Put/Call Ratio At Lowest Level In More Than 5 Years

The most discussed current level of extreme investor optimism is more than just anecdotal. A raft of quantitative measures confirms the scale of investor sentiment (chart below), as we have demonstrated in a series of previous posts. The current put/call ratio rests below levels that have preceded many previous market retracements.

Anecdotal evidence supporting “irrational exuberance” is plentiful. I am encountering more and more ads on the internet extolling the virtues of trading apps that are “beginner-friendly.” As well, a recent check of Amazon revealed that the #1 selling book on investing was devoted to day-trading.

The current optimism permeating markets is set against a backdrop that includes the most fragile global economic and geopolitical climate since WW2 and a pandemic that remains uncontrolled.

The disconnect between investor expectations and reality is historically large and will produce considerable volatility not only this year but through the decade.

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