Join Lawrence G. McMillan to learn why certain option data is useful in helping predict broad market movements. Larry McMillan will discuss the current state of those indicators. He will share why put-call ratios are powerful, contrary indicators with a good track record of market prediction. He will also discuss why volatility derivatives and indices are useful, especially in determining extreme oversold conditions and buying opportunities, and also in discerning the trend of the broad stock market. Lastly, Larry will touch on the current state of market breadth and how it relates to market prediction as well.
At the current time, realized volatility is dropping, $VIX is dropping more slowly, and $VIX futures are remaining at fairly lofty levels because of the uncertainty surrounding the upcoming Presidential Election. So, we decided to take a look back and see if there had been any other times when there was such a large discrepancy between the near-term $VIX futures and historical volatility. It turns out there was only one other time when the premium differential was larger – in late January, 2009. However, it doesn’t seem that there is any market-predicting parallel here.