Lead-Lag Report: Cem Karsan on Options Market Volution and Navigating Economic Complexity

The past few decades have seen an explosion of interest in options trading. And the past two years has seen the rise of daily options trading in a variety of market indices, including the S&P 500 and the Nasdaq.

The increased popularity of using options daily and for short-term market swings is clear. And we may now be at the point where movements in the options market can, in turn, now swing the much larger markets represented by these options.

The growth of options trading is extensive. Currently, $30 trillion in new investments will hit the market.

And now the options market can give investors a sense of how assets will perform. When the options market is heavily tilted towards the stock market going up, it’s likely that the market will rise. When investors are uncertain, bets will start to accumulate both long and short.

The increase in options trading, in short, gives a sense of what and asset’s value is now and will be into the future. And it can do so in a way that can be replicated by everyday traders.

Currently, markets are gearing up for their year-end tax loss sales and rebalancing. Investors may want to look at trends in the options market to determine an asset’s next move.

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