Before we turn for a look over the shoulder at the Easter week just past, a quick current investor-relations word: We said last time that stronger markets this week would be far more meaningful than what happened last week around options expirations. So far, so good…but the data continue to suggest that inflows are massively hedged and managed for risk.
Let's bound back now to 3/17-20 for more repetition (is that redundant?) on IR things to avoid around options expirations. You'll recall that quad-witching fell on Wednesday the 19th because of the market holiday on Good Friday. So leading into Easter the markets were wildly volatile regardless of news or the lack thereof. What to avoid at these times, IROs? Don't report earnings, material information (if possible from an FD standpoint), and other major things, and don't even release news on, say, product upgrades, new contracts and so on, because it'll not only fall on deaf ears, but it's likely to negatively impact buyside balances of assets (long equities in this instance) and risk-management (all the other stuff that offsets the long risk). And you won't get an accurate read on investor sentiment as a result.
Okay, we've beat that dead horse to death, as Yogi Berra would say. Bu let's quickly refrain in broad strokes how the buyside and sellside interact today. Institutional investors are asset managers. Big broker-dealers help them acquire and dispense shares and manage the associated risk. With tremendous uncertainty at work in the markets, and a herculean battle behind the order books for liquidity (supply of shares of all kinds…and this is why the NYSE has shuttled out 28 Exchange Traded Notes—the next step beyond ETFs—so far this year), institutional investors anywhere this side of stupid are going to take out insurance policies on those assets. Thus, the great significance of options expirations nowadays. So don't step into the vortex unaware.
Margaret E. Wyrwas - Knight Capital Group, Inc. (Nasdaq: NITE)
Senior Managing Director, Corporate Communications & Investor Relations
Equity Analysis™ subscriber since March 2007
"In global markets driven by automation, changing market structure regulation and dynamic investment objectives, today's investor relations professionals require new data points in order to remain relevant and add value in their company's quest to reduce its cost of capital."
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