ETF Options Trading Drives Volatility Around Key Support Levels
-
Every month, the Global X NASDAQ 100 Covered Call ETF sells call options that need to be hedged by market makers, driving increased volatility. This happened yesterday and may happen again today.
-
The ETF buying back existing calls and selling new ones leads market makers to hedge by shorting index futures. This can erase previous day's rally.
-
Outside of Fed speak, yesterday was fairly normal except for a 4% bitcoin drop. $40K is an important support level; breaking below could lead to further declines.
-
The yield curve rose yesterday, approaching resistance at 4.40% - an important level that acted as resistance as yields rose in Aug/Sept.
-
Today's OPEX hedging flows will fade next week, giving a better market view.