Valuations Stay Stretched While Fear Eases — Cheap Puts Deserve a Place in Your Portfolio
Keep the Protection On. Valuations remain stretched, with stock prices higher relative to earnings than in roughly 77 out of every 100 months since 2006.
October 20, 2026 at 12:01 PM EDT
Justification
Valuations remain stretched, with stock prices higher relative to earnings than in roughly 77 out of every 100 months since 2006. The forward price-to-earnings ratio sits at 19.0, squarely in the caution zone. The VIX, Wall Street's fear gauge, is 17.7 — below 20 — which makes protective put options relatively cheap right now. Buy puts on broad index exposure; watch the 10-year Treasury yield at 5.1% as the level that keeps pressure on high-multiple stocks.
Since the Last Issue
- Fear & Greed Index moved from 23 to 26 since the prior issue — still Fear territory, but the worst of the panic is fading.
- VIX fell from 18.7 to 17.9 since the prior issue, keeping options cheap and long-vol hedges attractive.
📡 Today's Opportunity Radar: JETS · XBI · ITB. Full ideas in the Opportunity Radar section below.
Know one person who watches the market? Send them this issue. They get the first week free at market-pulse-daily.ghost.io.