Nomura’s McElligott: It’s ‘Déjà Vu All Over Again’ As August Comes Calling In October
The ghost of August is calling, Nomura's Charlie McElligott reiterates, in a Tuesday note largely dedicated to the dynamics that helped catalyze a furious rally in tech to start the week.
If Monday felt like "déjà vu all over again" to you, that's because the same self-fulfilling prophecy is back in play, right down to the "spot up, vol up" conjuncture.
"The market 'gets' the Dealer 'short Gamma' dynamic in mega-cap, single-names with very large open interest outstanding," Charlie said, in
What happens at expiration? Will the retail options buyers exercise and then hold on to the stocks? Or do they simply sell the calls and move on? Does August/September give us a road map?
What is being described is high class market manipulation. But who is the pupeteer and who are/is the puppets? Playing short dated out of the money calls is a risky market bet, with options close to the money, it is a razors edge kind of market. these are the type of trades that are the hallmark of a late cycle rally in a sector or perhaps even a market.
Pondering further, if the buyers are, indeed, retail (not hedge funds?), do they actually have the cash sitting there to exercise and pay for the stocks? Are they “real” buyers or “players” like Ria alludes to?
Fun stuff to watch.
No, they don’t have the cash to exercise. LOLOL
i am thinking Masa Yoshi San is at it again buying call options. Maybe its Trump via Saudi who is asking for a favor and a higher market before the election day.