The Impact of Options Activity on US Stock Trading

Aug 17, 2023

Guests: David Kovtun, Options Sales & Trading, Jane Street, and Paul Jiganti, Managing Director of Business Development, IMC

Host: Peter Haynes, Managing Director and Head of Index and Market Structure Research, TD Securities

Episode Double Nickels (55) of Bid Out dives into the deep end of US options market structure with two experts, Dave Kovtun from Jane Street and Paul Jiganti of IMC Markets. The goal of this podcast was to educate equity traders and portfolio managers about the information content of options activity and related impact on the underlying securities. Listeners will learn about recent market moving options activity in the S&P and some less liquid US stocks, and what it means to have single stocks expire during the week, in addition to once a month on the third Friday. Paul and Dave tamp down any chatter that 0DTE trading might lead to a so-called Volmageddon 2 event, as potential land mines from option market maker rebalancing are well known to the Street. Dave does an excellent job explaining how market makers hedge options risk and how the lack of homogeneity in hedging strategies leads to more liquidity in the market. Paul and Dave finish with some suggestions for improvements to options market structure, a space that has not garnered a huge amount of regulatory attention in recent years.

This podcast was originally recorded on August 8, 2023.

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