Bulls Walk Away From U.S. Options Market As Put-Call Ratio Jumps

By Callie Bost

Bearish sentiment toward stocks is rapidly worsening in the U.S. options market.

Based on the number of puts trading compared with calls on single stocks, pessimism is higher now than any time since 2012, data compiled by Bloomberg and the Chicago Board Options Exchange show. It’s mostly the result of a decrease in bullish calls, whose volume has declined 36 percent since January.

Investor skepticism is growing as the Standard & Poor’s 500 Index meanders in its tightest range in nine decades. Recently, the stock market’s resilience has been tested by signs of a global slowdown as the Federal Reserve moves closer to raising interest rates.

“Upside speculation has really fallen off a cliff,” said Tim Biggam, lead options strategist at Delta Derivatives. “With the Fed making a decision in September and issues almost every day with China and commodities, a lot of people are getting nervous. You’re seeing put volume picking up and call volume going way down.”

In August, speculators have neglected calls, which give holders the right to buy shares at a certain price. They’ve instead focused more on puts, which convey the right to sell shares at a specific level.

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