A big issue that will come out in earnings that will dictate a lot is:
– are banks lending?
– are companies able to cope with credit rates?
This earnings will be the stress test. Also pay very close attention who reports after hours because their earnings may have no real tangible results is they’re after hours. We’ve seen that with a number if companies who’s big moves happen in pre or post market and are muted in regular hour.
Morning Minutes:
SPX and SPY have exposed themselves to a LOT of negative gamma through options positioning / massive repositioning after yesterdays drop. Now all our major OI Support / Resistance areas of overhead, and if we keep pushing down today or tomorrow Volatility will expand; conversely Volatility settles when SPX is at 4500 but because that is where balance is, and the market wants to Pin us at 4500 at tomorrows close.
At the moment because of the amount of hedging brokers did yesterday because of the drop there won’t need to add more hedges if price moves down, if prices move back towards the 4500 there will once against be major broker hedging to rebalance the numbers.
Call to Put Ratio for Gamma is PUT and Negative
Call to Put Ratio for Delta is PUT and Dropping
So it means the current positions for this week and all expirations looking forward are bracing for a downside move.
Please avoid buying high risk junk stocks, those will probably DIE under the current market pressure. Stick to the TOP PERFORMERS with HIGH LIQUIDITY. Please.
These earnings could see a LOT of downside movements. Be Well hedged, do not Swim Naked with Sharks, Enter any Earnings plays with hedges on! It’s all fun and games until a massive move down bleeds you like a Shark in water.