As in the rally collapses.
In the lead up to option expiry, you can have have a "dog wags the tail" effect. For example if investors have purchased calls (think Nvidia, Microsoft etc) market makers need to buy stock to hedge that position and as the market goes up they need to buy even more stock to hedge that exposure, but when the options expire, that feedback loop terminates.
Last year as markets were collapsing it was probably long put options that market makers had to hedge, so that has the opposite effect... market makers need to short sell stock to hedge sold puts and keep doing so as the market goes down.
Well the 15/16 June was quarterly option expiry last year and look what that did... as soon as that feedback loop terminated:
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As in the rally collapses.In the lead up to option expiry, you...
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