A single massive options trade fueled a 2% positive reversal in the S&P 500 on Wednesday, says Wells

[unconventional wisdom]

https://www.realvision.com/tail-wagging-the-dog-how-options-gamma-drives-equity-price-action

the video isn't available but i've always liked the analogy of the tail wagging the dog

 

[rb7]

If a guy was bullish, it means that the counterpart was bearish.
Also, block trades of more than 100k contracts are not that uncommon.

 

[SunTrader]

Markets reverse when momo slows just enough. In the case of a bottom selling slows not buying increasing. That happens once traders believe bottom might be in place.

Ops trade, by sheer chance, might have hit the tape at the right moment is all.

 

[Pekelo]

Why not both? We were hitting the lower BB on the hourly chart and that was probably the time they executed the trades further helping to push the market up. So the market was ready for a rebound and the call buying just helped it.

 

[cesfx]

Destriero hedging one of his tail risk in his real demonstration at his seminar in Vegas?

 

[murray t turtle]

If a guy was bullish, it means that the counterpart was bearish.
Also, block trades of more than 100k contracts are not that uncommon.

%%
Exactly\
but they may have preferred to promote sales or calls in a bear trend perhaps?? Justa guess, video is not available.
Don Bright Daytrading Co founder, used to be an options market maker;
after he retired from that, he said '' options are made to be sold'' LOL

 

[mervyn]

If a guy was bullish, it means that the counterpart was bearish.

Not necessary bearish, the seller may just want to hedge, i.e. sell covered.

 

[rb7]

Not necessary bearish, the seller may just want to hedge, i.e. sell covered.

Well, it's also true for the buyer.
Who knows the real intention behind those trades.

 

[mervyn]

Well, it's also true for the buyer.
Who knows the real intention behind those trades.

I'd do the same. Sold 25-27 weekly and monthly calls and use the premiums to buy as many shares of TQQQ in recent days.

 

[vanzandt]

A member here sent me that link via PM and I looked at the trade on the T&S at 7AM the next day.

Whoever that was from Wells Fargo that wrote this... pfff, its no wonder WFC has so many problems.
This:

In a Wednesday note from Wells Fargo's head of equity strategy, Chris Harvey detailed a bullish options trade worth $31 million that hit the tape right around the same time stocks hit their intraday low and started to move higher.

"The Greeks of the trade are likely what gave a mid-day pop to the S&P 500," Harvey said.

The specific trade included the buying of 20,000 S&P 500 calls expiring in October with a strike price of 4,500 and 14,000 bullish option contracts expiring in March with a strike price of 4,300. Meanwhile, on the other end of the trade, 48,000 call options expiring in January with an exercise price of 4,500 were sold.


The trade is a bet that the stock market will rally over the next few months — by almost 20% based on current levels. By midday Thursday, the S&P 500 was down 0.4% at 3,768.31.

Here's the trade:

For one thing, the writer got the number of contracts and a few strikes wrong, and it was a bearish bet.

The only thing this trader bought were the Dec 4400 calls, and that was the hedge.

The other 4 trades are all sells. (the columns above are quantity/bid/price/ask)

Do the math and it's approximately a $17M credit that the S&P stays below 4400 going into Dec exp, and 4500 going into the March expiration.