09/27/2024

Hey Trader,

Mark Sebastian is here with an exclusive big money update that has serious implications for the S&P 500…

We’ve got a big player making moves in the market—JPM’s quarterly hedge is causing major ripples right now. 

You might’ve heard of this “option fingerprint” before, but here’s the deal: it’s one of those rare moments when the S&P 500 is flirting dangerously close to their position. 

And when this happens, things get interesting. 

Let’s break down what’s going on, why it matters, and how it impacts the market.

There is a major “option fingerprint” affecting the market right now in the form of the JPM quarterly hedge.

For those of you who don’t know, JPM runs a managed account fund where you are long the market, long a put spread, and short an out of the money call. Everyone in the business knows where they are positioned; RARELY – and I mean RARELY – does it matter.

Because it only really matters when the S&P 500 is close to their position when the options are close to expiration. They typically roll the DAY of expiration… their hedge expires on Monday.

Here’s their position:

JPM holds about 44k 4750 calls.

Those options on Thursday wavered from a 65 delta to a 35 delta before closing a 50 delta.

That means market makers (dealers) bought and sold 264,000 futures or option equivalents to manage the delta. That’s about a fifth of the average volume of S&P 500 futures – huge!

When SPX approaches 4750 or breaks it, the dealers are selling. When below … they are buying.

The strike is going to act like a magnet. Fingerprints exist in stocks, and in indexes too. More and more options are the dog, and the stock market is the tail.

Always be closing,

Mark Sebastian