The core reason (short answer)
ETFs are traded mostly by retail & directional traders.
Index options are traded mostly by institutions for hedging.
So on down days:
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Retail buys calls on ETFs → “dip buying”
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Institutions buy puts on indexes → “portfolio protection”
These are different participants with different objectives.
Why RUT PCR = 2.1 is especially important
That’s extreme.
It implies:
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Heavy protection demand
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Stress in small caps
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Credit / growth risk concerns
Historically:
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When RUT PCR spikes → risk-off environment
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QQQ bounces may fail
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SPX grinds down or chops
