"Contrarian (?)" / put-call ratio at high level (1.45), last high was in Oct. 2014
Betting Against the "Crowd"
It is known that options traders, especially option buyers, are not the most successful traders. On balance, option buyers lose about most of the time. Although there are certainly some traders who do well, would it not make sense to trade against the positions of option traders since most of them have such a bleak record? The contrarian sentiment put/call ratio demonstrates that it does pay to go against the options-trading crowd. After all, the options crowd is usually wrong.
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Some of us are highly loss averse, but in general we’re all averse to losses to some degree. Empirical estimates find that losses are felt between two and two-and-a-half as strongly as gains. Thus the disutility of losing $100 is at least twice the utility of gaining $100. Evenutally loss ...
Anchoring (heuristic)
Anchoring is a particular form of priming effect whereby initial exposure to a number serves as a reference point and influences subsequent judgments about value. The process usually occurs without our awareness (Tversky & Kahneman, 1974), and sometimes it occurs when ...