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Vol Supply Wave Smothered Nascent Stock Selloff
This'll be a little esoteric for some readers, but that's ok: Esoterica's part of the allure. I lear
market makers obviously understand this dynamic. with the consolidation in that space leaving a handful of shops (citadel, virtu, a few others) on one side of vol positioning, and retail or whoever is selling vol on the other, i wonder if they’ve (the market makers) considered letting the market sell off a bit more before buying stock vs the puts they’ve bought. i assume most, if not all of this is automated these days, but i wonder if ken griffin has ever suggested canceling bids underneath to let all these vol sellers suffer a bit. especially when the market was so close to triggering cta selling.
Oh. I am glad I don’t still have to teach this stuff. When I got my doctorate there were four derivatives and no public market. My office mate as a 19 year old doctoral student genius who had built up a cash balance of $750k to write and buy derivatives at individually negotiated prices with market makers over the phone. He seems to be really good at this stuff as he has since published a bunch of books and never bothered with a real job. Thank God we all have you and those who inform you.