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How Options Expiry, Dark Pools, Gamma Exposure explains the Recent Market Fall and Rise
By Investment Moats  •  December 10, 2021
In a September post, I explained that due to QE, there is more liquidity in the market, which creates a conducive environment for options participants to dictate the stock market instead of the stock market dictating the options markets. Read How the Options Market ends up Controlling the S&P 500 in 2021. Since I wrote the article, the market decided to stop behaving the same way as the S&P 500 index experienced greater volatility before the options expiry for the month. However, the influence of the options market dealers is still intact. Last week we experienced an intense period where the volatility index of the S&P 500 went above 30: The chart above shows a snapshot of the price action of the S&P 500 in recent days. The first mark shows the day of options expiry. Prior to options expiry, there are very strong Vanna and Charm flows, and...
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By Investment Moats
Investment Moats is set up by Kyith Ng and have been around since 2005. He aims to share his experiences making sense of money, how money works and ways to grow his money. It hopes that by sharing his experiences, both good and bad, season investors can advice and critique his decisions and new investors can learn from them and find their own style ...
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