Not all put buying means the same thing
"Record put demand, must be close to a bottom."
I keep seeing this take on X. And historically, heavy put buying does line up with bottoms.
So where on the strike curve is the demand?
Put skew is at extremes. Spot on SPX is down about 1%.
Directional conviction would show up in high delta puts getting bought. Traders positioning for a 3-5% drawdown.
The demand is in deep OTM puts. Pure tail protection. Insurance against something the market hasn't shown you yet.
Ask yourself: has spot actually moved?
If skew is blowing out but price hasn't budged, the money is pricing crash risk, not trading near-term direction.
A wave of 25-delta puts is a directional opinion. A wave of 5-delta puts is a hedge book getting filled in case of something ugly.
Next time someone says "record put demand = bottom," ask them: which puts?
Volatility first.
Imran
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