Market Makers Allegedly Manipulate Options Expiration
A recent analysis on Moomoo's platform has shed light on what appears to be market manipulation by market makers last week. The scenario unfolded as follows: market makers attempted to manipulate the market by expiring both call and put options, then using the profits to influence market movements this week. This strategy involved high option volume in SPY (62.3M) and QQQ (42.7M), with an unusual balance between call and put options, and a significant volume of 0DTE options.
The manipulation began with market makers trying to keep the market in a narrow range, a tactic observed only six times in the past decade. This unusual stability was achieved despite a weaker-than-expected job report, which triggered pre-market whales and other counter players to pile into the market, countering the manipulation. To combat this, market makers allegedly manipulated Treasury yields during intraday trading, causing a sell-off to cap their losses.
The impact was particularly notable for stocks like Nvidia. The 235 call option dropped from $0.28 to $0.01, expiring at -96%, while the 232.5 call option rose from $0.86 to $1.55, an 82% increase. This allowed market makers to cut their losses while maintaining their manipulation strategy. Similar patterns were observed in QQQ options, where 749-and-lower puts and 750-and-higher calls became worthless.
The analysis concludes with a reminder that market manipulation is a recurring issue. Market makers, like Citadel Securities, which executes approximately 35% of all U.S.-listed retail trading volume, may continue to manipulate the market to expire options and control market movements. The post warns of potential further manipulation in October.