Outstanding. That was the best description of a gamma squeeze I've read yet. I love your "J" illustration, so simple and concise. Not to be left out, yesterday I bought options for the first time in my life. Some June 30th puts on the SPX @ 3700, I am betting that the party is nearing the 4am closing bell. We shall see.
To preempt the "thanks for reading" response, I would like to say thanks for writing! This is written in such simple English that even a non-finance based professional can understand the concept. Thank you again for the effort you put into your content to keep the quality coming out week after week.
I hardly understood a word of this but thank you for the detailed explanations, its why i dont invest as i have zero idea how i could be fleeced but am intrigued by the stock markets!
Anybody know how many TSLA $190 calls were still open and in the money at the close? How many$200 calls expired worthless? I'm guessing it was a small % of today's volume in those calls...
No but compare the options traded vs the open interest. I have lots more questions than answers, yet I haven't been able see the whole picture of what's happening here.
Try replacing all the 'retail' option buyers with one option buyer with deep pockets, deep enough to buy the same volume. If he can run up the price simply by buying so many options, why isn't a wealthy man like Musk running up his own stock with say, the money in his charity that is said to never have been spent? Why isn't this happening to any stock where someone wants to make some easy money?
Could we use the call volume at a given exp date as a predictor for market tops?
For example, if the mid-march call has lots of opened contracts this means that the day after expiration there will be less leverage and therefore less impulsive price action?
The market maker should be getting killed if he waits to hedge based on a formula of how far out of the money the option is when the stock goes up. Add to that, the increasing stock price he causes when he does hedge. Something smells fishy when more people are betting on a horse race than the ones actually going to the window to bet the race.
Makes a lot of sense, especially with the popularity of 0 dte options.
Outstanding. That was the best description of a gamma squeeze I've read yet. I love your "J" illustration, so simple and concise. Not to be left out, yesterday I bought options for the first time in my life. Some June 30th puts on the SPX @ 3700, I am betting that the party is nearing the 4am closing bell. We shall see.
Cheers for another great article.
To preempt the "thanks for reading" response, I would like to say thanks for writing! This is written in such simple English that even a non-finance based professional can understand the concept. Thank you again for the effort you put into your content to keep the quality coming out week after week.
Yes, this gamma squeeze did cost me quite a lot of money last week, when i was short $COIN stock. Should have known better !
thanks for this insightful article.
I hardly understood a word of this but thank you for the detailed explanations, its why i dont invest as i have zero idea how i could be fleeced but am intrigued by the stock markets!
Great article! I really like your homemade illustrations (and the "J" comparison is very well found btw!)
Well written, good sir
Anybody know how many TSLA $190 calls were still open and in the money at the close? How many$200 calls expired worthless? I'm guessing it was a small % of today's volume in those calls...
No but compare the options traded vs the open interest. I have lots more questions than answers, yet I haven't been able see the whole picture of what's happening here.
Try replacing all the 'retail' option buyers with one option buyer with deep pockets, deep enough to buy the same volume. If he can run up the price simply by buying so many options, why isn't a wealthy man like Musk running up his own stock with say, the money in his charity that is said to never have been spent? Why isn't this happening to any stock where someone wants to make some easy money?
great article
Could we use the call volume at a given exp date as a predictor for market tops?
For example, if the mid-march call has lots of opened contracts this means that the day after expiration there will be less leverage and therefore less impulsive price action?
What's the max of a bid-asked spread the market maker is allowed to post?
The market maker should be getting killed if he waits to hedge based on a formula of how far out of the money the option is when the stock goes up. Add to that, the increasing stock price he causes when he does hedge. Something smells fishy when more people are betting on a horse race than the ones actually going to the window to bet the race.
Great article!
It would interesting a post about death spiral convertible debt and meme stocks (see last Micheal Burry tweet)
How does it the story end? What causes it to end?