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US: Here’s What Stocks Will Do After The Election According To Options Traders

According to a study by Bloomberg’s quants Lily Gu and Bryan Liang, who looked at how options markets are positioned for the election, the market is split in two in terms of what it expects will happen on Nov 4: as shown in the chart below, the equity options market showed a 54% chance of a upside movement (+2.7%) between Nov. 2 and Nov. 4, and 45% chance of a larger drop (-3%).

Looking at the option market in general as the next chart from Goldman shows, traders seem to be far more on edge today than the day before the 2016 election: while the SPX term structure has a similar shape, it has a much higher level than it had on the Friday before the 2016 election:

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