A Breakdown of Today’s Trading in Nasdaq 100 Trust (QQQQ) Options

February 14, 2007 at 1:29 pm  ·  Category: Options, Sentiment Analysis

                          Puts            Calls          Put/Call Ratio

February           117,646       134,162            .88

March               236,974       160,127           1.48

April                   43,401          9,966            4.35

Source: Scottrade, as of approx. 3:00pm EST

What this tells us, I think, is that there are still alot of bears out there. 

Even though options buyers are bullish for the remainder of this week (the February options expire at the end of trading on Friday) they are decidedly bearish for March and April.  This is bullish because it means that there are still people betting against this market, with money on the sidelines – which could come into the market and drive it higher. 

I can’t tell you how many times I’ve heard that the Dow hasn’t had a 2% correction in this many days, the second longest period in its history, lately. 

I still think this market has legs because sentiment is not overly bullish.  I would say sentiment is slightly bullish, especially after today, but not worrisomely so.  As long as the housing market doesn’t fall apart and the “soft landing” hypothesis stays intact, stocks should rally in the near term.  A small speculative position such as the one I just recommended therefore seems warranted. 

Posted by Greg Feirman  ·  Trackback URL  ·  Link
 

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