Thursday, August 20, 2015

Opex Long Squeeze

What you saw in the last 30 minutes of equity trading was an opex delta hedge, fear of overnight gap down panic selling.  We have finally reached what I would call a clean flush out, with the previous attempts aborted by dip buyers and nervous shorts.   The China fears and the crushing of oil is making investors nervous, but it has been Europe that has been notably weak.

It was a 2% down day but it felt like a plunge, with the controlled volatility lately.  It looks like we've broken the 2045 to 2125 trading range that we've been in since March.  But there are a lot of bears so I wouldn't be surprised if we get a strong bounce over the next few sessions.  Still think bulls have the advantage over the intermediate term looking out 2-3 months.

10 comments:

Unknown said...

I enjoy readying your blog, always learning something new - wish you could write everyday

Just curious you have been in the market for how long? Did you have a mentor? Or you learned everything on your own/from the market?

Market Owl said...

I learned everything on my own. I write a blog entry usually when there is something to say. Nothing much to say these days except recently because of range bound trading. This breakdown is a fakeout move to get investors off sides before we go higher. IMHO.

Ivanovich71 said...

One helluva fakeout.

Market Owl said...

Trolls R Us. keep up the good work!

MM111 said...

This market is bottomless.

Unknown said...

this blog post piqued my interest in "delta hedge", and i found this article:
http://www.zerohedge.com/news/2015-08-21/why-market-crashing-close-jpm-explains

the first sentence from the article says: S&P 500 put option gamma exceeded call option gamma by more than $50bn prior to the option expiry this morning. This was the highest S&P 500 put gamma imbalance ever.

Market Owl, do you know a way to track gamma imbalance? a ticker/symbol readily available?

thank you!

Market Owl said...

Not familiar with gamma imbalances, but if market makers are short puts, they get longer the market as the market goes down. That is what you saw this morning with the big dip right before cash open, and this afternoon.

Ivanovich71 said...
This comment has been removed by the author.
Ivanovich71 said...

I simply questioned your comment regarding a "fakeout", and you label me a troll. Your call was off for the day, have the common decency to simply explain what mistake you made and move on. We all make mistakes, but labeling the one day move a fakeout was clearly incorrect - as a much deeper flush needed to take place.

But that's fine - I'm a troll. I won't bother you by reading your blog any further.

Best of luck with...well, whatever.

Market Owl said...

And you are perfect? Never made a wrong market call? You can question my calls, it doesn't matter. You provide nothing constructive anyway. The last thing I want to do is help a troll like you make money. Good riddance. Go troll another blog.