The put/call ratio shows investor sentiment and is a reasonably reliable indicator of the near-term market direction. Nevertheless, it is a judgment-based decision. Rules-based decisions such as the six habits of the Monday Morning Program are always right. Judgment-based decisions are frequently wrong.
That was the case last Monday, July 24, and our fearless, intrepid investor wrote (sold) just-out-of-the-money covered calls on SPY. She collected a nice premium income, but SPY rose instead of declining as expected, and she was assigned.
What will our fearless, intrepid investor do when the market opens today?
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