The S&P put/call skew just collapsed to 0.71. Not a low. The lowest reading on record. The 10-year average is 12. The 2020 panic peaked at 34. We're at 0.71. What this measures: how much investors pay to protect against a crash versus betting on a rally. At 0.71, crash protection is essentially free. Nobody wants it.
Think about what that means. After two years of gains, at record concentration, with households at record equity exposure, the options market has priced hedging like insurance on a house that cannot burn. History's lesson is consistent: markets don't crash when everyone fears a crash. Fear is the hedge. This chart says the hedge is gone. Nobody buys insurance at the top. That's what makes it the top?
The chart displays "S&P 500 Average Single Stock 1m Normalized Skew," a custom metric averaging 1-month normalized put-call skew across S&P 500 stocks, with the latest value at 0.71 (record low). History shows crashes follow low-fear periods as hedging fades.
but reliably foreshadows major trend changes.
