Monday, July 26, 2010

Puts and Calls Total Volume and what it means to the next market trend

Ok, for those of you early birds for Tuesday morning, I have compiled some interesting charts on the Total Volume of Puts and Calls from January 2009 to the close of the market today. The first chart is of the total of all Puts and Calls. The second chart is of all the Calls only. And the 3rd chart is of all the Puts only for this time period. What is fascinating to me is that the overall drop in total volume seems to be more related to people buying less Calls, than Puts. If things are getting better in the economy and hence the market, which is supposed to be a leading indicator, wouldn't you expect there to be more purchases of Calls. That's not what the charts show. The average of the Puts and the range are much larger and wider than the Calls. It says to me that the real money is betting on a correction, not a major rally like we had in most of 2009. What do these charts say to you? Leave a comment. And don't forget to come back to see the Consumer Confidence data Update after they are released at 10:00am EST.

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