The Daily Shot Brief – September 3rd, 2020



Equities: Let’s begin with the options market where the speculative fervor is on full display. Speculative demand for call options (mostly deep out-of-the-money contracts) has been staggering (2 charts).

Source: @sentimentrader
Source: @TheTerminal, Bloomberg Finance L.P.

Short-term call options are notoriously difficult to hedge, and dealers who sold them rapidly become short the market as shares rise (and the probability that these options will get exercised increases). Dealers are forced to buy stocks to cover their exposure (delta-hedging), pushing the market higher. That, in turn, makes the dealers short again, creating a melt-up.

Source: @markets Read full article


Credit: Banks’ credit outperformance doesn’t match their weakness in the equity markets.

Source: @ISABELNET_SA, @GoldmanSachs


Rates: Foreigners bought US liquid assets this year.

Source: Natixis


United States:  Growth in factory orders was solid in July.

Source: The Daily Shot


Global Developments: The number of advanced economies with rising COVID cases is on the decline.

Source: Variant Perception


Food For Thought: How long does it take to sell a house, by metro area:

Source: Black Knight

Edited by Daniel Moskovits

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