Daily Alert – Thursday 21st December 2023: Options kill the S&P500 bulls

Mark NugentDaily Alert, December 2023

Daily Alert – Thursday 21st December 2023: Options kill the S&P500 bulls

Good afternoon.

US annualised Q3 GDP came in at 4.9%, missing expectation slightly but still a number that most countries would give their eyeteeth for. Unemployment claims were less than expected too. There’s nothing stopping the US economy.

We saw a significant fall in US equities yesterday which was attributed to a massive position being taken in short-term put options, insuring against a market fall. The size of the position was so large that the option writers (sellers) had to take defensive positions, essentially shorting the market, and making the drop feared by the options buyers, occur. Is this legal? Why won’t it just happen again, and again, until everybody’s money has been turned into option premia? Well, the strange thing is it might. Finance. I love it.

I will be back tomorrow with brief videos of the S&P500 and WTI trades closed last week for a total profit of just over 3%.

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