By Nell Mackenzie
London (Reuters) – Wall Street Stocks could be facing correction due to rubions in the options market, Goldman Sachs expert Scott Rubner said in a Thursday note seen by Reuters on Friday.
About $ 2.7 trillion of US stock market derivatives are due to expire on Friday, which, if not practiced, will put pressure on Stoke's stock markets and volatility, the note said.
Why it is important
S&P 500 and European Stock Markets reach highest highs on Tuesday but since then they have deteriorated in the midst of Trump's latest tariff warning on pharmaceutical, semi -conductors and wood chips, which are among other threats, exacerbated wide trade war fears and di investors -Glem.
Buying stock may also slow down for other reasons. Retail traders in the US are trading reduced because they will have to pay their annual taxes, and average flows of retirement funds to joint traded funds and trading usually tightening in March, Rubner said.
According to the numbers
There are about $ 2.7 trillion of equity options, or derivatives that allow a betting trader that stock will reach a certain price, ending Friday, says the Goldman note.
These derivatives include wagers on the S&P 500, as well as US exchange trading funds and single stocks.
Banks and intermediaries who help wear these bets have over $ 9 billion hedgerows against these crafts. These posts have acted as a dampener on interchangeability, said Goldman's note, “supporting the weakness and muting of rallies.”
Key Quote
If investors do not return to renew their options bets, then intermediaries must also relax their hedgerows, explains Dan Izzo, founder of the Hedgerow Fund Blkbrd Asset Management and a former bank trader.
“That translates as a big moment weight. The biggest risk is that if no one is willing to buy that effect, we could see it triggering a bigger sales,” Izzo said.
(Reported by Nell Mackenzie, edited by Amanda Cooper and Philippa Fletcher)