Trader82

If I'm wrong, then I'm okay with it. A rally would be welcome as I would be happy to add to my position.

I have been doing this long enough to know: Being wrong in the short-term is of little consequence, as I will likely be right in the long term.

The end of day orderflow did show a lot of buying/short-covering. So, a rally is possible. 4k remains a very psychological level. Will be of interest what amount of gamma will be there on Monday and where the call/put walls will be.

To keep mkts from moving too far in either direction in a single day, they use price limits (A.K.A. Circuit Breakers or limit up/down). We very rarely hit these limits. ES (SPX futures) the last one was hit MAR 2020 (twice, if memory serves me correctly).


LINK

Sure. Most of my focus is on indices and commodities -I am a position and swing trader focusing on orderflow. I will have limited engagement with stocks.

As for indices today: a lot of the put gamma will run off. This will cause additional selling. A move lower is very likely today (looking primarily at MoC orders with SPY OPEX). IMO... a 3800 print is likely today by close.
As noted above, Monday will be real fun. This adds credence that large participants have continued to sell the mkt while it rallied in early AUG and SEP. If you go and look at the COT for ES you will note the selling by commercial traders. While they continue to buy VX futures. I have deviated from options - appoligies, if you want to look at CoT data, barchart(.)com has it available for free.

The underlining assumption is when retail or other participants are long puts or calls, dealers have taken the other side (thus are short puts or calls). Them being short has likely kept mkts up (as they're having to buy futures or a basket of high beta stocks as to delta hedge their book).

I suspect that most of this buying has been retail and short covering. Trader at large banks has had a lot to sell over the past couple of weeks. Talked to one buddy who committed he had just over $3B to sell on just his desk.
If you're able to, watch the tape on VX (vix futures), once you see large orders on either side that will give you a clue on the direction. Remember, VX/VIX is -1 correlation to indices.

You guys may find this interesting:
LINK

Same for us. My wife (no pics) is very engaged in all financial decisions. She does most of the shopping for the household. Most of the day-to-day stuff - bills, taxes, budgets, investment decisions, etc is handled by me. With one notable exception: I am a commodities trader, and I have handed my P&L over to her to manage. This keeps her engaged and brings an additional level of accountability, there are a few other reasons but those are the primary.
It is a partnership above all.

Just curious: What will your argument be when the FED pivots or we head into deflation?

The main issue with your argument is, that it's all math and fails to take account of other variables. It's also just looking at current mkt conditions and not where mtks are headed.

I'm unsure what I'm supposed to "log back into", this seems to be an inane comment.

I can get behind that too. After all, she is all-knowing. Just ask her!

The majority of the gamma is from a JPM SPX collar at 4005. That is what buoyed mkts thus far. You also have VIX OPEX and roll (VX futures) next week. Any suppression of volatility will likely ignite vanna/charm flows, which will push mkts higher. Additionally, what has not happened is very important VX futures have been unable to push higher (VXU22 - $27.22ish) and VVIX (VOL of VOL) has continued to base along with TDEX (measures tail risk).
My point is, that the hedge has already worked. Most CTAs have already repositioned. While Monday may or may not be interesting, the majority of gamma expiries in the AM (SPX)... SPY is (PM - MOC). I would not discount volatility tomorrow (Friday).
P.S. the amount of gamma expiring tomorrow is not large from a historical perspective.