As the S&P 500 sells off, traders eye key 'risk pivot' level
When the market dips, they balance their puts by buying stock. When the market rips, they balance their calls by selling stock. Based on an analysis of data from SpotGamma, Barchart and Cboe LiveVol, the biggest positions were concentrated around the 7,500 level in the S&P 500.These areas of activity can act as guardrails on the highway of trading, creating areas of support and resistance, but they are not impervious to rupture.
- ▪When the market dips, they balance their puts by buying stock.
- ▪When the market rips, they balance their calls by selling stock.
- ▪Based on an analysis of data from SpotGamma, Barchart and Cboe LiveVol, the biggest positions were concentrated around the 7,500 level in the S&P 500.These areas of activity can act as guardrails on the highway of trading, creating areas of
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To find clues on whether the stock market is going to get more volatile or break down further, options traders are monitoring what a buildup in trading around specific levels in the S&P 500 says about the positioning of big institutional traders who supply liquidity by buying and selling securities.Evidence suggests these market makers were likely "long gamma" for at least a month leading up to this week, meaning they owned options that pay off with volatility. When the market dips, they balance their puts by buying stock. When the market rips, they balance their calls by selling stock.
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