Call Buying

Today's ISE sentiment number was 144, again indicating a high level of call buying.

The problem with high levels of call buying is twofold:
(a) Investors think that being bullish is easy money, a guaranteed win. They don't think they can make money buying puts. But if no one is skeptical, who is the marginal buyer?
(b) Investors are not hedged. That means that when the inevitable negative surprise and downward move comes, they will be very quick to rush for the exits.