Meta Strategy Derivatives Portfolio – Probability Map Update.

Don’t Fight The Fed

The setup for a second leg down has been in place for the entire month of August, because sentiment and positioning increasingly changed to a bullish outlook, continuously building up more potential sellers with weakly held conviction.

Jerome Powell’s speech at Jackson Hole was widely expected to be a potentially decisive point for future market direction.

Astonishingly, that is exactly what seems to have occurred: His short and concise message of “No Pivot” to come from the FED may have been the catalyst that is needed to let the downside setup play out.

Like a game of dominoes, a wave of selling hits an under-hedged market.

A negative gamma spiral can easily ensue, as investors scramble to buy protection.