Brent Kochuba of Spot Gamma joins the podcast to discuss his view that there will likely be an equities rally into the March 18 options expiration.
This podcast was recorded Wednesday afternoon, March 9, 2022, and made available to premium subscribers that same day. Become a premium subscriber today by visiting Contrarian.Supercast.com or our Substack. There are many benefits beyond getting podcasts a few days (or more) early and not having to deal with annoying ads or announcements.
- Stocks have been selling off with the Nasdaq now officially in a bear market. But the guest is short-term bullish for reasons that can be traced to market makers hedging counterparty risk (2:39);
- What about all the uncertainty with Russia-Ukraine? (5:57);
- Stocks are up since the start of the Russian invasion on Feb. 24, likely because markets were hedged going in due to Fed tightening concerns (9:28);
- What to make of the March 9 rally? A brief primer on gamma, vanna, and charm aka delta decay (11:02);
- Similar gamma squeezes caused rallies in the past around options expiry (15:20);
- Background on the guest (21:31);
- The hedges investors have put on ahead of the FOMC meeting next week should lead to more risk-off. The lower bound for the S&P 500 is 4,100 (24:36);
- Recent days have seen a change in options flow: Nvidia (NVDA) and crypto names such as Coinbase (COIN) have benefited along with Amazon (AMZN) and the Financial Select Sector SPDR ETF (XLF) (26:50);
- Liquidity is important and recent months have seen some of it leave the system (30:06).