The Official Options Thread

[ajlaxmn]

Originally Posted by Blazed

Not necessarily that you got lucky, the market was easier - "easier" - to read. Now, we're getting into higher highs, have data drops, and gaps that need to get filled. So there's a few more things to take into consideration now than before. Remember, 4130 (411.5 on SPY) is a strong level, so until we break and hold that (premarket doesn't count) it will remain a strong level (top of the range).

You've also posted that you've rushed it a couple of times. The days you didn't rush it you were hitting the levels (including SPY support/rejects), so maybe that contributed to the off days?

Also, you haven't been doing this too long so there's a learning curve to the "tougher" days like the past few. So for the amount of time you've been doing this, you're doing great but it will take time to perfect it - and no matter how good you get, there will be off days. I have them too, where I miss a level or forget about a strong level because I didn't mark it.

So it's all good man, just keep learning as much as you can and make sure you journal what made you select the wrong levels; i.e. checked too early, rushed, TOS mobile app sucks and you need to use a chart... Don't get discouraged, you'll get there in time.

Yeah no worries, I'm not as discouraged as I may have sounded, as I know I'll get it, already might more confident than I was two months ago. Just need to get the ranges down and the SPY levels, these haven't really worked on in the past two weeks. Appreciate the back and forth, really do. Soaking up everything that I can.

[Blazed]

Originally Posted by Blazed

Initial Jobless claims came in higher and PPI came in lower, that's why we saw the move up - again, we all know it's bs numbers so lets see how this plays out today. I'd like to see a pump at open then drop like yesterday.



SPX: 4130 top (break above 4150 next resistance) / 4050 bottom (break below, 4030.59 (GAP) next support) / 4100 key level


Watching:

SPY - Rejects @ 410.4 and 411.5 (higher probability). Bounce 405 - 404.5.

Trade recap:

We went level to level. We had a gap up at open then a slow grind up the rest of the day - the up trend stayed in tact all day so there was no reason to be looking for puts.

SPX: 4130 top (break above 4150 next resistance)✅ - we were able to finally break above 4130 and look where we rejected... levels don't lie.

SPX: 4100 key level✅- bounced off 4100 6 times this morning before we rocketed up. If you got in @ 4100, you can hold your position all day and let it ride with the up trend. Just set a hard stop above break even in case it reverses. THESE are the kind of days I love to trade.

[ajlaxmn]

8:50, so its early, but I'll be away from my computer most all of the day, so I wanted to at least get what I was looking at.

SPY Reject 414.8, Bounce 409.3

Based on 4140 open as of 8:50

Range Top 4190 (O/I of 8k, ), Bottom 4100 (O/I of 5k for Calls, 6k for puts), Key level 4150 (based on 6k O/I for calls, need to break to continue uptrend)

I realize the early posting could be impacted, but I wanted to at least get something down.

[Blazed]

Originally Posted by ajlaxmn

8:50, so its early, but I'll be away from my computer most all of the day, so I wanted to at least get what I was looking at.

SPY Reject 414.8, Bounce 409.3

Based on 4140 open as of 8:50

Range Top 4190 (O/I of 8k, ), Bottom 4100 (O/I of 5k for Calls, 6k for puts), Key level 4150 (based on 6k O/I for calls, need to break to continue uptrend)

I realize the early posting could be impacted, but I wanted to at least get something down.

Looks good!

-----------------------

Side note: The FED injected money back into Wall st for a reason, and the reason is obvious - they want to keep the market up.

The same reason they say our inflation is 5% YOY - all smoke and mirrors.

Lets see what the market gives us today. Trade smart and don't force trades.

[Blazed]

Originally Posted by ajlaxmn

8:50, so its early, but I'll be away from my computer most all of the day, so I wanted to at least get what I was looking at.

SPY Reject 414.8, Bounce 409.3

Based on 4140 open as of 8:50

Range Top 4190 (O/I of 8k, ), Bottom 4100 (O/I of 5k for Calls, 6k for puts), Key level 4150 (based on 6k O/I for calls, need to break to continue uptrend)

I realize the early posting could be impacted, but I wanted to at least get something down.

Trade recap:

All done for the day, great way to end the week. If anyone took the 414.8 reject congrats, it paid.

SPX 4160 contracts moved from $750 > $2,800 - a gain of $2,000 per contract.

SPY Reject 414.8✅





Education:

Volume confirmed that we were going to reject the 414.8 area as buying was slowing down on the 2nd 15 min candle - pretty straight forward. Watch volume and know where your reject areas are. Look where they brought us back to on this drop... 4130 which has been a key resistance level, now turned support.

