By Todd Harrison May 19, 2004 3:31 pm
Fare ye well into the bell!
It's not funny when you come to work late
You have the key to the office, and the boss had to wait
It's not funny making money on a regular basis
And losing every dime betting on the races
The afternoon flicks are up to their tricks as the traders all trade and the critters transfix. I've now started this column four times but the tape is moving quicker than peanut M&M's on my nightstand. That, so you know, is why I prefer the Buzz for trading stuff and the News for broader picture pieces. I'm a fairly fast typist but the Minx, as we know, is pretty quick herself.
The whippy action today is (without question) being exacerbated by the underlying expiration currents. Negative gamma, in a nutshell, means that dealers are short volatility (calls and puts). As the market rallies, their short call deltas increase and they must buy stocks (higher) to hedge themselves. As the tape tanks, their short puts kick in (and their short calls lose value) and they must sell (lower) to balance their books. Add a ton of zeros to the end of this equation and the puzzle starts to fit together.
Today's lift was sparked by Asia and the prospect of a sustained (and prolonged) China bull. You know what they say about a bull in a China shop--it's only a matter of time before something breaks--and I suspect that the same will be true for the China "plays." I suppose this includes stateside equities and, to a degree, the metals but the question remains one of degree, public perception and structural influences. So you know--and if you care--I remain long silver (although I made some sales today vs. my cheaper buys) as my reason for owning it is independent of the above mentioned reasoning (I think the dollar is FUBAR).
We've got a spate of overnight earnings, a breakfast meeting with Beeks (initial jobless claims exp. 325k, continuing claims exp. 2950k) and a circle back at lunch (Philly Fed exp.31). Yawners one and all, I'm sure, as the force du jour will remain the option posturing. We also have overnight unknowns (geopolitical) and the oh-so-important psychology metric (today's close massively important) so keep those on your radar as well.
I am gonna jump, juggle and ready for my 4:00 meeting. I woke up this morning feeling pretty snazzy but my back has gotten increasingly painful throughout the day (trading on its lows). I can almost hear my mother now--take care of yourself!--but this is the big leagues, Ma, and we gotta play in pain. Hey, maybe I can get Daisy to give me a rub down after dinner tonight?
Good luck into the close and may peace be with you.
position in silver
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