OEX vs Equity Put/Call

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 http://sentimentrader.com/blog/archives/123

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OEX vs Equity Put/Call Ratio (Smart vs Dumb?)

Posted on January 10, 2012

A current negative for stocks is a spike in the OEX Put/Call Ratio.

A jump in this ratio means that traders have been busy trading put options on the S&P 100 index, the largest companies in the S&P 500.  These options are normally traded by more experienced traders.

With that put/call ratio high and the Equity Put/Call Ratio low, the spread between the two is at an extreme.  This is kind of a poor man’s proxy for smart money (OEX options) versus dumb money (equity options).

Such a wide disparity between the two has not been a good sign.

One mitigating factor now is that the Open Interest Ratio for OEX options isn’t at an extreme, meaning that there aren’t a whole lot more put options currently outstanding relative to call options.  At prior peaks, we usually saw both the OEX Put/Call Ratio and the Open Interest Ratio at extreme levels together.