Markets stocks volatility

‘LOLWUT’: Nomura’s McElligott Explains Tech’s Upside Summer Crash

There's "consternation" about the "spot up, vol up" dynamic evidenced in US benchmarks of late, Nomura's Charlie McElligott says, in a Tuesday note. This was, of course, the subject of a feature piece here on Monday evening, and the explanation is "simple", McElligott writes. "Street-wide, Dealers are short Gamma/short Calls off the back of the massive upside premium buyer (as in billions spent) who has been in the market over the past month or so in a number of mega-cap, single-name tech companies", he notes. Read more: Stocks Up, Vol Up And ‘The Mighty Call Trading Legion’ If you're wondering why, for example, Salesforce experienced a "freakish" (as Charlie puts it) surge last week, alongside a similarly anomalous move in Netflix, this dynamic goes a long way towards explaining it. McElligott employs his signature, ultra-colloquial cadence, describing the Salesforce move as a "lolwut" moment (which is probably what the ~1,000 people the company reportedly laid off on the same day where thinking). That surge, he says, "'dragged-up' a number of other high-profile big Tech names which have also been part of the upside buying program". Last week, Macro Risk Advisors’ D
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7 comments on “‘LOLWUT’: Nomura’s McElligott Explains Tech’s Upside Summer Crash

  1. If things don’t come off just right I’d imagine the unwind could be rather gnarly

    • Canuck says:

      Wouldn’t the trend rolling over mean people buy puts, forcing dealers to sell (short sell) stock to hedge the puts they sell, driving down the stocks, encouraging people to buy puts? Should be fun to watch.

  2. How long before TSLA has a $2k handle next to it’s share price again? Could happen very fast in a crash up dynamic…

  3. michael schratter says:

    History may not repeat itself, but last I heard it echoes…

  4. dayjob says:

    Now Zoom riding on the crazy train too. The infinity rally call was prescient…

  5. Prestwick AK says:

    Perhaps this upside call hording strategy can be added to Marks’ perpetual motion machine (?)

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