Options mania takes center stage
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Another day with another crazy NVDA stat
Rarity du jour: "it is extremely rare for a public equity in S&P500 to have 1m implied volatility > 60 (to be clear, there is only one stock in SPX with 1 month vol greater than 60)", writes Goldman's derivatives guru Garrett.
At 63% volatility the implied move is around 4%, which translates to an implied move of around $90bn per day. We have never seen this before. You might think 4% isn't a big deal, but it becomes huge when you apply NVDA's market cap, as well as the current AI hype people are chasing. Don't forget that the explosion in options volumes has created complex risks that dealers need to hedge mechanically. Bullish dynamics could quickly turn into bearish dynamics (here).