Is AI getting smarter, or information leakier?

"In many ways, especially for retail investors, that's a picture of the modern market. A place where rumor, rhetoric, and anticipation can impact price action in unpredictable ways. When you add the ever-changing realities of our current political and macro-economic environment, the average Joe trader can feel like the odds are stacked against him. But there is one set of data that more often than not, cuts through the noise. And that's the options market."

"Options give us a more accurate picture of what the people who move the markets are actually thinking. Institutions and hedge funds make their living on positive returns. And while stocks can often be manipulated, options have a shorter shelf-life and are way less forgiving. And it's there, in the nuances of the "put to call ratios" of the options market, that AI is quietly giving retail traders a helping hand."

"OnOctober 9th, our Prospero.ai AI-driven Net Options Sentiment (a gauge of real-time, market options data and positioning), plunged from a bullish 33 to an ominously bearish zero in a matter of minutes. No headline. No Fed speech. No earnings shock. Just a massive bearish shift, seemingly out of nowhere. We saw the shift and sent an alert to our followers on X. At 10:30 a.m. the next morning, the numbers were still sitting at zero."

Inception's blurred reality provides an analogy for modern markets where rumor, rhetoric, and anticipation drive unpredictable price moves. Retail traders face amplified uncertainty amid shifting political and macro-economic conditions. Options markets offer a clearer view of institutional thinking because options are time-sensitive and reveal near-term convictions. Put-to-call ratios and other options positioning metrics capture directional sentiment that stock prices may obscure. AI can parse real-time options data to detect abrupt positioning shifts. An AI-driven Net Options Sentiment gauge recorded a rapid fall from bullish to zero, prompting alerts as readings remained bearish the following morning.

Read at Fast Company