HIRO watches the options market in real-time, across 3,500 products, sometimes unveiling the cause of unexplainable fluctuations. The second is the Hedging Impact of Real-Time Options, or HIRO, a predictive indicator built in partnership with data analysis platform Bookmap.

The EquityHub tool is great for retail traders, even hedge funds and sales desks looking to develop as well as pitch trade ideas to clients, according to SpotGamma. Note the price movement at and around SpotGamma’s key horizontal levels. Graphic: The above charts display SpotGamma’s modeling of options positioning for Inc (NASDAQ: AMZN). The first is EquityHub, which allows users to scan and model options positioning for over 3,500 exchange-listed products.

Innovation From SpotGamma: SpotGamma has two game-changing offerings. That’s kind of the gamma-flip equation that comes up so often.” “Oftentimes, we think the market is going to move a lot, and the market is pricing in a small move. “When we’re talking about options, it’s about the distribution of returns,” Kochuba said about realized volatility differing from what is priced. SpotGamma helps adjust traders’ expectations in accordance with the aforementioned. When long gamma, they hedge by selling into strength and buying into weakness. When short gamma, they hedge by buying into strength and selling into weakness. “Embedded in that is gamma is high, and where are the big support and resistance lines,” he added in reference to the analysis of key levels, derived from open interest and proprietary volatility models.įor clarity, gamma, or convexity, is the sensitivity of an options risk to direction, given underlying price changes.ĭepending on how participants are positioned, the opposing side of options trades - market makers - will be long or short gamma. “The most important thing we do is give an estimate of volatility for each and every day,” Kochuba said. The Core Offering: A twice-daily note consumed by traders at the retail and institutional level.

Given that the S&P 500 is such a large product, Kochuba was confident he could share his models without giving away an edge in 2019, he founded SpotGamma to help traders better gauge market opportunity. “I built out these models and was designing some trading strategies around them.” “You can take the options market structure and draw some very basic conclusions for the direction of the market and volatility,” he explained. When the family office didn’t pan out, Kochuba was left with nearly 15 years of sell-side experience. Thereafter, Kochuba continued his work in the options space, developing models for a family office. Kochuba, alongside SpotGamma co-founder and CEO Matthew Fox, spoke with Benzinga about these dynamics and how the platform helps gauge market opportunity.Ībout: Prior to founding SpotGamma, Kochuba worked in investment banking and options market making at Banc of America, the investment banking subsidiary of Bank of America Corporation (NYSE: BAC), Credit Suisse Group AG (NYSE: CS), and Wolverine Execution Services. In short, participants, yearning for yield, have propelled option volumes to levels where hedging flows, which can compress or exacerbate volatility, represent an increased share of volume in underlying stocks. Lackluster trade, in the face of weak breadth, has a lot to do with the growth of derivatives. “The market has had essentially no movement and implied, or forward volatility - what people thought was going to happen - is so low such that, if you got any movement at all, it would violate what people thought was going to happen, or what was priced in.”

“Just recently, we hit a low in realized volatility,” Kochuba said. That’s according to Brent Kochuba, founder at SpotGamma, a financial insights company applying proprietary methodologies toward index and equity options modeling.

Squeeze momentum indicator webull