按键盘上方向键 ← 或 → 可快速上下翻页，按键盘上的 Enter 键可回到本书目录页，按键盘上方向键 ↑ 可回到本页顶部！
————未阅读完？加入书签已便下次继续阅读！
o analysis； there would be another element to this。〃purity；〃 namely； the participants。in the options。market would be confined to relatively unsophisticated individual investors。 In such a pure options。world； we would know that heavy call activity （or heavy put activity） would be the result of a strongly。
bullish （or strongly bearish） view held by the unsophisticated crowd； and； as。such； traders should consider taking the contrarian approach of fading this。activity。 But the real world of options。differs。significantly from this。pure world that would delight the contrarian。
1。
Options。market participants。include professionals。stub as。large money managers and； particularly in recent years； hedge funds。that trade very。actively。 Many of these larger investors。are quite sophisticated and have access。to valuable information well beyond the scope of the smaller individual investor。 To automatically take a position counter to the option activity of thisntingent would be foolish indeed。
2。
Option activity。is。by。no means。always。initiated by buyers。 For example； there is。quite a large constituency that sells。call options。against stock。they own as。a tool for generating additional ine； and others。who seek。a similar objective by selling puts。against cash。 And some traders。sell uncovered （or 〃naked〃） calls； which is。a bearish bet that a stock。will not rise above the call strike price。 If heavy call activity is。the result of a surge in covered or naked call writing； it certainly would not indicate a wildly bullish investment view。
3。
Option activity can occur in conjunction with trades。（or positions） in the underlying stock。 One example would be when a covered call position is。initiated。 Another would be the purchase of put options。to protect a long stock。position from a major decline； perhaps。ahead of a critical earnings。report。 Option activity that results。from strategies。that involve the underlying stock。（or strategies。that involve the buying and selling of other options。on that stock） can dilute the value of put call ratio analysis。
4。
Hedge funds。in particular use options as part of 〃pairs。trading〃 strategies。 For example； a put option on an energy exchange…traded fund （ETF） might be purchased in conjunction with a long position in Occidental Petroleum （OXY） if the manager feels。that the stock。will outperform its。sector。 So the purchase of the puts。in this。case is。not a reflection of a bearish view on energy but rather a hedge for a bullish view on a particular energy stock。
Considering。the Extremes
So the perception of a put call ratio as。a clear indication of the bullish （or bearish） sentiment of a crowd of unsophisticated traders。is。certainly a flawed one。 But
***************
137
***************
bullish contrarian plays。that is。turbo…charged from two standpoints：
1。 A trader will bolster the effectiveness of hisntrarian conclusion。 The major conundrum of sentiment analysis。results。from situations。in which the sentiment simplynfirms。the price action in the stock。 So a stock。that doubles。in price during a one…year period is。very likely to be the object of a fair amount of bullish sentiment simply because the gains。it has registered are likely to have attracted major attention among investors； because everybody loves。a winner。 Technical analysts。will be drawn to the stock。based on the notion that 〃the trend is。your friend〃 and even those with a fundamental bent will likely be swayed by the strength in the shares。and will tend to view the pany's。prospects。more positively。 And； as。technicians。well know； such a powerful move by a stock。often indicates。that there have been （or are about to be） some major positive developments。in the pany's business。 So the task of the contrarian in these situations。bees。the extremely difficult one of attempting to determine whether this。bullish sentiment has。reached a euphoric。extreme that indicates。a serious。depletion of sideline buying power and thus a potential top。
But if a stock。is。exhibiting strong price action and the sentiment remains。skeptical or outright bearish； the task。for the contrarian is。much easier。 Bearish sentiment bined with strong price action is。an unusual situation； indicating with great regularity that an uptrend in a stock。is。relatively。early in the game because there remains。major sideline buying power that can fuel substantial additional gains。
2。 A trader will have 〃structural buying〃 working for him because of the buildup in put open interest and its。subsequent unwinding。 When puts are accumulated on a stock； those who are on the other side of the trade （those who are selling these puts。to the put buyers） must protect themselves。from the open…ended risk。they'll incur should the stock decline substantially。 And they generally hedge their short put exposure by shorting the underlying stock。 But should a strongly performing stockntinue to post outsize gains； these short positions。will begin to be covered as。the put buyers。begin to capitulate and close their positions。 And even if the put positions。remain open； there will be short covering because the hedgers。need to be short fewer and fewer shares。as。the puts。they've sold move farther and farther away from the strike price and （as。time passes） thus have a smaller and smaller chance of ever attaining value。
Here are some detailed examples。of stocks。that exhibited outlier put open interest in bination with strong price action。 Figure 7。1 charts。the price action in AMR Corporation （AMR） along with the 50…day moving average of its。SOIR。 Note the powerful rally in AMR from late 2004 through mid…2005； along with the skeptical option trader sentiment as。reflected in the 50…day moving average of its SOIR as。it crossed above the 1。00 level （as。indicated by the horizontal line）。 This。juxtaposition of strong price action and bearish sentiment provided a very bullish backdrop for the shares。during this period。
The SOIR line crossed with authority above 1。00 in November 2001 and remained in this。zone until June 2006。 During this。period； AMR shares。rallied from the 9。00 area to a high of 29。32。 For more than eighteen months； while the shares were more than tripling； skeptical option traders。were accumulating more AMR put contracts。than call contracts。
In addition to the bearish sentiment of option traders； AMR was。being played very。heavily。on the short side in late 2004。 Short interest in excess。of 50 million shares。equaled almost 25 percent of the pany's。total float。 Although some of this。short interest could be attributed to the heavy put option buying； there was。a clear overall pattern of negative expectations for AMR shares。
When might a technician have felt fortable with buying AMR as。a bullish contrarian play； given this。backdrop of bearish sentiment？ Figure 7。2 charts。the weekly price action of AMR along with its。10…week。moving average and provides。a good backdrop for an answer。 The 40…week。moving average is。a widely used barometer among technicians。of whether a stock。is。in bullish or bearish territory。
Figure 7。2 indicates。there were a number of junctures。in late 2004 and early 2005 for entering an AMR long position based on a move above the 40…week。moving average。 Some of these