U.S. stocks have fallen so sharply over the past few days that, besides the hotter-than-expected CPI and inflation concerns, the options market may also be adding fuel to the fire.
This Friday is monthly options expiration (OpEx) for U.S. stocks. If market makers are in a negative gamma position, the further the indexes fall, the more futures they may need to sell to hedge—potentially deepening the losses. Options aren’t the root cause of this selloff, but they may well be amplifying it.
Yesterday’s CPI came in hotter than expected, and PPI is due at 8:30 p.m. tonight. If inflation continues to surprise to the upside, combined with Friday’s options expiration, the market may struggle to find calm over the next couple of days. Let’s see whether PPI can give the market a short-term boost.
This Friday is monthly options expiration (OpEx) for U.S. stocks. If market makers are in a negative gamma position, the further the indexes fall, the more futures they may need to sell to hedge—potentially deepening the losses. Options aren’t the root cause of this selloff, but they may well be amplifying it.
Yesterday’s CPI came in hotter than expected, and PPI is due at 8:30 p.m. tonight. If inflation continues to surprise to the upside, combined with Friday’s options expiration, the market may struggle to find calm over the next couple of days. Let’s see whether PPI can give the market a short-term boost.