BEWARE: THE REAL REASON BEHIND THE TECH STOCK MOVE MAY BE GAMMA HEDGING
To gain an edge, this is what you need to know today.
Gamma Hedging
Please click here for a chart of Nasdaq 100 ETF (QQQ).
Note the following:
- The chart compares QQQ with Cboe NASDAQ 100 Volatility Index (VXN).
- Most investors are familiar with the volatility index (VIX). VIX, also known as the ‘Fear Gage,’ is based on S&P 500 (SPX) options. VXN is similar but is calculated on Nasdaq 100 (NDX).
- QQQ is an ETF that represents NDX.
- The normal behavior is for VXN to go down when QQQ goes up.
- The chart shows that yesterday VXN went up along with QQQ.
October 13, 2020