Put-to-call ratio spikes amid highest options volumes of 2015.

Stock market averages are working off session lows as energy rebounds, but trading remains cautious as the S&P 500 falls for a fourth consecutive day. After hitting a low of 1988.44 midday, the S&P is now down 17.89 to 2005.14. The Dow shed 228 points and seeing relatively weakness due to a big post-earnings slide in JP Morgan (JPM).

CBOE Volatility Index (.VIX) is up .83 to 21.39 after a morning spike to 23.34. Trading in the options market reflects the negativity. 8.7 million puts and 8 million calls traded across the exchanges. The total put-to-call ratio is therefore 1.09 and the highest since the 1.15 on Jan 5. Total volume is projected to be 21.5 million for the day and the most since the December Quad Witch expiration Friday.

The bearish sentiment might set the table for a bullish midweek reversal, which is possibly playing out in the energy sector. Yet, some of the biggest options prints of the day seem to be expressing concerns about additional losses for global equities in the months ahead. For instance, the largest blocks of options traded Wednesday include a 70250-lot of March 49 puts and a 59,250-contract block of June 45 puts on the iShares Europe, Far East, Australia, Asia ETF (EFA). An investor was selling March and buying June puts on EFA, according to a source on the exchange floor. The action appears to be rolling or adjusting a block of Mar puts to a new position in June, possibly to hedge a portfolio of international equities.

Spread trading is driving higher volumes in the USO Oil Fund (USO). The ETF saw an aggressive rebound off record lows of $17.10 and is up 50 cents to $18.12. 216,000 puts traded in USO options. Bearish trading is also being seen in the SPDR Basic Materials Fund (XLB), Southern Copper (SCCO), and the iShares Long-term Bond Fund (TLT). Bullish options flow was noted in Lennar (LEN), Walmart (WMT), and Dow Chemical (DOW).