Paul J. Davies attempts to explain gamma’s effect on markets, here…
“While that is helpful to investors, the gamma trap is making it harder to tell whether news or events are properly reflected in market prices, according to Helen Thomas, founder of U.K.-based research firm, Blonde Money.
“Dealer hedging behavior is creating pockets of sensitivity in the markets,” she says. “If Trump tweets something about China when the S&P is at one level, it doesn’t matter. But if he does it when it’s, say, 20 points lower, it’s panic stations.””
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