to me yet.

Regarding converting into the underlying. I think there is a trend, using myself and a couple of boards as barometer, in trading options only and closing them out. I have seen a lot of stock traders turning into option traders. I do not know the percentage of the people who trade only options and not taking security, but it *seems* to be a big percentage.

Interested in hearing your thoughts on it.

Seldom Blue
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