Speculative frenzy in options market could be a warning sign for stocks

Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020.

Brendan McDermid | Reuters

Heightened activity in options on big tech stocks and other names, like Walmart, shows a highly speculative appetite among investors that could be a contrarian warning about the stock market.

Analysts have been monitoring the higher than normal activity,  particularly in call options — those that investors buy when they expect a stock price to rise.

“It’s just way to express a lot of speculation,” said Peter Boockvar, chief investment strategist at Bleakley Advisory Group. “If you’re going to speculate, what better way than in the options market.”‘

Boockvar said the rush by investor has the feel of topping activity.

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