SPX options activity

Schaffaers förklaring till optioners påverkan på spx index..........varför stiger index till ex (under Sept Oct) när put buying är heavy.

----------------------------------------------------------------------------------------

 Buyers dominate the SPX put activity.

Early in the front-month cycle, heavy put adds have a depressive effect on the index, as hedgers on the other side of the trade will short futures or short S&P Depositary Receipts

Assuming a relatively flat index, once the put adds peak, this serves to boost the index, as the option deltas gradually decrease (and then decrease on an accelerated basis approaching expiration). If the index has an upside bias, this boost gets even more juice, as the rally causes more rapid decreases in the deltas.                 ( and short hedgers cover thier positions)

The only negative for the index would be if there is serious external selling pressure, in which case the option deltas would actually increase and selling pressure would intensify. But these downside situations, while potentially quite severe, should by definition be far more rare - similar to the typical profile for the purchase of out-of-the-money options.