The quote below is from 4/12 - I was already watching for a 415 reject.

Originally Posted by Blazed

CPI (Mar YoY) 5% vs 5.1% Expected; Ex-food and Energy 5.6% vs 5.6%. We all know it's a bs number, but take what the market gives.

My opinion - the market will dump but first they need to kill massive short positions, this market is so speculatively short that its set up massive amounts of liquidity to hunt.

SPX: 4180 top (break above 4200 next resistance) / 4100 bottom (break below, 4090-4080 next support) / 4130 key level

Watching:

SPY: 413.75-414 is one of my main rejects. Others are 415 then 418.5 (highest probability). Bounce @ 411-410.5

Hope everyone enjoys the rest of their day, a good weekend to get in some education.

[ajlaxmn]

Based on 4137 open.

SPX bottom 4060 (O/I of 4k on Puts), Top 4150 (O/I 5k Calls), Key Level 4100 (O/I 1.9k Calls, 4k puts)

SPY Reject 413.75
SPY Bounce 410.3

Blazed please comment as necessary. SPX was using 4150 as resistance as it has been in the past and we have not held since breaking it last Friday. I first thought 4150 would be key level and 4200 as top. Perhaps that was correct.

[Blazed]

Earnings week kicks off and its also OPEX week. So it should be an exciting week overall.


SPX: 4200 top / 4100 bottom / 4150 key level


If for some reason we get up to 4200 I will be taking puts. Also of note there's sell signals across the board.

Watching:

SPY reject 415 for puts
SPY bounce 410 for calls

Wait for confirmations, it’s Monday don’t rush into trades and only take A+ setups.

[Blazed]

Originally Posted by ajlaxmn

Based on 4137 open.

SPX bottom 4060 (O/I of 4k on Puts), Top 4150 (O/I 5k Calls), Key Level 4100 (O/I 1.9k Calls, 4k puts)

SPY Reject 413.75
SPY Bounce 410.3

Blazed please comment as necessary. SPX was using 4150 as resistance as it has been in the past and we have not held since breaking it last Friday. I first thought 4150 would be key level and 4200 as top. Perhaps that was correct.

That was correct, you had the right thought - did you know why?

Reason: 4150 becomes the key level because 4130 is now a support level. Break below 4130 > 4100. Break above 4150 > 4175 -4180 (weak) > 4200.

[ajlaxmn]

Originally Posted by Blazed

That was correct, you had the right thought - did you know why?

Reason: 4150 becomes the key level because 4130 is now a support level. Break below 4130 > 4100. Break above 4150 > 4175 -4180 (weak) > 4200.

Awesome. Yeah that all makes sense. I need to start narrowing down that reasoning based on previous support/resistance. That is good info, thanks.

[ajlaxmn]

My anticipation is to take Puts immediately if we reject 4150 as that is an ATR band in addition to key level. Been choppy so far this morning, lets see if start to push to 4150.

[Blazed]

Originally Posted by Blazed

Earnings week kicks off and its also OPEX week. So it should be an exciting week overall.


SPX: 4200 top / 4100 bottom / 4150 key level


If for some reason we get up to 4200 I will be taking puts. Also of note there's sell signals across the board.

Watching:

SPY reject 415 for puts
SPY bounce 410 for calls

Wait for confirmations, it’s Monday don’t rush into trades and only take A+ setups.

Calling it a day here. No trades for me today. I missed the 4150 reject (rejected early around 4144) and I didn't like the 4130 bounce area as we're stuck in a range. A larger move might come later in the day, but as of now the R/R isn't there for me.

Since it is OPEX week, we will probably range and have bigger moves Thurs & Fri. The range is expected, as institutions take out big loans with high interest during OPEX to sell options against the holdings capturing premium burns so this range is exactly what they love.

I do have an alert set for 4145 and will see how we look if we get there but probably won't take anything.

[ajlaxmn]

Originally Posted by Blazed

Calling it a day here. No trades for me today. I missed the 4150 reject (rejected early around 4144) and I didn't like the 4130 bounce area as we're stuck in a range. A larger move might come later in the day, but as of now the R/R isn't there for me.

Since it is OPEX week, we will probably range and have bigger moves Thurs & Fri. The range is expected, as institutions take out big loans with high interest during OPEX to sell options against the holdings capturing premium burns so this range is exactly what they love.

