I check my options scanner every morning. Most days it returns nothing notable.
Last Tuesday it flagged something I had not seen before.
Most retail traders watch individual stocks. They'll track the put/call ratio on TSLA or NVDA, look for unusual options activity on a specific ticker, and build their thesis around single-name flow.
What they often miss is the sector level.
My options flow scanner — one of the Claude Code skills I run every morning — returned a reading I hadn't seen before: XLI put/call ratio of 5.32.
That number stopped me.
What XLI is, and why 5.32 matters
XLI is the Industrial Select Sector SPDR ETF. It tracks industrials: aerospace, defense, machinery, transportation, construction. The names you'd expect — Caterpillar, Honeywell, RTX, GE Aerospace.
A normal put/call ratio sits somewhere between 0.5 and 1.2 for most ETFs. Anything below 0.5 is aggressively bullish (heavy call buying). Anything above 1.5 is cautious. Above 2.0 is a meaningful signal.
5.32 is not a retail read.
At that level, you're looking at institutional positioning — funds buying downside protection on industrial exposure at a scale that moves the aggregate ratio by more than 4x the baseline. This isn't someone hedging a small position. This is deliberate, significant protection buying on a broad basket of cyclical names.
What the scanner output looked like
For context, here's what the morning scan showed across my watchlist that day:
Options Flow Summary — 2026-05-13
SPY P/C: 0.44 [EXTREME BULLISH]
QQQ P/C: 0.54 [BULLISH]
TEM P/C: 0.50 [BULLISH]
RXRX P/C: 0.38 [EXTREME BULLISH]
IREN P/C: 0.83 [NEUTRAL]
XLI P/C: 5.32 [OUTLIER — INSTITUTIONAL HEDGE SIGNAL]
The individual names are telling a bullish story. SPY at 0.44 is one of the more extreme readings I've tracked — the options market on the broad index is pricing in continued upside.
And yet there's a single data point that cuts against the grain: someone is paying significant premium for downside protection on industrials specifically.
Three interpretations
When you see a reading like this, there are a few ways to think about it.
1. Macro hedge against cyclical slowdown
Industrials are economically sensitive. They underperform when growth expectations contract. A fund with large equity exposure across the market might be buying XLI puts not because they're bearish on industrials specifically, but because it's an efficient way to hedge broader slowdown risk. Cyclical ETFs move with GDP expectations; cheap sector puts can protect a broader book.
2. Specific catalyst hedge
Something is coming that specifically affects the industrial sector — a regulatory announcement, a tariff decision, a defense budget revision. The buyer knows something about timing that makes sector-specific protection worth paying for, even when the broad market is signaling bullish.
3. Volatility play
Put/call ratio can be distorted by unusual options strategies — ratio spreads, collars, complex institutional hedges — that inflate put volume without being straightforwardly bearish. Less likely at this magnitude, but worth considering.
I don't know which of these is true. That's not the point.
What I actually did with the information
I didn't change any positions based on this signal alone. One data point isn't a thesis.
What I did:
- Flagged any industrial-adjacent names in my portfolio for closer attention
- Noted the reading in my trade journal with a "watch" tag
- Set a trigger: if XLI P/C stays above 3.0 for three consecutive sessions, review sizing on cyclical exposure
The value of the signal isn't that it tells you what to do. It's that it tells you what to watch. It interrupts complacency.
Before I built this scanner, I would have missed it entirely. Not because I wasn't paying attention — but because I was focused on my individual names and never would have thought to check sector ETF flow as part of my morning routine.
How the scanner works
The skill is one of six I run daily. Here's the core logic in plain terms:
- Pull options chain data for each ticker in my watchlist
- Sum total put volume and call volume across all expiries
- Calculate the ratio, classify it against threshold bands
- Flag anything outside two standard deviations of that ticker's historical average as an outlier
The outlier detection is the part that caught XLI. It's not just "is the ratio high" — it's "is this ratio unusual relative to what this specific instrument normally looks like." XLI's baseline P/C is much lower than 5.32. That's what made it worth flagging.
The skill runs in Claude Code as a custom command. The underlying data fetch is a Python script. The output hits my Telegram before market open.
The broader point
Options flow at the sector level tells a different story than single-name flow. Institutions hedge through ETFs, not always through individual names, because the liquidity and cost efficiency is better. If you're only watching stock-specific options activity, you're reading half the conversation.
The XLI read might amount to nothing. The puts could expire worthless, the industrials sector could rip higher, and whoever bought that protection will have paid for peace of mind they didn't need.
But I'd rather know the signal exists and decide to ignore it than never see it in the first place.
The scanner is open source on GitHub: github.com/tellmefrankie/ai-investment-skills
The full suite including Telegram alerts and the complete watchlist configuration is available as a bundle: jaehyunpark.gumroad.com/l/tcyahy
Every Monday I publish the top 3 options signals from the live scanner, with interpretation. Free to start: Options Anomaly Weekly
Not financial advice. Personal tooling and research. Do your own due diligence.
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