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IPFS News Link • Stock Market

Gammasterpiece: The Full Breakdown Of Robinhood's Historic Surge

• by Tyler Durden

Yesterday was the first day that options trading was available in HOOD, with strikes prices available up to $70.

Below we've plotted out the options activity as a function of delta. By viewing the delta of the options trading, we can estimate the amount of hedging exposure these trades generated. If the options generated large positive deltas that is telling us two things:

It indicates the trades were strongly bullish (buying calls and/or selling puts)

It infers that options market makers needed to purchase stock in order to hedge their exposure

As you can see below, right after the market opened there was a surge in positive delta activity (green line) which is likely call buying. In effect there was a gamma squeeze right at the open. This in turn pushed the stock price to an initial high near $80 (red arrow). Shortly after the stock reverted strongly as options flows turned bearish – traders bought puts and sold calls (blue arrow).

Notice that after the blue arrow the options delta stays flat. This suggests that options trading was directionally neutral, and remained that way up until ~2PM EST. At that point the options flow turned quite bullish (green arrow), which coincided with the stock pinning the $70 strike.