Brothers, tell me something scary. The call option trading volume of the S&P 500 reached $2.6 trillion yesterday. What concept? In the history of the US stock market, there has never been such a high daily figure. 01) Retail investors rush for options, forcing market makers to buy stocks This 2.6 trillion is not real money buying stocks. In fact, retail investors and traders are crazily competing for call options. What is a call option? Spending a small amount of money to bet on the rise of stock prices, doubling on the right bet, and resetting on the wrong bet. Now the US stock market is hitting new highs every day, and everyone thinks it will continue to rise, so they are buying desperately. But there is a question: who sold you the options you bought? Market makers. Market makers are not fools. If they sell you options, they have to bear the risk of the stock price rising themselves. To hedge, he has to buy the corresponding stocks. If you buy a 1 yuan option, he may have to buy 100 yuan worth of stocks to hedge. So the 2.6 trillion yuan option buying is backed by massive stock buying. This is not investors bullish on the company, it is the options market forcing market makers to buy stocks. 02) Gamma compression The mechanism here is called gamma squeezing. The higher the stock price, the greater the risk of options held by market makers. He needs to buy more stocks to hedge. The more you buy, the more fiercely the stock price rises. The more aggressively the stock price rises, the more he has to buy. The cycle repeats, and the market is directly blown up to the sky. This is the truth behind the recent S&P daily high. It's not about how good the company's performance is, it's not about how strong the economy is. It's buying in the options market, dragging the index upwards. But can this cycle continue indefinitely? No. Options have expiration dates. On the day of expiration, those who bet on price increases need to close their positions, and market makers also need to close their positions. At that time, the force of buying stocks before will become the force of selling stocks. And the strength is the same. The more fierce the rise, the more fierce the fall. The current market situation is not about pricing, it's about gambling The current S&P 500 is not priced by investors at all. What is the pricing? Look at how much money the company earns, how much it grows, how deep the moat is, and then give a reasonable price. Now then? No one cares about how much the company earns. Everyone is betting on whether it will rise or not tomorrow. The record breaking trading volume of call options indicates that the market has turned into a casino. Retail investors are gambling, institutions are gambling, and hedge funds are also gambling. A 2.6 trillion yuan option buy is a 2.6 trillion yuan bet. The larger the bet, the crazier the market. The crazier the market, the more people will bet. What is the difference between this and the 2015 A-share leveraged bull market? There's no difference. It's all about money driving, not value driving. Money can be pushed up or smashed down. When will this bomb explode? No one knows. But all the market trends driven by options ultimately collapsed. In 2021, GameStop's Gamma squeeze drove the stock price from 20 to 480, and then fell back to 40. In 2020, Tesla's stock options frenzy pushed its valuation to the sky and then halved it again and again. History does not repeat itself, but it rhymes. The current S&P 500 is a game station that has been magnified 100 times. The day when the 2.6 trillion yuan options expire or when funds are concentrated and liquidated is the day when the bomb detonates. And no one will notify you in advance when it detonates. ------- Brothers, I am not bearish on the US stock market. On the contrary, I am optimistic in the long run that there are good companies, real growth, and hard technology in the US stock market. But the current market situation is no longer related to the company's fundamentals. I need to remind my brothers who are leveraging, taking out loans, and following the trend to buy without cash flow When it rises, explosives push you up into the sky. When it falls, explosives send you to the ground. If you're on the boat, don't ask when it will explode. When asked if you were on the boat.