I can't remember the last time that I saw such wide spread between Put:Call prices. Puts are quite expensive at the moment. It could be that folks are hedging or downright betting on swing down, I don't know. It'll require the insight of people much smarter than I.
We get the grizzle.... Globex gets the gravy ... If we don`t get some serious Vol today... It`ll be time to inverse hours & just trade the over night session .... "Steal The Move" ... has been the mantra ....
Stayed up till 12 midnight trying to catch this Long move as it was fairly obvious we`d get it as PA was screaming it..... Sharp down moves kept me from carrying long into the over night session.... Defense First...
Pull up a weekly/monthly chart of QQQ/NDX and then think about the tail risk following a one way move of such magnitude.
Could you elaborate further FC? Would love to hear more in detail what you are pointing to. Was a move of big magnitude but so was the move before it so just trying to understand.
Of course, reversal risk is high with such a huge one way move, but we've been moving in this direction for a minute and spread hasn't been this blown up. The most interesting bit, to me, is the timing of this vol spike (on puts). Naturally, one would expect the tight range chop of the last few days to crush the vol, but it's been resilient (on puts). I notice it more because my plays are built around it. I think the market is at least expecting volatility in the coming weeks, and more likely a downward move If I understood correctly, S/he is saying we've moved heavily in one direction over some time. Reversal is likely, and that likelihood might be getting stronger in correlation with the move. That was my understanding, and what my response is based on
Yeah I understood the same. But what I'm trying to understand is why there would need to be anything sizeable down since this big move up simply came off that big move down. To me it would seem (especially with Naz since its the powerhouse) that more of a sideways/down move would follow since we've already mean reverted (granted the reversion happened very quickly - but so did the down move). Bet it gets really sloppy and congested for a while... possibly until Q3 or election time.
Perfectly reasonable, there doesn't need to be anything. We all try to glean insights into the market's next move, and we call it an edge. What I gleaned is the unusual PA in SPY puts, and what I'm trying to ascertain is whether it's a useful insight into short term PA. Honestly, the recently volatility has been very good to me that I'm mostly agnostic to the market's direction. However, if I can gain an advantage into direction as well, it's just extra gravy. Also a possible outcome, but my expectation with this move is a relatively even IV in the option prices. Funnily, that IV has come in significantly today for puts. A few of us were joking around yesterday that the 10+% extra IV on puts yesterday was just an extra bonus for premium sellers, since it should get crushed today if the markets move marginally up as expected. It now appears that joke is exactly what played out.
Cool. Can't wait to get more into learning about options / volatility studies. That subject matter is so interesting.