Head of Equity Strategy Summary: In the last week we have observed how the VIX Index has increased despite cryptocurrency saxo bank record highs which is an unusual behaviour. Part of this move is heavy volume in call options in several US technology stocks such as Apple and Tesla forcing market makers to aggressively buying the underlying stocks to hedge their short call option positions.
In this research note we discuss the dynamics and how it can cause significant volatility in technology stocks over the coming week.
The company tried to project a positive outlook for the second half driven by new content rollout, but the unease was apparent on the conference call. We take a look at Netflix and what could be next for the this entertainment giant. It did not take long to get the first real earnings shock.
Tesla is down 6. In this research note we lay out that volatility could rise dramatically under the right circumstances and that it is the US equity options market dynamics that are driving the behaviour this morning. The US and global equity market were on a firm footing yesterday, so any statistical analysis would obviously point to something odd going on.
What happened was a sharp reversal in call options to put options volume on US equities indicating significantly shift in options volume. Why is this important? Source: Bloomberg Since late last year US equity options trading has been commission free driven by Robinhood.
Many of these are trading in equity options because it gives more upside through the implied leverage. What we have observed over the past couple of months is that retail investors are aggressively buying call options which means that market makers are short all these call options.
Saxo Bank are sediul central în Copenhaga și se ocupă de investiții sub formă de contracte futures, obligațiuni, acțiuni, CFD și o bursă de cryptocurrency saxo bank, având mai mult de de clienți instituționali și gestionând peste 12 miliarde de dolari zilnic. Este de interes faptul că o bancă a cărei prezență în climatul financiar clasic are un analist dedicat domeniul cripto pe nume Jacob Pouncey și că acordă suficient interes domeniului încât să îl includă în analizele trimestriale realizate. Investitorii rămași sunt cei care au motivație puternică și care au capacitatea de a pune cirptomonedele pe drumul cel bun după începutul prost al acestui an. În plus, companiile care gestionează criptomonede și-au continuat campania de recrutare a talentelor financiare și tehnice, inclusiv din Silicon Valley, mișcări ce demonstrează că se pregătesc să facă mișcări majore pe piață.
To neutralize their exposure and get a loss if the underlying cryptocurrency saxo bank price soars they buy the underlying. What likely happened yesterday was that Tesla shares fell just enough to push the delta low enough on a lot of the outstanding call options so that market makers began unwinding a lot of Tesla shares.
Saxo Bank analyst: Bitcoin could hit $100,000 in 10 years
This caused a sharp sell-off in Tesla shares. The subsequent rebound could have happened because a lot of retail investors bought large quantities of call options forcing market makers to buy the underlying to hedge their options book.
These options dynamics are causing massive intraday volatility cât timp va dura bitcoin certain stocks, so we recommend traders and investors to prepare for large sudden intraday moves. This means that investors buying call options really need big moves to the upside to get the calls in the money.
At some point many investors buying these calls will learn it the hard way that these implied volatility levels are extremely elevated and expensive.
Source: Bloomberg The chart below is a 5-year chart on the stocks mentioned in the research note. This is for regulatory purposes.