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Investors’ daily waves of option sales are poised to slow a sustained stock rally back to record highs.Option-selling strategies have abounded in 2025, from exchange-traded fund overwrites to systematic zero-day to expiry trades and bank Quantitative Investment Strategies. On the other side, the dealers typically rebalance their positions each day by selling into rallies and buying dips.The slowing effect may be felt more on gains than drops, as JPMorgan Chase & Co strategists led by Bram Kaplan noted an increasing preference for selling calls over puts in recent weeks. Meanwhile, UBS Group AG points to a particular strategy — selling so-called iron condors — that is popular with retail traders.With investors focused on ever-shortening windows of volatility to manage risks, the influence of contracts expiring from zero to five days away has surged. Zero-day to expiry options in particular keep scaling new heights at about 60% of overall S&P 500 Index volume.The short iron condor strategy — where a trader sells a call spread above the current market level and a put spread below it — has become popular with some retail traders, boosting volumes. Positioning on one-day to expiry option trades in the S&P 500 — specifically via the short iron condors — may have helped contain recent rallies, according to derivatives strategists at UBS.“This 1DTE iron-condor flow is now leaving a very clear imprint on SPX options positioning profiles, to the extent that it may be influencing underlying price action,” said Kieran Diamond, derivatives strategist at UBS.The iron condor strategy is set up to collect premium as long as the market stays in a narrow range. Market makers holding the opposite side of such trades have more hedging to manage when the underlying price approaches the nearer call strike in the final 30 minutes of trading. The size of the spreads and the distance between the strike prices has increased in recent months, according to UBS.While overall market maker gamma positioning from 0DTEs is dynamic during trading hours, much of the flow is still from investors selling options. Dealer positioning is most extreme on the upside call strikes. The lower volatility on those increases the gamma per unit of notional, making the dealer hedging impact more pronounced.“The most significant risk sits to the upside, with SPX market makers managing very large long gamma exposure from the calls that the condor traders have sold to them,” said Diamond. “When managing this risk, market makers need to sell equities as the index moves up toward the strike, which makes it incrementally harder for the S&P to rally during the trading session.”The end of the day is particularly fraught. In the most extreme example from Oct. 24, S&P 500 dealer gamma reached a peak of around $90bn 10 minutes before the close, according to Diamond. This means that a roughly 0.1% move in spot would generate around $10bn in flow to be bought or sold.While that can be absorbed by the futures market, it isn’t without a price impact. In theory, markets may be more likely to gap-up outside of regular hours in Asia or Europe, as the dealer hedging needs subside at the close every day.“There were a number of sessions through October when the market seemed to struggle to break through the region where this long gamma is concentrated, but then rallied after the close once the majority of the options risk had expired,” said Diamond.That may offer opportunities to exploit such price distortions, for example buying a one-day option at the close every day and selling it back at the open the next morning. Dealer gamma resets daily from this flow, so positioning tends to flatten around the end of trading at 4 pm New York time.Some are sceptical about the market impact of a particular option strategy like the iron condor.“Of the 25 or so different things that are pushing markets in different directions, this is one of the 25,” said Chris Murphy, co-head of derivatives strategy at Susquehanna International Group.Murphy said it was simply “one of many factors” influencing the market. “It gets more attention than it deserves.”Also, there are questions about the sustainability of such systematic short option flows, especially if they are retail driven.“Any systematic short-option strategy generally harvests premium pretty well until a high volatility environment realises and then it kills the trade via convex losses,” said Garrett DeSimone, head quant at OptionMetrics. “Even if you have great risk management and you can time the exit points, you will likely end up being sidelined for such a long period that your investors will likely lose patience and redeem.”

The US bank JPMorgan has expanded in Dubai as part of a broader push to grow and do more business with medium-sized companies, an executive told Reuters, as competition in the Middle East intensifies.The move, not previously reported, is a challenge to competitors such as Citigroup, and comes after JPMorgan recently devoted more resources to coverage of so-called midcaps in Austria and Poland."There's a global focus on doing more in the midcap space," Stefan Povaly, London-based co-head of corporate banking for Europe, the Middle East and Africa, said. Midcaps give JPMorgan another revenue stream beyond its traditional focus on the biggest blue-chip firms."The Middle East is of course a priority... This is the first step for an expansion into the midcap space," Povaly said.Global financial firms have increasingly set up operations in the Middle East to tap into oil wealth and growing regional markets. Barclays recently announced an expansion into Saudi Arabia, while Goldman Sachs opened an office in Kuwait.Citigroup first opened in the UAE in 1964, and added commercial bank activities in 2007. Speaking about competition in general, Alex Stiris, head of Citi's commercial banking in Europe, the Middle East and Africa, told Reuters that Citi sees the UAE as a location with one of the greatest opportunities for increasing market share and that his bank has an ingrained "natural advantage"."We have seen more competition come into the UAE," he said, not referring to any individual firm."Obviously the more competition, the more we have to be on our tiptoes. So it worries me to some extent," he said. "We can't rest on our laurels.""We are investing selectively," Stiris said. "Investing is not just in terms of just adding more headcount. It's also in terms of just looking at the people we have, and in some cases, just upgrading people." "There's also investing in terms of capital,” he added.Elsewhere, JPMorgan is in the early stages of evaluating a move to increase covering midcaps in Turkey."Over time, we could look to hire bankers dedicated to midcap clients in the country," Povaly said.JPMorgan has relocated Tushar Arora, a banker who has been with the US lender for more than a decade, from London to take up a Dubai role as the first in a team to focus on smaller venture capital-backed companies.The activity follows a push to Poland with the hire of Marcin Pietrucha from Santander, who has built a team based in Warsaw and other hubs.In parallel, JPMorgan is seeking more midcap business in Austria, headed by banker Philippe Bull based in Frankfurt.JPMorgan has a large presence in Germany, in part for coverage of the country's medium-sized Mittelstand firms.JPMorgan has been on an expansion course in Europe. The bank this week officially opened an office in Berlin with space for 400 staff ahead of its launch of a digital retail bank.Last week, German regulators imposed a record fine on JPMorgan for deficiencies in its anti-money laundering controls, reflecting the scale of its operations in the country.

