Divergence in Put/Call vs. Volatility

This is something that few traders actually look at but is VERY important. It’s a chart comparing the Put/Call activity to the VIX or Volatility index.

Notice that the Put/Call line has already started moving higher suggesting a bearish move in the markets and yet the VIX has remained low. Usually this Put/Call line is a leading indicator to a higher move in the VIX. So again we cannot stress enough the importance of waiting for a higher VIX before entering new positions – you will get much better pricing and be even further from the market.