A $3.2 Trillion Option Expiration Seen Worsening Post-CPI Rout
- Market makers seen selling equities to hedge their positions
- Dealer ‘gamma’ flipped to short post inflation data: SpotGamma
This article is for subscribers only.
Another wrinkle in a chaotic stock market where everything from the frenetic activity of quant traders to an ever-hawkish Federal Reserve is making investing harder than usual: A looming $3.2 trillion options expiry played a notable role in the Tuesday selloff.
As a hotter-than-expected inflation reading rocked Wall Street, a slew of bearish options that had become worthless during last week’s rally jumped back in the money, forcing market makers to sell underlying stocks to hedge their positions.