Here's a thing most traders get exactly backwards.

You've been taught that expensive puts mean the market is scared of a drop. And in a normal stock, puts are structurally more expensive than calls — that downward-sloping skew is there almost every day, in almost every index, for years. If it were a crash prediction, the crash would be permanently imminent and permanently wrong.

It isn't a forecast. It's a price. People own stocks and buy puts as insurance, and markets fall faster than they rise. That permanent tilt is the resting heart rate of the options market. By itself, it signals nothing.

The signal is when the shape changes.

Measure it with one number: the risk reversal. IV of the 25-delta call minus IV of the 25-delta put. In a normal name it's negative — say a 22% put and a 15% call gives you minus seven. Healthy. Track it day over day and watch the direction, not the level.

When that number climbs — minus seven to minus four to plus three — calls are getting bid relative to puts. Someone is paying up for a violent move higher. In a heavily shorted name, dealers short those calls have to buy stock as price rises, which pushes price up, which forces more buying. A gamma squeeze. The options market sees the fuel loaded before the fire starts.

What a disciplined trader does: pull the 25-delta call and put IV on the names you trade, compute the risk reversal, and write it down. When it crosses toward zero, stop reading crowded shorts as easy money. An inverting risk reversal means being short is standing in front of a train.

The handle to keep: downside skew is the weather, an inverting risk reversal is the storm — and it points up.

This is educational commentary, not personalized financial advice — a way to think, not a trade to copy.

Full walkthrough with the charts here: https://youtu.be/RAGsz7Q3ycM