SpotGamma was quoted in an Reuter’s article today concerning the 3/31 JPM Collar Strategy.
The way the trade is structured means when the market starts to fall, options dealers – typically big financial institutions who facilitate trading but seek to remain market neutral – would have been forced to sell an increasing number of stock futures, thereby aggravating the selloff, SpotGamma’s Kochuba said.
As you can see below, there was a drastic selloff in the final hour of trading on Thursday, March 31st.
Full article here.
We also posted a video explaining this trade here: