Trillions of US stock options set to expire: What it means for the market
<p>Around $5 trillion in US stock options are set to expire on Friday, the largest such expiration in at least 20 years</p><ul><li>80% are in S&P 500-linked contracts</li></ul><p>Info comes via a news wire <a href="https://www.reuters.com/markets/us/why-are-us-stocks-sluggish-blame-record-5-trillion-options-expiration-2023-12-12/#:~:text=Some%20blame%20a%20looming%20%245%20trillion%20options%20expiration,-By%20Saqib%20Iqbal&text=NEW%20YORK%2C%20Dec%2012%20(Reuters,U.S.%20stocks%2C%20market%20participants%20said." target="_blank" rel="nofollow">report</a>:</p><ul><li>market participants’ behavior ahead of the upcoming expiration
has been muting stock gyrations and may be one reason equities
have traded in a tight range over the last few weeks</li><li>
The S&P 500 has not logged a greater than 1% move in
either direction for 19 straight sessions, the longest such
streak since early August. </li><li>Cboe Volatility
Index (VIX) is around a nearly 4-year low circa 12.07</li></ul><p>There is more at that link above on how option dealer hedging is dampening volatility ahead of the expiry:</p><ul><li>dealers are net long "gamma," and must continuously sell stock futures when equities rally and buy futures when markets sell off to keep their position neutral</li></ul>
This article was written by Eamonn Sheridan at www.forexlive.com.
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