The 5-day trailing average equity put:call ratio strongly advises selling stocks:
Source: indexindicators.com
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This average doesn’t stay below 0.55 for very long. This doesn’t mean that the indexes can’t squeak out new highs for a few more days, and it doesn’t mean they have to crash, but it does mean that a decline of at least a few percent is extremely likely to start with a couple of weeks.
Jason Goepfert of Sentimenttrader.com posted this chart of the American Association of Individual Investors bullishness survey on his blog:
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When everyone is on one side of the boat, stroll over to the other. In my opinion, at $6.00 each, December 2011 SPY 90-strike puts are just sitting there on the floor like $20 bills. The December 2012s are also now listed – the 100 strike is under 12 bucks today.
Well, 90 when SPY is currently around 115 is a 20% drop, plus your 6$ for the option price is 4% of the current value. Meaning that you need a 24% drop at expiry to get even… but of course, if vol starts to climb, you will make money before that…
Yes, a 10% drop this winter would likely take those to $9 or $10.
i just bought myself a couple 115 put contracts for feb2010 expiry.
kind of betting on a short term correction… wait&pray