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Interest Rates Are Having An Affect On Derivatives (Preview)

By Lawrence G. McMillan

It turns out that the increase in interest rates has gone on long enough and raised rates enough that some things regarding derivatives are occurring that haven’t been in place in quite some time – or ever, for that matter. We are going to address a couple of related topics. Newer option traders might not have seen some of these things before, since essentially interest rates have been at or near zero since 2009, until last year.

Put Volume Surge In Stock Options

There have been several days in the last two months on which put volume in certain stocks has surged (the phenomenon began on November 2nd, 2022). These surges have occurred for the most part on Wednesdays. This was particularly noticeable on the CBOE, which publishes their Equity-only put-call ratio daily, and that data is tracked by many analysts. That surge seemed odd and completely out of character with the history of CBOE put-call ratio readings. The surge in put volume has continued since then, mostly on Wednesdays, but occasionally on other days of the week as well. Some of that was, of course, related to the bearish market itself, but the data was odd enough that many were questioning the CBOE’s data accuracy...

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