Options Activity Is All Bulled Up
Call contracts got rolled higher on Friday (6,800-7,200 range), as Gamma Flip level has increased back up to 6700. - now that SPX is 150 pts higher & it only took 3 days.
Speaking of $7000 fast approaching, here was my July 3rd post calling for it:
And my September 30th client post:
As of Friday, with the QQQ gap up above $613 breakout level, today we did indeed see the tag of 628 - in fact closing above it afterhours. Wen $650s?
Anyway, it’s hard to believe Powell or X won’t disappoint market bulls in some fashion later in the week, but given how seasonal strength, sentiment and sticky buyers have persisted, most are chasing this melt-up - not waiting for earnings let alone Santa.
Also remember this chart I sent few weeks back of impending dealer flows? Well, we are here:
Goldman reminds via TME:
Take this market slightly higher and dealers will lose lot of long gamma... and will enter aggressive short gamma territory. They will need to buy deltas mechanically in order to dynamically hedge the book. Running short gamma at these volatility levels is not attractive, so we wouldn’t be surprised to see dealers turn full momo chase upside optionality, which has the potential to exaggerate the move higher as spot up/volatility up could easily kick in.
At the same time,
This is classical upside panic behavior where people start abandoning protection as “downside hedges only cost money bro“.
Melt-Up, Meet Mega Cap Tech & Macro Event Risk Week
Let’s talk about all the market moving news and expected market reactions…