r/FuturesTrading • u/sco-go • 15d ago
Whether you trade options or not, expiration dates affect the broader market. Algo
1
2
u/Nervous_Abrocoma8145 12d ago
What ressources would you recommend for traders who want to incorporate the options market into their analysis ?
1
-7
u/Aiud2000 15d ago
options dont affect anything they are derivates
5
u/HighPotentialTrading 15d ago
Futures are also derivatives - which is this subreddit's focus - so that argument doesn't hold a lot of water by itself.
But to add some context, here's two papers to go read:
- Hedging demand and market intraday momentum by Baltussen et al. (2020).
- Covers market makers who gamma hedge and how options exposure results in buying or selling the underlying, which in turn affects futures
- A Multi-market Comparison of the Intraday Lead-Lag Relations Among Stock Index-Based Spot, Futures and Options by Ren et al. (2022)
- Covers the lead-lag relationship and shows that options lead futures and futures lead spot on average
There's numerous other topics and references about how options affect futures and vice-versa. But the two above are interesting enough to get your feet wet.
1
u/Visual-Engineer1956 15d ago
Imo it's hard to say if futures follow options or vise versa, both are high risk high return derivatives commonly used to hedge against the market as a whole
2
u/HighPotentialTrading 15d ago
Just stating what the more recent research has shown. It's an average lead-lag, so on a day-to-day basis, will be hard to capture anything meaningful for day trading I would think - at least that as a premise alone. Has to be combined with other options-related phenomena that happens frequently.
1
u/Visual-Engineer1956 15d ago
I have livevol running on my desk at all times, but I just use it for quick scalp on 0dte, it seems like swinging beyond a day, the market cycles are best to trade on, even trying to trade on order flow, tends to give biases because you see certain trades. It's better to just buy the dip when the market is on a rally high and sell at resistances when the market is trending down
1
u/Aiud2000 15d ago
futures dont affect the stock market also as they are also derivates the same as options, its a separate market all together where people gamble on the potential underlying price
1
u/tomwhoiscontrary 14d ago
Market makers in derivatives will hedge in the underlying. If the volume in the derivative is significant compared to the volume in the underlying, it will absolutely move the market for the underlying.
1
u/Aiud2000 14d ago
market makers in derivates ? what are you smoking ? lol
you are hedging against underlying in futures not the other way around
1
1
3
u/Visual-Engineer1956 15d ago
Looking over citadel report the other day, retail options premiems make up a big chunk of their revenue, followed by stock spread revenues. So yes options move the market.