GFBP Update & Today's Settles
If you missed our earlier note, you should read it, as it highlights the rationality for the parabolic equity run up, here is a little highlight if you missed it:
Anyway, we touched on Gamma and you can research more, but in option land when investors buy calls for instance and dealers sell the calls to them (short Gamma), they are theoretically short the underlying, with that is the inherent risk of the underlying rising in price eating their profits from “writing” the short call option. (Not only a rise, but the speed of the rise is truly detrimental to the positions P+L)
So the Dealer will use a systematic approach to purchasing a certain amount of the underlying, inherently adding a bid to that equity. (driving price higher) So as volatility increases, it becomes somewhat of a self-feedback loop driving more people to spec and buy upside calls and causing dealers to become more short the underlying equity and forcing them to buy to protect.
{Feel free to read the post if you are already a subscriber}
Anyway today’s Magnelibra Global Futures Benchmark Program (GFBP) Positions Tracker lost out mainly to the major SP500 outperformance vs the other indices, as well as taking minor losses in the short USD long FX positioning and the 2 day flattening in the US Treasury curve as the long end continues to rise in price and fall in yield. Here is a snapshot of the GFBP Positions Tracker:
When we look at today’s settlements for September 2nd 2020 you can see the winner on the day was the SP500 and the big loser was none other than Silver as someone continues to keep it from over taking that all important $30 level. Gold too was not immune as it dropped to $1944.70 -$34.20 on the day:
Finally let’s take a look at how the dust settled in our Q+TFAANGMs today:
Tesla and Apple with rare down days, in fact its Tesla’s 2nd day in a row and after reaching an intraday high of $502 is off some 11% from that high! Anyone worried? Nah didn’t think so!
If you are not already and want to become a paid content subscriber or even a full Founding Member and have access to Magnelibra’s proprietary “Global Futures Benchmark Program Positions Tracker,” (a unique global macro program that is a proxy to the systematic approach Magnelibra Capital Advisors the Commodity Trading Advisor uses for its individually managed accounts), then feel free to hit the subscribe button below.
Also feel free to share our work with friends and colleagues that you feel would enjoy reading our analysis.
-Magnelibra Econemotions
DISCLAIMER: For educational purposes only. This is not a solicitation to buy or sell commodity futures or options on neither commodity futures. The risk of trading securities, futures and options can be substantial and is not for everyone. Such investments may not be appropriate for the recipient. The valuation of futures and options may fluctuate, and, as a result, clients may lose more than their original investment. Nothing contained in this message may be construed as an express or an implied promise, guarantee or implication by, of, or from the author Michael Agne owner of Magnelibra Capital Advisors. All rights are reserved. We will never claim that you will profit or that losses can or will be limited in any manner whatsoever. Past performance is not necessarily indicative of future results. Although care has been taken to assure the accuracy, completeness and reliability of the information contained herein, we make no warranty, express or implied, or assume any legal liability or responsibility for the accuracy, completeness, reliability or usefulness of any information, product, service or process disclosed.