JPMorgan Says Big Options Bets Swing Stocks in Thin Markets
- Dealer hedging can stoke equity volatility: strategist Quigg
- Tech derivatives have been in spotlight as big trades revealed
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Market liquidity remains thin and this can leave stocks vulnerable to exaggerated moves around big options trades, according to JPMorgan Chase & Co.
“While we are not concerned about a dominant ‘whale’-type investor, exceptionally large trades in thin markets,” especially in sectors or investment styles considered overbought or oversold, increase the “potential for exacerbated stock moves as dealers hedge exposure,” Shawn Quigg, a derivatives strategist at JPMorgan, said in emailed comments.