NEW YORK (TheStreet) -- The Ides of March have brought additional volatility in the form of increasing price fluctuations in many of the major indices we track. Despite briefly hitting a new high in the SPDR S&P 500 ETF (SPY) this month, we have seen an increase in fear brought on by slowing growth data in China and political uncertainty in Ukraine.
This fear has put a bid under safe haven assets such as gold, Treasuries, and even VIX futures. The iPath S&P 500 VIX Short-Term Futures ETN (VXX) gained more than 7% last week as traders reduced their exposure to equities and hedged their bets with options. A rising VIX typically means that we are seeing a shift out of risk assets and into a more defensive posture.
Right now investors are likely looking at their portfolios to determine if they should be reducing exposure to stocks in anticipation of a pullback, or if this is just going to be another minor speed bump in the road. Both sides of the argument are valid considering how resilient the market has been over the last 18 months and how long we have gone without a true correction.
One indicator I track is the CBOE Put/Call ratio, which can be a contrary indicator of options activity. As of Thursday, the ratio stood at 104%, which means that put options significantly outweigh call positions. Oftentimes when this ratio reaches an extreme high or low we will see a reversal as sentiment gets stretched. The last time this ratio popped over 100% was back on Oct. 9, right before stocks made a significant move higher.