By Nell Mackenzie
London (Reuters) -Wall Street shares could be confronted with a correction due to ructies in the option market, said Goldman Sachs specialist Scott Rubner in a Thursday invoice that Reuters saw on Friday.
About $ 2.7 trillion from the US stock market derivatives will expire on Friday, which, if not exercised, will put pressure on stock markets and Stoke volatility, according to the memorandum.
Why it is important
S&P 500 and European stock markets have reached record highs on Tuesday, but have since fallen in the midst of Trump’s newest rate warning on medicines, semiconductor chips and wood, which, among other things, worsens the fear of a broad trade war and uninsured investors.
The stock purchase can also delay for other reasons. Retail traders in the US act less because they have to pay their annual taxes, and average flows from pension funds to mutual and listed funds taper in March, Rubner said.
By the figures
About $ 2.7 trillion at their own wealth options, or derivatives with whom a trader can bet that a share will reach a certain price, the Goldman Note said on Friday.
These derivatives include bets on the S&P 500, as well as by the American stock market -built funds and some shares.
Banks and intermediaries that help set up these bets have more than $ 9 billion in coverings against these transactions. These positions acted as a damper on volatility, says the Goldman remark, “supporting and damping rallies.”
Key
If investors do not return to extend their options, intermediaries must also relax their hedges, then Izzo, founder of the Hedgoeds BLKBRD Asset Management and a former banking trader.
“That translates as a great temporary pressure. The greater risk is that if no one is willing to buy that impact, we can see it causing a larger sale,” Izzo said.
(Reporting by Nell Mackenzie, editing by Amanda Cooper and Philippa Fletcher)
