Recently, there has been a great deal of discussion surrounding tariffs, with some being proposed and then either paused or withdrawn. Alongside this, military tensions involving Europe and Russia have stirred debates. Interestingly, despite these talks of looming tariffs and potential conflicts, Mexico, Europe, and China seem to be performing better, while the United States is experiencing more challenges. This has led to increased uncertainty, and the market is quickly adjusting to these elevated risks.
The current weakness in the market is likely linked to the complexities within the options market. Market participants are trying to navigate this intricate landscape, which adds to the volatility.
An intriguing thread by Menthor Q offers insight into this situation. According to the update on SPX trading, the index is currently at 5777, just below a crucial put support level of 5800, with negative gamma playing a significant role. The suggested dealer hedging flows point to potential increased volatility in the near future. The big question is: will the SPX continue to decline, or will it manage to bounce back and regain these pivotal levels? Let’s delve deeper into this topic to uncover more.
