Comment

The app for independent voices

The Great Financial Tightening

"The "smart money" is now exploiting a new regulatory loophole in the options market to make a quick (lucrative) buck. They are selling large amounts of deep out-of-the-money 0DTE options, without having to post margin to clearinghouses, who don't count intraday expiries.." My question: if margins aren't needed to be posted, doesn't this allow extra 'money' (liquidity) to flow into the system, just like derivatives increased money supply in the economy in the Great Financial Crisis?

Yes because you can bypass regulatory limits by hedging jntraday. You don’t have to report your positions to clearinghouses.

Mar 3, 2023
at
3:47 PM