With continued uncertainty in global markets, what the heck is happening here?
Massive Call Buying By Public
July 12 (King World News) – From Jason Goepfert at SentimenTrader:
Tuesday, options traders bought to open a record number of call options
versus put options on indexes and ETFs. There are a number of reasons
this could mean something other than the obvious, but if we take the
data on its surface and look at other times there was a big surge in
call buying on indexes and ETFs, stocks struggled…
to the ISE exchange, one of the largest options exchanges, traders
bought to open 112 calls for every 100 puts on stocks on Tuesday. That’s
not unusual and is actually on the low side.
in indexes and ETFs, it’s a different story. Traders bought 354 calls
for every 100 puts, a new record dating back to 2006. It’s impossible to
know exactly what’s going on here – it could have been a single large
fund hedging other parts of a portfolio, instead of a mass rush by
bullish investors to bet on a rally via ETFs. It looks like SPY was the
vehicle of choice, and that tends to be a playground for retail (mom and
pop) investors, but that’s a gross generalization.
we just take the data at its surface and see how stocks did after other
times there was a big jump in call buying on indexes and ETFs, the
sample size is too small but not especially encouraging.
of the tiny sample size and difficulty in knowing, or even guessing, at
the machinations behind the surge in call buying, we wouldn’t consider
this a negative factor for stocks. It’s more of an eyebrow-raiser and
something to keep in mind as a potential negative, like some of the
breadth oddities that have triggered in recent weeks.