Oh Come On!
Investor, Venture Capital Background
Virtu Financial is a little-known but key ETF market maker in an ultra-high-growth niche, yet trades at a P/E of only 10. x.comÂ
Market makers like Virtu Financial profit from increased volatility, and the US Navy's plan to blockade ships entering or leaving the Strait of Hormuz should bring more of it. Virtu is already up more than 40% over three months, so it is no longer early, but not late either. x.com x.comÂ
The S&P 500 is in a full gamma squeeze. A record $2.6 billion of S&P 500 call options traded yesterday, and the market makers who sold those calls are forced to hedge by buying the underlying stocks, pushing prices higher. x.comÂ
Virtu Financial is the biggest beneficiary of volatility, and its chart shows institutional accumulation forming a clean flat base. x.comÂ
US stocks could see a bigger decline over the next few months, as dealers are heavily short indices and long VIX futures, though that is not a timing tool. The key S&P 500 pivot is 7,620; below it lies 7,300 June-July support and, in an extreme case, the 6,878 yearly open. Seasonally, a low usually forms in October, and an election-cycle rally typically starts before the November 3 election as hedges unwind, absent black swans. x.com x.com x.comÂ
Cboe Global Markets is the primary winner of the long-term boom in options trading, owning a toll booth that takes a cut of every trade. Once its platform is built, each extra transaction costs almost nothing, giving exceptional margins, and exclusive rights to products like the VIX and S&P 500 options can't be copied. More traders deepen liquidity in a network effect. It also tends to do well when markets panic, making it a good portfolio hedge. CME Group and Nasdaq are strong competitors. … Show more
Equity volatility looks too cheap with the VIX in the 15s despite alarming oil and diesel headlines, such as the Saudis reportedly telling European refiners they will get no crude next month, per @zerohedge. That makes it a good time to buy volatility for October, with a spike still expected ahead of the midterms and peak tax-loss harvesting season. This is a very risky trade. x.com x.comÂ
The S&P 500 and Nasdaq 100 look set to hold up because options chains are pretty bullish through June. Bears and doomers are out in force, and anyone betting heavily on SPY, QQQ or Dow puts could get crushed. x.comÂ
US stocks are in a sell-the-rip regime until a real capitulation clears months of excess. Friday's chip-led drop was a genuine break, as Broadcom left AI-chip targets unchanged and hot May payrolls (+172k vs +80k expected) revived rate-hike fears, removing the Fed put. Dealers are short gamma, VIX is in backwardation, and a 0.84 put/call is too low for a reversal. CPI and Oracle earnings on Wednesday and Warsh's first FOMC are the next risks; equal-weight S&P outperformance would signal repair. … Show more
Cboe and MIAX stand to benefit long term as wealth passes from risk-averse generations to more risk-seeking ones. Baby boomers hold at least $93 trillion in assets, per Visa, more than Gen X and millennials combined. Barriers to entry remain substantial, since only a few exchange groups run the US listed-options market and few genuinely new operators have entered in 15 years. x.com x.comÂ