3 Must-Watch Signals for Options Traders (Beyond the Noise)

Options trading can feel like decoding a foreign language, but a few key metrics actually tell you everything about where smart money is headed. Let’s break down the signals that matter.

Volume Ratios: The Sentiment Meter

First up: call/put volume ratios. Think of it as a mood ring for traders. When we see a 2.50 call/put ratio across major exchanges (ISE, CBOE, PHLX), it means buyers opened 2.50 calls for every put. Sounds bullish, right? But here’s the catch — you need context.

We stack this against historical data across a full year. If today’s ratio hits the 95th percentile, it’s not just bullish — it’s unusually bullish. Traders are piling into calls at levels we rarely see, which can signal either conviction… or dangerous FOMO.

Open Interest: The Patient Money Indicator

While volume captures today’s action, put/call open interest ratio (SOIR) shows who’s actually holding positions. This metric looks at all options expiring within 3 months, filtering out the noise traders and focusing on serious short-term bets.

Again, percentile ranks tell the story. A skewed ratio reveals where structural positioning sits, not just fleeting sentiment.

The Volatility Wild Card

Here’s where timing meets math: the Schaeffer’s Volatility Index (SVI) averages implied volatility on at-the-money front-month options, then ranks it historically.

If SVI hits the 95th percentile? Traders are pricing in extreme uncertainty — which usually means options are expensive. You’re potentially overpaying for protection or lottery tickets. That’s the signal to step back and wait for a better entry.

The Bigger Picture

These three metrics aren’t standalone — they’re a system. High call/put volume + elevated open interest + expensive volatility? That’s a setup screaming “extended.” The reverse? Potential accumulation on the quiet.

The traders who win don’t just track one number. They triangulate.