Gamma Briefing
Things are getting real: The S&P 500 is trading lower, off roughly 1.2%, as a wave of mega-cap earnings misfires runs headlong into a fresh spike in crude tied to another leg up in the US-Iran standoff.
The overnight geopolitical picture has worsened sharply, with Houthi forces striking two Saudi tankers in the Red Sea and Trump threatening to hit Iranian infrastructure should Iran move against shipping in the Strait of Hormuz, prompting Tehran to counter that any such action would choke off Gulf oil flows entirely, sending WTI up more than 4% above $90 while gold climbs about 2% past $4,150. The ECB, meanwhile, left all three policy rates untouched and refused to pre-commit to any path, with Lagarde flagging that the energy shock's full inflationary bite has yet to arrive and that risks to inflation now tilt to the upside.
On the single-stock front, Tesla is the standout drag, down about 8% after missing on EPS and posting further margin compression, while Alphabet is off roughly 5% despite a beat as its lifted capex guidance reignites AI-spending concerns. Energy names are the clear pre-market leaders as crude rips, with Exxon up around 1.5%, and memory names such as Micron and SK Hynix are bucking the broader tech weakness to trade higher.
Gamma Situation
SPX GEX has dropped sharply to -115M, suggesting dealers will now start to add real fuel to the fire by sucking liquidity out of the market, which could trigger big swings in both directions. The line in the sand for 0DTE traders is 7,430 (2nd chart below).
Systematic Situation
CTAs are so far chopping sideways, but could become light sellers below 7,370 according to our model (chart below). Below 7,295, supply could accelerate before getting serious below 7,215.
Also keep an eye on the vol control cohort: so far this group has not been adding any pressure on the market, but the risk is skewed heavily to the downside from here.
Stay safe.
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