This contrarian stock market signal is losing predictive power
A long-watched indicator of which way the stock market is likely to move next has lost predictive power lately, confounding investors who have come to rely on the signal embedded in options trades.
By Jan-Patrick Barnert / Bloomberg
The put-call ratio, which compares the number of contracts traded in bearish versus bullish options, is widely considered a contrarian indicator; for example, when investors load up on puts allowing them to sell the underlying stock or index, markets may be primed to rally as the ratio spikes. In other words, the ratio can be a powerful indicator of the market’s mood.
Already a subscriber?Log in here
Read the whole article
Get access for 14 days for free. No credit card is needed, and you will not be automatically signed up for a paid subscription after the free trial.
