http://www.globenewswire.com/news-release/2020/09/22/2097532/0/en/UPDATE-Heavy-Put-Options-Volume-Suggests-Markets-Headed-Lower-According-to-iVest.html
EMERYVILLE, Calif., Sept. 22, 2020 (GLOBE NEWSWIRE) — iVest+, an innovator in trading platforms for educators and retail investors, today released new data that indicate increased investor concern about the markets in the coming months. Data from iVest+ show volume in the forward contracts for NASDAQ-100ETF (QQQ) has been weighted heavily to puts — nearly two-thirds — suggesting investor expectation of a market downturn.
iVest+ uses proprietary tools to analyze options volume data for contracts expiring before and after each “triple-witching” expiration, which happens four times a year on the third Friday of March, June, September, and December. By filtering out the data from the various market exchanges for the contracts that are expiring, iVest+ has visibility into where the money is “rolling” for the weeks and months ahead. When indices are near their highs, like now, increased put activity indicates that stocks may be overvalued, and investors are expecting a drop, explained Rance Masheck, CEO of iVest+.
“People buy puts for two reasons: Protection from downside or a belief that the market will head lower,” he said “When the market is at lows, they buy them out of a sense of concern that worse things might still come. When the market is closer to highs, they buy them because they think the market is going to head down.”
By comparison, March’s triple-expiration saw put volume in QQQ contracts with expirations after March 20 nearly three times higher than calls. But with the market already down significantly at that point, this extra put volume created a floor and precipitated the market rebound, according to Masheck.
“When this happens after a significant drop in the market, it can often create a bottom because so many investors have essentially purchased insurance to protect themselves from further losses,” he said.
June’s triple-witching day, meanwhile, featured a balanced split between puts and calls, iVest+ data show, and the markets did not shift direction.
“Triple-expiration weekend is often an important turning point in the markets as so many options and futures contracts expire and the money has to come out of those contracts and move to later expirations,” Masheck explained. “How that money shifts is often very telling about what will happen next, and we filter data in a way that it can be more useful to traders.
“If June was a show of mild confidence, today’s data says that confidence has eroded,” Masheck said.
About iVest+
iVest+ has reimagined what trading platforms should look and act like, with DIY investors in mind. Purpose-built by leading educators, for educators, and to empower self-directed traders, iVest+ provides tools that act as an invisible mentor for continuous improvement. iVest+ offers brokerages, trading educators, and independent investors the only stock and options trading platforms that package powerful data and insights into portable technology, with easy-to-use tools and visuals for optimal success. For more information about the company’s white-labeled and retail trading offerings, visit www.ivestplus.com.
CONTACT:
Mike Wall
Tier One Partners
781-568-9124
mwall@tieronepr.com