Excess Returns

What Regular Investors Need to Know About Options Flows | Brent Kochuba


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In this episode, we dive deep into the world of options and their impact on market dynamics. We start with an "Options Dealer Flows 101" primer, explaining key concepts like delta hedging, gamma, charm, and vanna to help viewers understand how options flows can drive stock prices.

We then analyze the current market situation heading into the September 2024 options expiration, one of the biggest of the year. We explore the outsized influence of Nvidia options activity, discuss potential outcomes from the upcoming FOMC meeting, and examine how bond-equity correlations are shifting.
We break down why understanding options flows is crucial even for long-term investors who don't trade options themselves. Using real-world examples, we illustrate how options positioning can create market volatility and reversals around key dates.
Whether you're an options trader or just want to better understand what's moving markets, this episode provides valuable insights into the hidden forces shaping stock prices. Join us as we unpack the complex world of options and their far-reaching effects on the broader market.
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