Small traders are buying call options and selling futures contracts

During the week ended May 15, the smallest of options traders opened a new record of net bullish positions.

The positive market further encouraged them. For the week ended May 22, they used more than 45% of their total volume on buying speculative call options, on par with the highest levels of aggressive betting in 15 years. 

They're not the only ones placing heavy bets on a continued rally. Call buying and put selling was so popular across all traders that it pushed our Options Speculation Index above 1.3, meaning that traders opened 30% more bullish contracts than bearish ones. The Backtest Engine shows this has not worked out well.  

Options speculation Index

The curious thing is that at the same time small traders are aggressively buying speculative call options, they're shorting the major equity index futures. 

The contrary record of their call buying activity is much better than their futures positioning, and we'd give that a lot more weight. Even the couple of times they were buying a lot of calls that weren't confirmed by their futures positions led (at some point) to a decline. 

This is an abridged version of our recent reports and notes. For immediate access with no obligation, sign up for a 30-day free trial now.

We also looked at:

  • A more in-depth look at options traders' position versus futures traders'
  • Consumers are feeling less positive about now and more positive about the future...again
  • The S&P 500 is playing with its 200-day moving average
  • A look at domestic and overseas indexes and the number of stocks rising above their 50-day averages

The post titled Small traders are buying call options and selling futures contracts was originally published as on on 2020-05-27.

At, our service is not focused on market timing per se, but rather risk management. That may be a distinction without a difference, but it's how we approach the markets. We study signs that suggest it is time to raise or lower market exposure as a function of risk relative to probable reward. It is all about risk-adjusted expectations given existing evidence. Learn more about our service , research, models and indicators.

Follow us on Twitter for up to the minute analysis of market action.

Not ready to signup up for a free trial yet?

Signup for our Daily Lite email to receive highlights of our daily report, research and studies.

Follow us on Twitter:

Subscribe to our Youtube Channel:

RSS Feed

Subscribe to the Blog RSS feed