Kevin McCarthy's Boyfriend Weighs In:

Pollster Frank Luntz is ‘scared to death’ about midterm elections: ‘I’m warning the markets now that I don’t think we’re going to have a clear result’

October 21, 2022

Frank Luntz, a Republican pollster, communications consultant and political pundit, sounds an alarm for traders

‘I’m warning the markets now that I don’t think we’re going to have a clear result on Election Day 2022.’— Frank Luntz

That line came from Frank Luntz, a Republican pollster, communications consultant and political pundit, as he spoke on CNBC Friday about his forecasts for the midterm elections.

Luntz predicted the outcome from the midterms won’t be certain due to election deniers, while others have noted that Georgia’s rules on runoffs could be the reason why control of the Senate won’t be determined in November.

“There are enough election deniers out there— candidates running that are going to lose and going to claim that they won, and they won’t accept the election results. I am scared to death,” Luntz said.

“We are going to have a problem in this country, if Senate candidates, governor candidates, secretary of state candidates lose by 2% or 3% and claim the election is stolen.”

Concerns about election deniers are persisting as former President Donald Trump continues to make false claims of widespread voter fraud in the 2020 election. Some Republicans have said they believe Trump, even though courts across the country ruled against him and 50 states certified Joe Biden’s win.

“The American people do not trust the election counting. They do not trust the system right now. It’s a greater degree of cynicism towards elections than we’ve ever had, and it’s being prompted by elected officials who are telling them, ‘Don’t believe the numbers. Don’t believe the count. It’s not true,'” Luntz said during his CNBC appearance.

He predicted that part of the problem will come from the fact that the vote “will look overwhelmingly Republican at midnight, and it won’t be as Republican when all the votes are counted,” because votes on Election Day are counted first, followed by ballots cast in early voting and then absentee ballots.

“It should have gone in order,” Luntz said of the counting for ballots.

He also forecast that Republicans will take control of the U.S. House, but Democrats will keep their grip on the Senate by a single seat.

Sauce: https://www.marketwatch.com/story/pollster-frank-luntz-is-scared-to-death-about-midterm-elections-im-warning-the-markets-now-that-i-dont-think-were-going-to-have-a-clear-result-11666367651?mod=home-page

Wall Street is driving explosive volatility in stocks by ‘YOLO-ing’ into options on the brink of expiring

October 21, 2022

Reddit-loving day traders are reportedly returning to their day jobs, according to the Wall Street Journal, but back in the world of high finance professional traders have adopted one of their signature trading strategies, according to one closely followed markets guru.

An explosion of trading volume in options with one, or even zero, days left until they expire is helping to drive the large intraday swings in major U.S. equity indexes that are becoming increasingly common as of late, according to Charlie McElligott, a cross-asset equity derivatives strategist at Nomura.

Large trading shops have been buying — or, as McElligott puts it “YOLO-ing” — these near-expiry options as part of a broader trading strategy that allows them to profit by anticipating the hedging activity of large options dealers.

In a note to clients, McElligott compared the behavior of these professional traders to the denizens of the popular day-trading-focused subreddit “Wall Street Bets.”

“YOLO’ing into 0 and 1 Days-Til-Expiration (DTE) Options has now been ‘institutionalized’ by Vol traders at many of the largest funds on the Street….i.e. it’s not about Retail-alone playing this game anymore,” McElligott said.

Readers of ‘WSB’ might recognize the strategy from the “loss porn” posts and memes that litter the popular forum, which rose to prominence in early 2021 when its readers were credited (or rather, blamed) for driving the massive rally in shares of GameStop Corp. GME, +3.65%

Retail traders once dominated trading in this corner of the options market, but that has changed in recent weeks as institutional traders have picked up the slack as retail traders have retreated, McElligott said.

Instead of recklessly gambling like Robinhood-using amateurs, these professional volatility traders are buying these options as part of a calculated strategy to force large dealers to move markets in their favor, as McElligott explains.

McElligott even has a name for this type of trading: “weaponized gamma” which is a reference to the hedging strategies that dealers employ to lay off risk from their clients’ options trades

The strategy has allowed these traders to generate profits in a volatile trading environment while minimizing their risk. Traders often close out the trades “mere hours” after opening them.

In that respect, these professionals are behaving like”full-tilt day traders, using the certainty of Dealer hedging flows that their orders create to then amplify and ‘juice’ the intended directional market move,” McElligott said.

To illustrate his point, the Nomura managing director shared several charts showing how trading volume in one- and zero-day-to-expiry options has risen dramatically as a percentage of overall trading volume in options tied to the performance of the S&P 500 SPX, 2.37%, SPDR S&P 500 ETF Trust SPY, +2.43% and the Invesco QQQ Trust Series 1 QQQ, +2.34%, which are among the most popular products for traders of equity-linked options.

Sauce/more: https://www.marketwatch.com/story/wall-street-is-driving-explosive-swings-in-stocks-by-embracing-a-trading-strategy-popularized-by-the-reddit-crowd-11666294951?mod=home-page