People critiquing NOPE: guys it doesn't include the whole SPX complex and also it doesn't represent MM delta hedging bcuz futures and other methods exist Me: Exits puts at 150% return
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Even ignoring the SPX options/futures question it clearly has ~nothing to do with market maker delta hedging. Primarily NOPE measures three things 1. options volume to underlying volume (sets the scale) 2. call volume to put volume (sets the overall direction)
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3. Intraday moves in the underlying (sets the short-term changes). The indicator is a blend of these three things, if it is predictive it must be because these three components (together or individually) are predictive.
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I don't think i'd go that far, there needs to be some mechanism of transmission from the options to the underlying and that mechanism is some sort of hedging either by the dealer or by the customer (and the dealers are the ones more predictably hedging)
End of conversation
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