Put to Call Ratio and 4 major indexes’ Open Interest – $SPY $XLF $IWM $QQQ

I saw this tweet earlier by Ryan Detrick regarding the put to call ratio.

Here is the chart he posted (which can also be found here http://stocktwits.com/message/14247255)

The put/call ratio is often used to gauge investor sentiment; however, when it gets to extreme levels (as it is now), many traders view it as a contrarian signal.

To get a sense of where options are open on four major indexes, SPY, XLF, IWM and QQQ I have graphed them out. Below are their charts, followed by their respective open interest graphs.

SPY – closed Friday at 159.07, outside of its Bollinger Band for the first time in 2013. Although this often signals oversold conditions, note that the lower BB band is expanding indicating potential future lower prices. SPY also closed below its 50 day simple moving average.

The sentiment here seems rather neutral with 159 and then the 160 puts being the highest OI and 167 followed by 164 the highest call OI.

XLF – closed Friday at 19.11 and also below its expanding BB bands the first time in 2013. It too is  below its 50 day MA.

As you can see, the sentiment is much more bearish on the financials this week with the 19 put OI taking up most of the outstanding interest.

IWM – closed Friday at 95.97. Once again, it is below its expanding BB band (happened once before this year on 4/18) and below the 50 day MA.

Similar to the financials, the small caps are also conveying a very bearish sentiment, with the 94, closely followed by the 96 strike puts being the largest.

QQQ – closed Friday at 70.43 below its expanding BB bands (happened twice before this year on 4/5 and 4/18) and below its 50 day MA.

The sentiment here seems either neutral or slightly bullish with the top OI on puts and calls being at 73, which seems somewhat of a stretch from where price currently sits.

Although this does not constitute the entire market by any means, nor does it completely convey where the put to call ratio currently stands overall, there are some takeaways to be had. I think you can at least note that the financials (XLF) and small caps (IWM) are currently taking on a much more bearish sentiment than the ETF that many people turn to as a signal for the overall market (SPY) as well as where many high beta and tech names are housed (QQQ).

I intend to trade very small high probable trades until the market finds a new and more steady trend. Good luck next week!