As expectations grow that the August US jobs report will pass without major surprises, open interest in put options, the right to sell, is declining in the Japanese stock market ahead of the September SQ. Market participants are considering the possibility that attempts to push prices lower may be running out of time for now.
The Japanese stock market looks set to come through the August US jobs report without major surprises. However, with this weekend’s September major SQ approaching, open interest in puts continues to trend lower ahead of the calculation of the special quotation for stock index options and September Nikkei 225 futures. Against this backdrop, the momentum behind downside bets may be losing steam.
Nonfarm payrolls in the August US jobs report were reported to have increased by 162,000 from the previous month, and the market is using the results to gauge how Japanese stocks will move toward the SQ.
In the Nikkei 225 futures and stock index options markets, some believe that selling pressure, driven by expectations of a buildup ahead of the SQ calculation, is beginning to ease. The declining trend in put open interest is contributing to a sense that downside risks have run their course.
Attention is focused on what happens next, and developments and further reports as the market approaches the September SQ are likely to continue attracting the attention of market participants.