Equity Markets drive Options or Options drive Equities
Hello, I was wondering if there are any studies done on whether option (IV) markets drive equities or is it the other way round...where is the causality?
Cheers !!
You sir are an idiot. An option is a derivative - now look up what derivative means.
As a side note, if someone stumbles on this post by mistake, here is some actual content - there are some instances where option markets will move the underlying equity. Let's assume on expiry you have an option at $10, and the stock is trading at $10 - this is called pin risk, and you don't know if you will or will not get exercised. I have seen some market players smash through the level in the close to make sure it goes or does not go through depending on their side. This will affect the underlying equity. This is only one instance of many where the option market might have an impact on the underlying equity due to existing positions.
Both points duly noted @"Disjoint"
@Aintnospam Can you point out some of them...I've been looking for something similar but cant find.
Read, listen, comprehend
"there are some instances where option markets will move the underlying equity." That's what I wrote, then used it as an example - so thanks for pointing what I said hinting that I was somehow contradicting myself. "Even your own example directly shows that the causality flows both ways between the derivative markets and the underlying"
Shall I also point out OP is talking about options in equity. So equity/commodity futures as you like to point out as an example are NOT equity options. Finance 101: Options are derivatives, futures are derivatives. Options are not equal to futures and derivatives are not options only.
At least OP had the decency to admit that his question was a bit silly, now aintnospam you just put a finger so far up your ass with this comment it seems it came up through your brain.
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