The market has started to pull back. The rebound since July has turned into a tug-of-war in the past week, with the implied volatility (IV) for major tenors clearly declining, indicating that the market is increasingly pricing in low volatility.

Looking at IV trends over the past three months, the early-June rapid drop briefly lifted IV. At this stage, IV is essentially a fear gauge: the faster the selloff, the more IV rises. Once the market’s decline stops, IV will fall quickly, which is highly correlated with the level of market panic.
The rising share of Put trades and sustained low IV are also typical IV characteristics of a bear market. This situation will not be broken by a single bullish candle. We can be very clear: this is a good time to sell Calls, until the end of this setup once two major bullish candles have played out.