The CNN Fear & Greed Index by itself is a guide, not necessarily a way to pinpoint highs and lows. Part of this index is the 5-Day average put/call ratio. This can be useful to identify extremes in put and call holdings. For example, the chart below illustrates key points over the last 13 months when investors were overweight in their holdings of call options. Based on current readings a decline is expected during the last quarter of 2025. This correction would lead to an adjustment of option holdings and be expected to drop the index into its Extreme Fear & Greed range with a reading below 20.
Note that this information is for educational purposes only and not a recommendation.
Stock charts courtesy of StockCharts.com.
