Making trades using Gamma imbalance

Not me, but this dude. Excellent predictions yesterday, to stay in puts until end of the day then switch to calls for today:



Posted at 1PM yesterday:

"there should an acceleration into the close today. However, be mindful of reversals around 3:15pm. For some reason this seems to be the point in time over the past 8 months where this attempt can run into issues and the market will rally.

It is a mean reversion strategy, but the main goal is to take advantage of any acceleration into the close. If you're unable to take advantage of Puts into the close focus on buying the calls at 3:55pm, so you can make money on tomorrow's bounce."

 

Explanation of the Gamma trap:

 

thanks for sharing! really interesting! would this strategy work for any share making a 5 standard deviation move? or is it only when an entire index makes the big move up/down.

 

thinking about the gamma trap strategy, what do we expect from TSLA today. it's a pretty strong move down so would buying Puts now and closing around 3:30pm make sense?

 

I don't know, probably. You can back test it easily.

Funny thing is that someone in the explanation thread said: "this won't work anymore because it was published even on CNBC", 9 months ago.

Yet it worked just fine yesterday... People have this notion that once a strategy is out there it suddenly stops working.

 

i like the idea.

a simplified version for everyday trading might be to spot shares that are making big moves up or down and buying calls or puts respectively. if the trade moves in your favor towards the close, close the position. if the position moves against you, hold til the next trading day for a possible retracement.

likely a high risk-to-reward strategy but I'll definitely give it a try.

 

Not enough people dump there method / belief and jump onto another, total ignore, it's just an excuse for why there method stopped working.

Interesting theory, something for the weekend to study!

 

So are we talking only a few opportunities in a normal year?

 

Normal, is long gone, we are in Feast ( Bull ) or Famine ( Bear ) mode, with occasional lulls between.

 

Yeah but this is not normal and will revert. During high volatility, opportunities are plentiful. I am more interested in strategies that do well in quiet times.