GM all. Options overpriced since yesterday $VIX overstated the drop. With the added premium, MMs have a lot of short futes to unwind. MMs are component gamma positive, which means 1% moves can be frequent to both sides.
When I say options are overpriced, that means that MMs are short a lot of puts. That means customers are hedging their positions, and MMs sell to hedge them. They both reach critical mass, where all are hedged to where they want to be. Yesterday's lows are very near that point
The only way we go down further is if more people hedge (VIX overstates more). So that is what I'm keeping an eye on. Since there is excessive premium to decay on both sides of the hedging spectrum, upside is expected, but lower than ATHs.
If looking to trade this in some way I would stay small and slightly long gamma. something like a weekly 4350/4400/4450 fly would be good, sell when delta neutral, risk what you are willing to lose. I'm not doing this trade, so I won't follow it.
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