Tag Archives: Matt Gohd

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Equities Options Marts Bustling: 1 Billion Contracts Trade in Q3

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tradersmag  Trading in equities options is enjoying a resurgence, thanks to recent volatility in underlying cash markets, a burst in IPO activity and heightened hedging action in the stocks of companies such as Apple, Inc. according to reporting by TradersMag. Citing a TABB Group recent study, 0ptions mart trading volume exceeded 1 billion contracts in Q3. The third quarter gains represent a 4.9% increase from the second quarter total and an 8.2% increase from the year-earlier period.

options volumeIn its latest research, “U.S. Options Market Review: Third Quarter 2014,” Tabb Group also reported that U.S. options volume rebound was driven in part by a 15.8% jump in September’s total as retail fervor around Apple’s new product announcements, the Alibaba IPO and rising volatility brought monthly volume to 365.9 million contracts.

The report, compiled and written by TABB Group principal Andy Nybo, head of derivatives research, also noted that volatility spikes in late July and late September helped push volatility averages up in each month, with the CBOE index averaging 13.5 in both August and September – prompting more trading.

Weeklies trading, Nybo noted, remained strong in the third quarter with volume totaling 270 million contracts, up 7% from the second quarter total and 39% from the year-earlier period.

Noted Matt Gohd, market strategist at WallachBeth Capital, “Aside from volume spikes that typically come with increased volatility, I think there is clearly an increasing trend towards using equity option strategies for opportunistic, alpha capture and hedging purposes on the part of sophisticated investors as well as institutional fund managers.” Added Gohd, “The better news is that an increasing number of fiduciaries recognize that equity option strategies can play a crucial part of their overall approach to managing risk in a responsible way.”

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In Your Face: Option Trading Contrarian Called $FB Move re: post-lockup activity

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     Courtesy of John Carney/CNBC

MarketsMuse Editor Note: article below was published Tuesday Nov 13 at 6pm, in advance of $FB lock-up  expiration.

Eight hundred million shares of Facebookare set to “flood” the market Wednesday, as the company’s biggest post-IPO lockup expires.

This has many investors fearful that stock sales from employees could push the stock, which has lost nearly half its value since the IPO, even lower. Some are calling it the “Facebook fiscal cliff.” (Read more: Facebook Drops as Employees Sell Shares)

But not everyone sees this as a reason to sell. In fact, some contrarians think it will be an excellent time to buy Facebook.

Matt Gohd, a senior managing director and options strategist at WallachBeth Capital, thinks Facebook [FB  21.5592    1.6992  (+8.56%)   ] stock could very likely go up in the aftermath of the lockup expiration.

“I think it could go up tomorrow, it will be up next week, and it will be up at the end of the month,” Gohd said.

Gohd’s thesis is pure contrarianism. With so many traders positioning themselves for a downward move in Facebook stock, the stock price may have already incorporated the coming sales. If you believe markets are at all efficient, certainly they should have priced in the shares coming out of lockup.

“The end of the lockup is the worst-kept surprise in U.S. history,” Gohd says.

When the first lockup of Facebook shares was lifted on August 16, shares fell 6.3 percent. But if you bought shares at the closing price on August 16 and held them for a month, you saw an 8.3 percent gain.

I should point out that Gohd pointed out in early August that the lockup expiration could be bullish for the stock

Facebook shares were flat the first trading day following the lockup expiration on October 15. If you bought at the closing price that day, you’ve seen a 2.18 percent gain to date. (And you were up by a nudge more than 19 percent on October 24.) Continue reading →