BY ANDREW GIOVINAZZI
June 28, 2024
Yo Pit Crazies,
Hanging with Voz for Free on Friday might be the best deal we have ever had at Option Pit. I think the post-Debate close will let loose the animal spirits in the market.
Now part of why I got involved with Mark at Option Pit 12 years ago was to educate retail traders on how the options market works. Option Pit has 3 roles for folks wanting to get into trading options:
Make Money
Get Educated
Have Fun
I think the crew at Option Pit does a good job of that. Lately I have been spending more time on TWTR/StockTwits watching what folks are saying. I came across this:
Sadly this post does not show any real understanding of how the market works. Besides, the Cboe Global Markets (Ticker: CBOE) is not in charge of the markets, they just collect and disseminate information. There are rules and regulations they enforce, but market dynamics is not something they get involved in.
Although there was a time I did visit Market Reg in the 1990’s
The CBOE Market Reg folks did not understand Implied Volatility moves
The Micron Tech Inc (Ticker: MU) example is just the investor not understanding there are more than 1 Greek involved in trading options. There are many. I had to explain to Market Reg years ago that Implied Volatility moved. They looked at me like I had two heads.
In the MU case above, the vega risk on a drop in IV outweighed the gain from delta. That is why the puts did not make any money. That same effect will happen 1000’s of times a year post earnings and what I think will happen post-debate today. I expect a lower VIX today.
Knowing how things will work is a big help trading options. Sign up for Option Pit University here and the cost of the class is less than a 5 lot of options.
To Your Trading Success,
Andrew Giovinazzi
30-Year Trading Pro
See what's hot at option pit
CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
DELTA STRIKE: VLY Mar15 8 puts closed for a 88% gain
PFE May17 26 calls closed for a 66% win
OP MENTORING: SPY Mar22/19 510 put calendars and 520 calls for 6.4% gain
OPTION SHOPPER: ERX Mar28 65 calls closed for a 90% gain
Events make the liquidity providers raise prices for the same amount of time
How do I know this? I was one for 15 years, Mark 10 years and Licia for 15 years. That is 40 years and 20 million option contracts. Also, players will wait to place trades while an event is in play. Traders would rather ride a sure wave than place a big bet prior.
The liquidity provider will just pump up the volatility in the options to overcome the daily decay. Trade 1 Greek for another, Theta and Vega. That is just time for volatility.
Look for my Greek Exposition in Option Pit University coming soon.
If the PCE number is just in line post-debate, SPX will fly as the market is waiting for a reason to go higher. Hard to imagine there will be any surprise from the two candidates but that is why the VIX has a bid!
To Your Trading Success,
AG
The Gulf of Maine and the shoreline offer 1000s of fishing spots. An almost unlimited supply of places to go. Right now the stock market, with 1000’s of names to trade, has only one place to go.
That stock is Nvidia Inc. (Ticker: NVDA). On a low volume Tuesday in the June heat, NVDA managed a day where the fund manager had a chance to buy the stock not at all time highs. So they all jumped in and the performance lifted all high quality tech.
Yo Pit Crazies,
It is Voz Free Friday this week. Check out Voz and Mark as the dynamic duo of trading on the close every day in Trade to Close.
My close Tuesday was a bit different, a buddy wanted to go Striper fishing so I did this: