<<Does any of this make sense?>>
Yes, it does. Thanks.
FWIW, one thing I've noticed in looking at the option interest in some of the tech big caps like INTC and CSCO is that the preponderance of calls is at levels we are just at or nearing now (CSCO 15, INTC 20, QQQ 26, MSFT split between 50 and 55). The put buying in September is minimal all around. While I think this might put a cap on any rally, the lack of puts certainly A) means there's no need to decline much to kill puts and, I suppose, B) there's no need to stop falling if it kills more calls. (But as we well know, of course, put buying will leap up when/if we get any downside pressure.)
What also strikes me about this situation is that right now, the "big boys" aren't losing in the option market either: we've been rallying slowly enough that very few stocks are running away and the declining VIX has impacted premiums, too. If the rally picks up steam from here, then I would think we might see more delta hedging/buying/whatever. As of now, it's just a bear's worst nightmare: no breather, no "good" exit points, and yet not really a sharp, fear inducing rally to make one say uncle. (And yes, one could argue bulls are being lulled into complacency. In fact, I've seen that argument for two weeks now. At some point here it will be true <g>).
I don't know what to make of it all, other than I'd guess that September puts and calls are gonna be frustrating as hell to hold for everyone.
the freep, master stater of the obvious |
