Wall Street blamed zero-day option traders for a sudden stock-market selloff. But a BofA team says they got it wrong.

A team of equity-derivative strategists at Bank of America argues that the influence of rising zero-day option volumes has been exaggerated and that other factors, such as rising Treasury yields and trading by systematic quant funds, were likely the drivers of a sharp move lower in the S&P 500.

marketwatch.com

Relevant topic timeline:

8/25/2023

'This is a no-rules market'. Goldman strategist explains why recent stock moves have confounded traders.

Systematic option traders and funds have significant control over the US stock market, reducing the impact of fundamental news, such as Nvidia's earnings report, and contributing to increased market volatility.

9/4/2023

Stocks tend to plummet in September - but expect a better month this year, Bank of America says

Bank of America's technical strategist believes that despite historically poor September performance, the S&P 500's year-to-date rally positions it for further gains, with the potential for an 8% climb by the end of the year.

9/10/2023

Hedging Costs Rise as Stocks Extend Gains Ahead of Key Inflation Data

Investors are paying more for options that hedge against a decline in the S&P 500, indicating rising concerns about a downturn amid economic troubles in Europe and China, ahead of crucial readings on US consumer prices and the Federal Reserve's interest-rate decision.

9/12/2023

Bitcoin Slides 15% Since July As Macro Uncertainty Weighs Despite Bullish Fundamentals

Bitcoin's recent 5% increase after testing the $25,000 support level doesn't necessarily indicate a victory for bulls, as Bitcoin has struggled to gain momentum despite significant catalysts, while bears have their own advantages like ongoing legal cases and financial troubles for Digital Currency Group. Derivatives metrics show a lack of demand for leveraged long positions, but options markets indicate equal odds for both bullish and bearish price movements.

9/17/2023

BofA: S&P 500 Could See 25% Surge in 2023 Based on Profit Growth Expectations

Bank of America predicts that the S&P 500 could surge over 25% within the next year based on a bullish indicator, with low long-term profit growth expectations among analysts signaling potential gains.

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Posted 8/22/2023, 9:48:00 PM