Only 56 million options contracts traded yesterday.
That number comes from the OCC, the Options Clearing Corporation, which reports every listed option that trades in the U.S. For those of you that have never seen an OCC report, it’s your worst nightmare. No, it’s just option volume.
Now, correct me if I’m wrong. There was a Fed announcement yesterday, positioning before the PCE data and positioning before some of the biggest earnings of the year, with everybody on the edge of their seat about AI. So why did only 56 million contracts trade?
Where Did 15 Million Options Contracts Go On Fed Day?
The year-to-date average is almost 71 million contracts a day, and October has been running about 73 million.
If we’d done 63 million, I’d call that light. At 56 million, you’re 20% off the norm for this month, and that’s absolutely unheard of.
No one participated in yesterday’s movement. There was no retail trade and no professional trade. People didn’t show up, and the ones that did didn’t do anything.
I was shocked when it came out last night, so I started texting buddies. At one of the biggest brokerage houses, volume was totally anemic.
Why “Retail Got Scared” Doesn’t Explain It
Some people will tell you retail got scared. I don’t buy it. When people are scared, the professionals come in and hedge, and that raises the volume.
And how is retail getting its rear end handed to it? The market is sitting about a percent and a half from an all-time high, and the semiconductors had four up days back to back. It doesn’t smell right.
I don’t have an answer. It’s almost like institutional traders took one big step back, and I don’t like it.
The NASDAQ Moved 250 Points In 7 Minutes, And Volatility Fell
Then look at this morning. The NASDAQ dropped 250 points in seven minutes, bounced 150 of it and reversed right back down.
That’s the trading equivalent of 100-foot waves. If you’re not an algorithm, you’re screwed in there, and the juice isn’t worth the squeeze.
Yet volatility was down on the day. The market has already decided we’re all going to be just fine. When nobody’s trading and nobody’s afraid, you’d better pay attention.
When I can’t tell what this market is up to, I want to know my risk before I get in. That’s the whole idea behind Pocket Profits. Every trade has a floor and a ceiling set before I enter, so I know the most I can lose and the most I can make. See how Pocket Profits works.
To your success,
Don Kaufman
P.S. Amazon reports tonight, and I’m surprised it’s down today, because its cloud business should be phenomenal. Microsoft’s was too, and the market is selling it anyway. When the market sells into good earnings, there’s a problem.
