Massive S&P options trade may have roiled U.S. stocks on Thursday Saqib Iqbal Ahmed - Reuters Traders are pointing to a massive quarterly options trade on Thursday they said was from a JPMorgan fund as one reason why the stock market took a nosedive late in the day, as options flows linked to the trade exacerbated market weakness. The S&P 500 Index fell 1.2% in the last hour of trading on Thursday, marking the largest hourly drop for the index in more than three weeks. It finished the day down 1.56%, with some attributing part of the weakness to the large options trade that went down earlier in the day. /jlne.ws/36RgF5c
The SP closed down a whole 1.2% on Thursday? BOO FUCKING HOO! Why is this news? Jesus CHRIST people are so f*ed in the head! Nobody EVER talks about the 3% swings it has been having over the last quarter, intraday. Just goons I tell you!
Pretty minor event compared to the market manipulation Brian Hunter used to do in commodities. Finally it caught up to him. Boom!!!
I think this was a big deal as the selloff was dramatic right on the close. There was over a 10 billion imbalance on the sell side for the close, the largest I've ever seen. If you play the expiring SPX options in the last couple of minutes of the close, there was some tremendous opportunity/risk on the close, as the index dropped substantially in the last 2 minutes.
Makes sense since every JPM analyst I see on CNBC/Bloomberg is outright negative and certain this is just a bounce from a continuing bear market. Mike Wilson has been saying to sell for at least the last year. I think he said before that the bottom may be SPX 3000. Of course even the Wells Fargo & BAC analysts are also very negative on this market.
ON $SPX 5 minute trend was down, couldn't break thru resistance but could thru support so down it went. Why? WhoTF cares why. An anal-yst said so meh. What's past is past.
Similar impact on monthly option expiry and most Friday/Monday as well. I've incorporated this dynamic somewhat into my trading choices but if anything I've underplayed it because I'm surprised how predictable it can be. Occasionally Friday dynamics are trumped by other dynamics; for example, Cdn Oil stocks got oversold mid week last week and had nonstop slow buying on Friday.