Can derivitives influence the price of an equity?
I searched the web and so far what the majority says it doesnt, but I refuse to believe that retail investors have the amount of firepower to shoot the price of an equity up bu insane amounts, or am I just crazy? Someone with knowledge please enlighten me, im losing my mind here.
Not directly. It can in the form of hedging. Hence short squeezes and the like.
Index futures will usually lead stocks. In some markets there are liquid single stock futures which can lead the cash stocks as well. Options directly leading would typically be a smaller factor but if there is lots of activity in options they could directly affect the underlying stock.
Thinly traded, small volume stocks, retail has a big push. Sorta like Gamestop.
Big names that are part of large indices, derivatives and delta hedging have a much bigger impact.
AAPL is going to move very much based on what people think of the S&P500, in futures, delta-one, etc.
Be careful of what you read online, lots of people that don't know very much can get an outsized voice.
When I was in equity research, we would take note of large open positions in options. It was one of those things that would be a concern for investors if it was a target put position for example. However, I don't think anyone would exit their position simply because of that. It definitely was a part of the mosiac to make a decision about an upcoming quarter for some investors.
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