Bullish Stock Bets Explode as Major Indexes Repeatedly Set Records

This is a fascinating WSJ  article about recent (historically unprecedented) trading volumes in options markets. The article features a 21-year-old student at Syracuse University named Ben Austin, who apparently “… primarily trades calls to position for big events that have the potential to lift stocks”, and attributes the following quote to Mr. Austin: “There’s way more potential for higher gains in a shorter amount of time.” While this is technically correct (after all, as we shall soon learn in Finance 4366, call options represent leveraged bets on stocks), there’s also way more potential for larger losses in a shorter amount of time, particularly since Mr. Austin is probably not hedging his options positions with positions in the stocks against which the call options are written.
wsj.com
“Options activity in January is building on 2020’s record volumes in the latest sign of optimism.”

Leave a Reply

Your email address will not be published. Required fields are marked *