Nomura Sees Asset Managers De-Grossing; “YOLO-ing Robinhood-ers” Left Holding The Bag

Having  ‘nailed it’ on the post-Quad-Witch tumble in stocks, noting that dealer delta and gamma positions suggested a lack of support after expiration…

“if selling persists and the $270 “trigger” in QQQs is taken out, that’s when “things could get sloppy to the downside into next week”

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It is worth listening to Nomura’s Cross-Asset Strategy MD Charlie McElligott when he warns that he is seeing large market players de-risking while retail continues to desperately play their leveraged BTFD game.

Bag-holders beware…

As McElligott notes, the legacy impact of:

1) the Nasdaq / Mega-Cap Tech dynamics from August (mind you, some of those large flows were Sep all the way out through Feb), and

2) evidence of more Robinhood retail YOLO’ing even just last week chasing short-dated and highly-convex upside on the bounce…

…has continued to perpetuate the dealer “short gamma” dynamics in QQQ options…

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And as retail continues to try and buy any dip – on leverage – McElligott points out that “large lot” trade imbalances in futures – a proxy for Asset Managers – were tilted for sale all day long and accelerated into the close.

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All of which suggests – given the carnage in mega-tech markets this week – that retail is the bagholder once again as the big boys reduce risk (amid surging election/fiscal-stimulus) uncertainty.