Comments on: Today’s Market Plunge: The Road To Capitulation http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html Freshly squeezed market commentary & analysis Sat, 21 Nov 2009 23:44:02 +0000 http://wordpress.org/?v=2.0.2 by: anon http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34952 Thu, 02 Oct 2008 20:36:33 +0000 http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34952 I don't know if you've mentioned this before as I haven't searched your archives....but a common theory re. the put-call ratio is that with the introduction/recent liquidity of the Ultrashort Proshares, traders/investors have been using those to hedge risk rather than options. (makes sense at first glance.) But the converse is that I'd bet that many people (especially retail) have held onto SKF/QID/etc one day too many and got hammered by the 20% intra-week moves. Theory number two is that if you're liquidating, you're purely selling and not hedging. I don’t know if you’ve mentioned this before as I haven’t searched your archives….but a common theory re. the put-call ratio is that with the introduction/recent liquidity of the Ultrashort Proshares, traders/investors have been using those to hedge risk rather than options. (makes sense at first glance.)

But the converse is that I’d bet that many people (especially retail) have held onto SKF/QID/etc one day too many and got hammered by the 20% intra-week moves.

Theory number two is that if you’re liquidating, you’re purely selling and not hedging.

]]> by: Babak http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34930 Wed, 01 Oct 2008 03:09:15 +0000 http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34930 Brandon, maybe but that doesn't square with what we've seen historically. Why would things change in terms of the option traders behaviour and why so dramatically? and why now? Zlatko, I think we came very close but missed by a teensie bit... but don't forget that Lowry's also mentions 80% days in their seminal research report. If you haven't read it, go to the "Free Stuff" section and download it - it is under reports. Brandon, maybe but that doesn’t square with what we’ve seen historically. Why would things change in terms of the option traders behaviour and why so dramatically? and why now?

Zlatko, I think we came very close but missed by a teensie bit… but don’t forget that Lowry’s also mentions 80% days in their seminal research report. If you haven’t read it, go to the “Free Stuff” section and download it - it is under reports.

]]> by: Zlatko http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34927 Tue, 30 Sep 2008 21:35:29 +0000 http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34927 I'm not completely sure how to compute it using stockcharts.com, but it seems to me like we got a Lowry's down day followed by a Lowry's up day today? I’m not completely sure how to compute it using stockcharts.com, but it seems to me like we got a Lowry’s down day followed by a Lowry’s up day today?

]]> by: Brandon http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34920 Tue, 30 Sep 2008 03:35:50 +0000 http://www.tradersnarrative.com/todays-market-plunge-the-road-to-capitulation-1894.html#comment-34920 Babak the only put/call ratio I use is the Total put/call ratio ($CPC) which is up 33% for the day. I'm guessing that when in panic mode people just opt for index options as opposed to stock specific ones. Babak the only put/call ratio I use is the Total put/call ratio ($CPC) which is up 33% for the day. I’m guessing that when in panic mode people just opt for index options as opposed to stock specific ones.

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