Audible

I bought back the covered SPY calls I sold earlier today for a negligible profit. I think we are likely seeing margin calls. I expect this pressure to abate over the coming days.

4 comments:

Market Owl said...

Why would there be margin calls on an up day? If there were to be margin calls, it would be those short and that would be upside pressure, not downside pressure.

Tsachy Mishal said...

Once a margin call is in place the owners have 3 days to come up with the money. Assuming we don't make new lows it will take until next week before we are in the clear since some call were likely triggered yesterday.

PJ said...

What's driving the market is the continued movement of funds out of Europe, the declining Euro, and the resulting European delevering. Sentiment is supporting it. The result is a market that chops sideways. But the oversold condition will end before the fundamentals change.

aaron said...

In the last few weeks every time we have a close like that the market opens lower the next day. Another thing worth mentioning was the larger than usual imbalances at the close. Usually you only see that kind of imbalances at the end of the quarter or rebalancing days. There were large buy AND sell imbalances. Maybe connected to the margin calls. Anyway, if the market doesnt gap lower tommorow we could have many people caught short.