<< If "Joe public" has the calls and institutions the puts or vice versa look out. >>
This is a problem, you're right. So, it pays to know something about the volume of the trades, since this will tell you who is behind them. But even if the institutions have all the puts, don't forget that somebody sold them the contracts, and that somebody is not Joe Retail.
In general, I think it is important to look at the clustering of contracts. Huge open interest clustered at certain strikes is not the work of Joe Retail. If you can get a handle on the trades, and how big they are, and whether they execute at the bid or the ask, that will tell you something also.
So, as you suggest, this is not as simple as it would appear at first glance. Still, I think you can get at least a broadbrush picture by looking at open interest clusters, put/call ratios, Max Pain points, and so forth. That's all I'm really trying to do, is get some information, and try to see how that fits within the context of other information, such as fundamentals, technicals, charts (e.g., trendlines, formations, support/resistance), candlesticks, and sentiment.
In other words, I'm just trying to look at as many trees as I can to try to figure out just what kind of forest I'm looking at.
JMVHO........
WS |
