Following are a few quick observations by 3 astute observers of today’s stock and commodity market action.

Trotsky on The Market Traders:

I’ve seen something very unusual today – market-on-close bidding for index puts. I have a feeling this doesn’t bode well for tomorrow.

There must be a load of open derivatives positions that have suddenly turned sour. e.g. I noticed a big put seller getting active just before the plunge accelerated, apparently on a ‘this is business as usual’ assumption. Maybe it is, but the odds chart-wise are that it isn’t. Also, this has the typical feel of a sudden turn in sentiment from totally complacent to full of fear – and the fear has not found full expression just yet.

Please note, market ‘liquidity’ is largely a psychological phenomenon. It is those sudden turns when liquidity evaporates the fastest.

Professor John Succo on Minyanville:

Interestingly, I’ve only seen option sellers. Vega is up a little but not much. There’s no panic put buying–the VXO is up only because correlation between stocks is up.

Professor Kevin Depew on Minyanville

Tomorrow has the potential to be an even more severe day. For one thing, unlike May when a partial carry trade unwind began mid-month, this “event” has occurred at the end of the month, beginning in Asia and spreading across the globe.

There are many risk models that will need to be de-leveraged tomorrow – portfolios that most likely were not even considered at risk going into today. With the VIX up more than 62% today models that adjust on month’s end will require some fine-tuning tonight… to say the least.

What is most interesting as a tell is weakness today in gold and gold shares. Leverage is everywhere.

Leverage is indeed everywhere and today is just a down payment on the unwinding of that leverage. Whether or not tomorrow is “business as usual” remains to be seen but the risk of a “sustained event” is certainly not going away.

Mike Shedlock / Mish/