Fewer puts than calls

Discussion in 'Stock Market' started by william the wie, Aug 22, 2018.

  1. william the wie
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    william the wie Gold Member

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    2.4 puts per call is the more or less neutral point less than one put per call which is what I am seeing and that is a fairly good indication of a downturn in the near future.
     
  2. Dont Taz Me Bro
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    Dont Taz Me Bro USMB Mod Staff Member Gold Supporting Member Supporting Member

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    I think the market has run up way too high too fast
     
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  3. william the wie
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    william the wie Gold Member

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    Definitely true. Also even semi-observant Jews tend to get out of the market before Rosh Hashana (Sept 9th this year) until the end of Yom Kippur (Sept 19th) and that can shift charts.
     
  4. justinacolmena
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    justinacolmena Active Member

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    A put is a "gentleman's agreement" from the "house" to buy back stock from a consumer investor at no less than a certain price.

    Trouble is that there's no money to back it up when the market falls.

    A call is a lottery bet on a bull market for any particular stock. Plenty of suckers.
     
  5. MarathonMike
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    MarathonMike Platinum Member

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    2.4 Puts per call is average? That would seem to be a very bearish sentiment, I thought the average PCR was under 1.
     
  6. william the wie
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    william the wie Gold Member

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    Think it through, when a put is exercised shares or contracts in the underlying have to be bought to permit the exercise which causes the price to rise slightly for a time. but more puts having to be exercised put a floor under the underlying.
     
  7. MarathonMike
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    MarathonMike Platinum Member

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    Ok I got it, but I was asking if the market average for Puts to Calls is really that high. Unless you meant something else by 2.4 Puts to Calls being a neutral point.
     
  8. william the wie
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    william the wie Gold Member

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    I took a sample of 30 issues that met my criteria of five years of increasing dividends and at least a 5% current dividend yield. I was able to sell covered calls at a price where I would have a capital gain and a premium yield = to my minimum annual dividend on six issues if exercised.

    Those six issues are EDF, GUT, HRZN, ORC, PEI, & SDPL. There were three other issues where I got a quick down and dirty return that convinced me I needed a stronger cash position and some hedges. So, I looked over the other 24 issues that made the cut for dividends criteria but did not make the cut for a covered call position nor for writing puts. That after only 48 hours after I had written the calls. I doublechecked sources on the put call ratio and they mostly agreed on the 2.4 or more puts per call Investopedia had the simplest explanation of why that is true. Cellblock is a good source here on this board. I'm thinking about buying some index options to cover for a downturn but otherwise this market is getting too rich for me.
     
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  9. Toddsterpatriot
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    Toddsterpatriot Diamond Member

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    Trouble is that there's no money to back it up when the market falls.

    When the market falls, why do you think I need money to "put" my stock?
     
  10. Toddsterpatriot
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    Toddsterpatriot Diamond Member

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    He's talking out of his ass again.
     

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