How to read a Volatility Chart for Fun and Profits

BY ANDREW GIOVINAZZI

December 17, 2024

Yo Pit Crazies,

If there was one lesson from the $1 shots adventure last Friday it was Bitcoin and Big Tech still have something to say into the end of the year. The possibility of Bitcoin being any store of value for the Federal Government or major corporations has folks going nuts over anything Bitcoin related. Orange Santa is a go!

Robinhood Markets Inc (Ticker: HOOD) with bitcoin trading and Microsoft Corp (Ticker: MSFT) with a “possible” quantum computer are the two leaders with the calls up 33% and 40% respectively. Walmart Inc (Ticker: WMT) is in 3rd with a shot at profitability and Uber Technologies Inc (Ticker: UBER) is 4th but it does have time. I think UBER is undervalued in all this but it would make a better long term investment at this point.

The nature of the Bitcoin rally is violent. To see how this is playing out, look at the chart below on the SPY Jan17 2025 610 calls. Microstrategy Inc (Ticker: MSTR) is joining the SPX so just like that Bitcoin is in the S&P 500 Index. Damn sneaky!

IV in the SPY Jan17 2025 610 calls

I circled the implied volatility of the options for a reason.

Click here to find out how that will help you in the future

Upside IV should decline in slow rallies

I highlight the 610 calls in SPY because the IV in there is going up, not down. Note the blip above that is a real jump in implied volatility above the current market price. That means dealers feel the need to push up option prices because of demand. Stocks can drop on any day but the Orange Santa is in full swing to the end of year based on the changes in volatility I see.

Bitcoin, Quantum Computing, D.O.G.E, and of course the AI rally that started the year all contribute to market euphoria and that is mostly a long market, long volatility position.

Check out our Zero Theta ways to manage this amazing end of the year opportunity.

To Your Trading Success,