To: isopatch who wrote (17405 ) 12/7/2015 2:40:05 PM From: isopatch 2 RecommendationsRecommended By
Respond to Something else to consider soon after the expected 12/16 FED rate hike. (excerpted from longer article)This important event falls at a peculiar time —less than 48 hours before the largest option expiry in many years. There are $1.1 trillion of S&P 500 options expiring on Friday morning . $670Bn of these are puts, of which $215Bn are struck relatively close below the market level, between 1900 and 2050. At the time of the Fed announcement, these put options will essentially look like a massive stop loss order under the market .somewhere in the 1,800 area, or nearly 200 points below current levels.> the subsequent move is driven not by the market's read through of monetary policy but by the "pin" in this massive $1.1 trillion option expiry, the biggest in many years, one which if recent market action is an indicator, suggests the stop loss strike level will be taken out in the process setting the "psychological" stage for market participants who will look at the drop in the market, and equate it with a vote of no confidence in what the Fed is doing, potentially forcing the Fed to backtrack in less than 2 days!zerohedge.com
