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Options Market Sets New Total Volume Record

Market Update

Michael Reinking, CFA
Sr. Market Strategist

January 28, 2022 AT 5:30 PM EDT

The S&P 500 closed out the week up slightly less than 1%…….wait what? You can pick the descriptive word for the volatile trading environment this week. For active traders or asset managers a few that come to mind would be turbulent, tumultuous or exhausting. Coming into this week the S&P 500 had closed lower for three consecutive weeks and on last Friday broke below its 200d moving average for the first time since May of 2020. Over the weekend, investors had some more time to ponder the imminent tightening of financial conditions and a slowing (but growing) corporate earnings backdrop. Sprinkle in mounting geopolitical concerns, a big miss on Markit PMIs and the fact that some protection had rolled off the pad last week, with options expiration, and there was a recipe for a selloff. That selloff came swiftly with a sharp 4% drop in the first three hours of trade which brought the peak to trough drawdown in the index to ~12.5%. However, this selloff completely reversed in the back-half of the day. This was precursor of the volatility that we’d see for the remainder of the week. The range for the week in the S&P 500 was 5.5%, but what I found more interesting was the that the close-to-close range on S&P futures exceeded 3% each day this week.

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