Good morning.
Yesterday’s “euphoria” aka the mechanical squeeze higher has subsided, as investors are digesting Powell’s press conference and today’s bleak assessment for the economy coming from the BoE, which can be summarized in one word: “stagflation” (even if the bank refuses this definition).
Also not helpful: Bad economic data out of Germany (factory orders -4.7%) and out of the US (productivity -7.5%).
In terms of options:
Big investors apparently used yesterday's rally to stock up on cheap puts and increased open interest at 4000/3600/3700 and even 3500.
We continue to see 4300 as a strong resistance that needs to be conquered before a sustainable rally towards the “gamma flip level” at 4390 can take place. Dealer gamma registers -582MM, gamma inversion occurs at 4390.
Yesterday’s “euphoria” aka the mechanical squeeze higher has subsided, as investors are digesting Powell’s press conference and today’s bleak assessment for the economy coming from the BoE, which can be summarized in one word: “stagflation” (even if the bank refuses this definition).
Also not helpful: Bad economic data out of Germany (factory orders -4.7%) and out of the US (productivity -7.5%).
In terms of options:
Big investors apparently used yesterday's rally to stock up on cheap puts and increased open interest at 4000/3600/3700 and even 3500.
We continue to see 4300 as a strong resistance that needs to be conquered before a sustainable rally towards the “gamma flip level” at 4390 can take place. Dealer gamma registers -582MM, gamma inversion occurs at 4390.