Seasonal Vol Selling Meets Tightening Liquidity
3 Takeaways
Expect volatility-selling to dominate near-term price action, as holiday-shortened weeks historically suppress implied volatility, even if fundamentals are not supportive.
Watch the Japanese yen and cross-currency basis swaps closely, as a reversal in yen weakness could pose a material risk to U.S. risk assets.
Prepare for wider trading ranges after OpEx, as reduced gamma and tight year-end liquidity increase the probability of sharper moves next week.