can options premiums be used for understanding market trends? as being too expensive or looking cheap?

Not really.

If there are more call options outstanding that put options then that means the market feels that the trend is upward but if there are more put options than call options outstanding then the market feels that the trend is going to go down.

Option premiums are dependant on how in/out/at-the-money it is currently at.

One Response to “Can options premiums be used for understanding market trends?”

1. Terry W says:

   February 11, 2010 at 11:57 pm

   Not really.

   If there are more call options outstanding that put options then that means the market feels that the trend is upward but if there are more put options than call options outstanding then the market feels that the trend is going to go down.

   Option premiums are dependant on how in/out/at-the-money it is currently at.
   References :

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