U Option Expiration - Friday the 13th
Posted by Tango
on August 6, 2021, 10:19 am
Some describe the market being in a consolidation mode, congestion. Another perspective, or explanation, involves option expiration. The resistance that the market is showing could very well come from calls that need to be hedged completely. As we get closer to expiration, the likelihood of higher prices decreases. After expiration, the resistance eases. On the downside, put hedging and unnecessary call hedges will provide support. We have seen in the recent past a sharp drop in prices as many in the money calls that were never hedged put sudden pressure on the market. Although this will not necessarily be the case this time around. lint json
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