Traders who buy put options are betting the price will sink. Option players historically have been wrong at major market turning points. That means most options traders think the market will sink further, so they buy more bearish puts than bullish calls. When the market wrings out the last bit of optimism, it clears the decks for a new rally. The last sellers have made their move.
Buyers can now return unopposed.
But this gauge doesn't always work so precisely, which is why you should let the market itself decide whether a new rally is at hand. The session should be clearly powerful. Usually this happens on the fourth to seventh day of an attempted rally. Follow-throughs after the 10th day signal a weaker rally. As the market has become more volatile and dominated by huge mutual funds, premature follow-throughs have cropped up.