In this episode, we dive deep into the world of options and their impact on market dynamics. We start with an "Options Dealer Flows 101" primer, explaining key concepts like delta hedging, gamma, charm, and vanna to help viewers understand how options flows can drive stock prices. We then analyze the current market situation heading into the September 2024 options expiration, one of the biggest of the year. We explore the outsized influence of Nvidia options activity, discuss potential outcomes from the upcoming FOMC meeting, and examine how bond-equity correlations are shifting. We break down why understanding options flows is crucial even for long-term investors who don't trade options themselves. Using real-world examples, we illustrate how options positioning can create market volatility and reversals around key dates. Whether you're an options trader or just want to better understand what's moving markets, this episode provides valuable insights into the hidden forces shaping stock prices. Join us as we unpack the complex world of options and their far-reaching effects on the broader market. SPOTGAMMA'S NEW PRODUCT - TRACE THE MARKET https://spotgamma.com/trace-the-market-excess-returns/?aff=Excess DOWNLOAD THE SLIDE DECK https://spotgamma.com/opex MORE INFORMATION ABOUT SPOTGAMMA ⁠https://www.spotgamma.com⁠ ⁠⁠⁠⁠⁠FOLLOW BRENT ON TWITTER ⁠⁠⁠https://twitter.com/spotgamma⁠ ⁠⁠⁠⁠FOLLOW JACK ON TWITTER ⁠⁠https://twitter.com/practicalquant⁠

In this episode of OPEX Effect, we dive into the recent market volatility and its connection to options flows. We discuss the sudden VIX spike to 65, examining the factors that led to this extreme event, including low liquidity, the unwinding of correlation trades, and the impact of zero-day options. We explore how the market landscape has shifted, with a focus on the transition from inter-equity correlation to a broader bonds versus equities perspective. We also analyze the current options positioning and its implications for future market movements, particularly in light of upcoming economic data releases and events like Jackson Hole. Throughout the episode, we emphasize the importance of understanding options flows and market dynamics to make more informed investment decisions in these volatile times.

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In this episode of the OPEX Effect, we explore the current market rally and discuss the concept of "correlation spasms" - unusual movements and relationships between market components. We examine record low volatility, the outsize impact of mega-cap tech stocks, and the recent surge in small-caps. We analyze the prevalence of zero days-to-expiry options trading and its effects on intraday volatility. We consider potential scenarios for how current market imbalances may unwind and highlight key indicators to watch around the upcoming options expiration. Our goal is to provide insight into the complex forces driving markets, helping long-term investors better understand and contextualize daily market moves, even if they don't actively trade based on these shorter-term dynamics.

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