Yes yes yes … I knew it.
The shorting is what is causing the market to not crash.
The experienced hands (institutional managers) are short the stock in their hedge funds and are holding the equity in their mutual funds (they are 80+% of the equity and 90+ on options BTW) and they buy more shorts when bad news comes out and dont run and sell the equity in a panic.
That makes equity prices apparently shrug off bad news and option prices go through the roof. So options for shorting get more $$$ and the law of dimnishing returns takes over.
I believe this is the first time we are having a likely market crash stemmed by options. 87 crash had so little options, post 9/11 was an inevitable crash but options traders made like bandits on their shorts cos there was some serious bracing for armageddon after the .com crash a few months prior. The lessons from then are being put to use now. I’d anticipate the mutual funds to dump the stock ~2-3 weeks before their put options expire and their puts will be worth more when they mature. However since they can hold 3 months out, 4 months out or year out puts, we never know. So can you say crash in slo mo … yup.
However house prices will crash fast when the stock prices seem to hold up in spite of all the bad news.
Cool.
Cow_tipping.
