Reward 500 Tiger-coinsThis Friday, Wall Street faces a record-breaking options expiry—a total of $7.1 trillion! About $5 trillion tied to $S&P 500(.SPX)$; About $880 billion tied to individual stocks
According to Goldman Sachs, roughly $5 trillion of this exposure is tied to S&P 500, while another $880 billion is linked to individual stocks. The extraordinary concentration of these expiring contracts could amplify market volatility heading into year-end, with traders closely monitoring whether S&P 500 can hold the 6,800 level, a key battleground for bulls and bears.
This December’s event surpasses all prior records, with zero-day-to-expiration (0DTE) options on the S&P 500 alone accounting for more than 62% of total option activity, highlighting the complexity and potential volatility of the session.
Massive expirations could amplify swings. But a “pinning effect” may also stabilize prices toward key strike levels at close.
Although the market rebound tonight, it’s far away from Santa rally.
Can S&P 500 close above 6800?
Do you expect the “pinning effect” or market swings to dominate?
Leave your comments to win tiger coins~
Comments
I expect the “pinning effect” to push prices toward key strikes, but with such huge expiries, volatility is almost certain. Sudden swings are likely as traders adjust positions, though some stabilization around 6,800 is possible as market makers manage risk.
Although the market has rebounded, I remain cautious about a Santa rally. Even if SPX stays above 6,800, the sheer size of expiries could create choppy conditions. It’s a day to watch levels closely, stay disciplined, and be ready for both swings and pinning.
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Can S&P 500 close above 6800?
Do you expect the “pinning effect” or market swings to dominate?
Leave your comments to win tiger coins~
Massive expirations could amplify swings. But a “pinning effect” may also stabilize prices toward key strike levels at close.
Wall Street faced a record-breaking $7.1 trillion options expiry, with $5 trillion tied to the S&P 500 and $880 billion to individual stocks, making it a massive deadline day where trillions in trading contracts expire at the same time, causing the busiest trading day of the year
The index successfully stayed above the 6,800 level, proving that buyers were strong enough to keep the market from falling
The “pinning effect” kept the index around 6,800 as traders focused on that price due to options expiring, but big market swings dominated the final hour as traders adjusted massive year-end positions
With the S&P 500 holding 6,800, the market looks healthier heading into the holidays, likely setting the stage for the start of the "Santa Claus Rally"。。。
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1. It was fully priced in. Investors had already baked the quarter point hike into their plans with overnight swap market showing a near 100% probability of the move before it happened.
2. Governor Ueda's lack of guidance into future rate hikes actually caused the yen to weaken further, dropping 1.3% to 157.53 yen per dollar.
3. Real interest rates in Japan remain negative (at around -2.2%). This means that BoJ is still supporting growth even as it "normalises".
So it turns out that BoJ 's historic interest rate hike was about as scary as a kitten dressed for Halloween. The market, which was expected to shudder at the move away from decades of negative rates, merely stifled a yawn & continued its rally.
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While traders braced for market chaos, the S&P 500 laughed in the face of the "pinning effect" and went full steam into a gamma fueled rally.
The market completely shrugged off the BoJ's predictable move and the massive options overhang to close at 6,834.50, a robust gain of 0.88% for the day.
The rally was fundamentally supported by a comeback in the AI trade. $Micron Technology(MU)$ earlier blowout earnings and news that TikTok would sell its US operations to a venture including $Oracle(ORCL)$ Silver Lake and MGX, helped to fuel the rally.
It is Ho Ho Ho All the Way to Christmas and the New Year.🎅🎅🎅🌈🌈🌈💰💰💰🎁🎁🎁
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