Investors' apprehension over the upcoming U.S. presidential election led many of them to bet on a market drop Tuesday, according to a report by Strategas, which looked at wagers in the options market.
"Put buying spiked yesterday, with the put-call ratio hitting its highest level since mid-January as pre-election anxiety continues to weigh on investors," Chris Verrone, head of technical analysis, wrote in a research note to clients Wednesday.
The put-call ratio is a commonly used measure of investor sentiment. The ratio is calculated by taking the volume of S&P 500 put options and dividing that figure by the number of call options. As the ratio increases, it signals traders are buying more puts than calls on expectations the market could fall, or to hedge existing positions in case of a sudden drop.