Odd Lots Lots More With Charlie McElligott on the Sharp, Strange Selloff
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Mar 21, 2025 The recent sharp selloff in the US market caught everyone off guard, with the S&P 500 plunging deeply and old winners suddenly flopping. Surprisingly, despite the chaos, volatility didn’t skyrocket as expected. The discussion dives into the complexities of options trading and how concepts like delta and gamma affect market dynamics. Listeners will also discover how politics and economic sentiment are shaping risky assets in this volatile environment, making for an engaging exploration of today’s financial landscape.
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Short Gamma Strikes
- Charlie McElligott explains there were two large short gamma strikes in the S&P 500 index options.
- These strikes, at 5600 and 5565, acted as potential acceleration points for the sell-off.
Unresponsive Volatility
- McElligott notes that market volatility has been relatively unresponsive to the recent sell-off.
- He contrasts this with previous market shocks, such as the one in August 2024, where volatility spiked significantly.
Post-Election Narrative and Crowded Trades
- Post-election narratives focused on fiscal dominance and U.S. exceptionalism under a Trump presidency.
- This led to crowded trades in U.S. assets, especially tech, driven by perceived innovation and deregulation.