BY ANDREW GIOVINAZZI
November 27, 2024
Yo Pit Crazies,
As we buckle in for Thursday and watch football and eat about 3000 calories in a day, melting is not the first thing we think about. It is the opposite of melting. We melt into the couch ok but that is about it.
Options are a different beast. They are always in a state of melting. Sometimes a lot, other times a little. The trick is knowing when they are going to melt. As for trading Tuesday, options expiring Friday the 29th started the Thanksgiving melt early in the morning and did not let up by midafternoon.
The SPX skewolater for Nov29 options
That is the rub for the week.
What is volatility going to do?
Traders are going to decay the day away
For every holiday there is a day we are not going to trade. Market Makers know this. They leave the premiums at normal levels at the beginning of the week and once the tone is set they start decaying it away. They do this by moving the date forward in their trading systems and that looks like a lower volatility to you and me.
As the week wears on, we get Friday prices early but we still get the overnight ris for any moves with options at cheaper prices. If you bought options last week, you noticed how they are getting savaged this week. Traders are moving time.
The passage of time, as our VP famously says, is real and can go faster.
This is all stuff anyone can learn. Even sitting on your couch at Thanksgiving.
To Your Trading Success,
AG
Andrew Giovinazzi
30-Year Trading Pro
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CAPITOL GAINS: SMR Aug16 7 call closed for a 150% gain
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