Equity index options are the least surprising of options markets. According to data and the best of our knowledge, out-the-money (OTM) call options have never cost more than OTM puts on equity index options – reflecting the greater concern of a market slump than a rally.
Anxious about the U.S. economy? The Conference Board think tank is pointing to growth slowing to 1.5-2.0% but there are no imminent signs of a recession.
U.S. monetary policy exerts a strong influence on the skewness of currency, gold and silver options. In a normal monetary environment where short-term interest rates are well above zero, investors tend to be more concerned about gold and silver prices rising abruptly than falling.
Negative rates aimed at boosting European bank lending instead had the opposite effect. Will the ECB end this policy and raise rates in 2019?
The U.S. shale oil revolution has given out-of-the-money put options a persistently negative skew over the past decade, overshadowing likely supply woes.