Options have emerged as the new bedrock, with SPX functioning as the derivative. Tail wagging the dog scenario. For traders engaged in the SPX, ES (futures), or SPY, understanding the ramifications of options flows is paramount - But is this information really needed to be consistently profitable, or is it just noise?
Triple Witching and SPX 0DTE: Unveiling Market Mysteries Amidst Soaring Options Volumes
A recent phenomenon that has been making waves is the peculiar performance of the S&P 500 on Triple Witching days. Over the last 15 occurrences, the S&P 500 has experienced declines in a staggering 13 instances. This raises questions and piques the curiosity of market participants and analysts alike. What could be driving this pattern, and how does it intertwine with the surging volumes in the world of options trading?
Unraveling the Influence of 0DTE SPX Options: Distortions and Risks in Today's Stock Market
In the ever-evolving landscape of markets, new trading instruments emerge, bringing both opportunities and challenges. One such instrument is the 0DTE option, a derivative introduced in 2022 that has gained significant traction, accounting for nearly 50% of daily trading volumes in the S&P 500 (SPX). While these options have brought liquidity and flexibility to the market, their influence has also led to certain unintended consequences, artificially suppressing volatility and fueling a self-reinforcing feedback loop.
Gamma Exposure (GEX), Gamma Levels, and SPX 0DTE - What You Need To Know
Gamma & Gamma Exposure - What Traders Need to Know
“gamma is one of the larger sources of non-fundamental economic activity in global markets. Market makers who delta-hedge their option positions are economically driven to trade substantial amounts of underlying shares or futures, strictly as a result of the price of the underlying itself changing, not as a result of fundamental news and without regard to the liquidity available. As a result, gamma can cause markets to overreact to fundamental news (short gamma) or too under-react to fundamental news (long gamma).”