The $55bn take-private of Electronic Arts Inc has evoked several superlatives, including being heralded as the biggest leveraged buyout of all time. Part of that list is JPMorgan Chase & Co’s $20bn of financing — the largest debt commitment ever by a single bank for such a deal.It marks the biggest win yet for Wall Street lenders that have sought to fend off the $1.7tn private credit industry from financing such transactions, which carry some of the juiciest fees in the debt-underwriting business.JPMorgan made the commitment through its leveraged-finance arm, not its private credit strategy, and the biggest US bank is expected to share the risk with rival firms to create a global syndicate of underwriters, according to people familiar with the deal. The debt — expected to be rated in the single-B range — is set to be sold through high-yield bonds and leveraged loans in a cross-border, dual-currency transaction, said the people, who asked not to be identified discussing confidential details.The final structure of the sale will depend on market conditions at the time of the launch, the people said.Normally, the buying and selling of companies by private equity firms drives a significant amount of activity in the leveraged-finance debt markets. But these deals have remained muted ever since the Federal Reserve began hiking rates in early 2022.That left investors clamouring for new deals — particularly big-ticket mergers and acquisitions such as Electronic Arts — beyond the refinancing efforts dominating the market that often recycle existing debt into lower margins, sometimes repeatedly.At the heart of the demand for new paper are collateralised loan obligations — the largest buyers of leveraged loans. The rapid creation of CLOs, which package sub-investment grade loans into bonds, is driving demand for debt deals even higher.US-based CLO exchange-traded funds welcomed $674mn of inflows last week, well above the weekly average $446mn recorded over the past year, according to JPMorgan research published on Monday.“The key element, or the connective tissue we need to produce net new issuance, is M&A,” said Tal Reback, global investment strategist at KKR & Co’s credit and markets business. “There is pent-up demand and fleeting opportunities to go to market. But there is a pipeline in the works.”Evidence of that started to emerge in recent weeks. A group of banks led by Goldman Sachs Group Inc launched a $5.5bn leveraged loan to help finance Thoma Bravo’s acquisition of human-resources software provider Dayforce Inc. And the home-care business of Reckitt Benckiser Group Plc raised almost $2.4bn of debt to support its carveout to Advent International.Advent’s deal isn’t just attracting typical CLO buyers for its term loans but also interest from Middle Eastern, Asian and smaller European banks that look set to buy up to $700mn of it.While the desire for a headline deal exists, the last big leveraged buyout was for Elon Musk’s $44bn acquisition of Twitter Inc. in 2022. That left a group of banks led by Morgan Stanley stuck with about $13bn of debt, and it took until this year for them to finally move that off their balance sheets.Separately, credit markets are dealing with two sudden distressed situations that took investors by surprise. Auto-parts supplier First Brands Group filed for Chapter 11 bankruptcy, and Tricolor Holdings, a used-car seller and subprime lender, filed to liquidate, leaving lenders facing potentially hundreds of millions of dollars of losses.EA is being taken private by Saudi Arabia’s Public Investment Fund, Silver Lake Management and Jared Kushner’s Affinity Partners in a deal announced Monday. Representatives for JPMorgan, Silver Lake, PIF and Affinity Partners declined to comment. A spokesperson for EA didn’t reply to requests for comment.The jumbo deal is a welcome development for the broader private equity industry, which has been grappling with a prolonged deal drought, limiting its ability to return capital to investors, according to Jake Mincemoyer, global co-head of debt finance at law firm A&O Shearman.“That flywheel is not fully spinning yet,” Mincemoyer said, referring to a rebound in mergers and acquisitions. “The whole ecosystem needs to start trading assets again.”The debt commitment is made up of $18bn that’s expected to be funded at closing, according to a statement, and $2bn that will be in the form of a liquidity facility, the people familiar with the deal said.