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Options-Selling ETF Trend Spreads To Single Stocks
A little over a month ago, I revisited a familiar, but slightly esoteric topic: Ballooning AUM in mass market, yield-enhancement/income products and specifically, ETFs with embedded options-selling strategies.
I'll spare you any torturous recapitulation in favor of simply reiterating that total assets for such products hit $60 billion in 2023.
As I put it last month, the associated flows don’t exist in a vacuum. They’re impactful. And increasingly so.
With that in mind, Nomura is now high
I don’t get Nomura’s point?
So ETFs are selling Puts to generate income. Hedging that requires going short, to some (delta) extent. This dampens volatility… until it doesn’t, presumably. Like the rest of the vol selling industry…
So what’s Nomura’s play? Let’s buy options? In case, the artificially suppressed vol breaks out, I guess?
Am I understanding this right?