I do have an alert set for 4145 and will see how we look if we get there but probably won't take anything.

Yeah nothing happening at all. No trades for me either. Care to elaborate on the bolded? Maybe in the "speak to a small child Jeremy Irons" manner so that I can fully grasp it?

Thanks.

[Blazed]

Originally Posted by ajlaxmn

Yeah nothing happening at all. No trades for me either. Care to elaborate on the bolded? Maybe in the "speak to a small child Jeremy Irons" manner so that I can fully grasp it?

Thanks.

Basically just saying institutions sell options against their holdings but go a little heavier during OPEX. They sell them at a high premium with the goal of having them expire worthless or buy them back for pennies. So it's in their best interest to keep it within a small range (stay stagnant and let theta do its thing then get cheap calls/puts right before they move the market the way they want it to go). The push at the last hour today to 4150 didn't have any reason other than to kill puts - we're going up because they need to inflict some pain since the market was heavier in puts.



Last OPEX there was $1.4 trillion in options set to expire. I haven't looked yet this time, but scroll the options daily chains and look at the strikes with high OI. Based just on OI @ the 4200 strike, it looks like they want to hit that this week.

Also notice where they closed us - right at the key level. They held us down all day and kept us within a range and waited to push us up to the key level during power hour. A lot of people who bought puts when we dropped below 4130 thinking it would act as resistance again got smoked. That's how they get cheap calls/puts.

Originally Posted by Blazed

Earnings week kicks off and its also OPEX week. So it should be an exciting week overall.


SPX: 4200 top / 4100 bottom / 4150 key level

[ajlaxmn]

Originally Posted by Blazed

Basically just saying institutions sell options against their holdings but go a little heavier during OPEX. They sell them at a high premium with the goal of having them expire worthless or buy them back for pennies. So it's in their best interest to keep it within a small range (stay stagnant and let theta do its thing then get cheap calls/puts right before they move the market the way they want it to go). The push at the last hour today to 4150 didn't have any reason other than to kill puts - we're going up because they need to inflict some pain since the market was heavier in puts.



Last OPEX there was $1.4 trillion in options set to expire. I haven't looked yet this time, but scroll the options daily chains and look at the strikes with high OI. Based just on OI @ the 4200 strike, it looks like they want to hit that this week.

Also notice where they closed us - right at the key level. They held us down all day and kept us within a range and waited to push us up to the key level during power hour. A lot of people who bought puts when we dropped below 4130 thinking it would act as resistance again got smoked. That's how they get cheap calls/puts.

Thank you very much, all great information and insight on institutions and the option market works. Soaking up everything I can. Next I need to know the purpose and frequency of all these reporting dates/data drops you talk about, they all seem to have significant impact.

As always, thanks.

[ajlaxmn]

Based on a 4170 Open.

SPX Bottom 4100, Top 4200, Key Level 4175 (O/I 3K)

SPY Reject 415
SPY Bounce 411

[Blazed]

SPX: 4200 top / 4120 bottom (break below > 4110 > 4100) / 4150 key level

4200 level is key on SPX.



Watching:

SPY reject 417.5-418 area for puts

SPY 410 for a potential bounce.

SPY uptrend entry 415 for calls - (Only with SPX confirmation)

Could have another day where we range, so trade smart and don't force.

[ajlaxmn]

Originally Posted by Blazed

SPX: 4200 top / 4120 bottom (break below > 4110 > 4100) / 4150 key level

4200 level is key on SPX.



Watching:

SPY reject 417.5-418 area for puts

SPY 410 for a potential bounce.

SPY uptrend entry 415 for calls - (Only with SPX confirmation)

Could have another day where we range, so trade smart and don't force.

Where did you get SPY Reject? August of '22 on 4h chart?

I had 4150 as my key level being that broke above it, I selected 4175 as I thought that is a level we would need to break above in order to continue up, also had the highest O/I for Calls. I'm assuming though that it still should have been 4150 as this level was previous resistance and is now support?

[Blazed]

Originally Posted by ajlaxmn

Where did you get SPY Reject? August of '22 on 4h chart?

Feb 2nd 1 hour chart.

I had 4150 as my key level being that broke above it, I selected 4175 as I thought that is a level we would need to break above in order to continue up, also had the highest O/I for Calls. I'm assuming though that it still should have been 4150 as this level was previous resistance and is now support?

Correct. 4150 resistance turned support & whole psych number. It's also tradeable range, 4175 as a key level would make the days range off balance. But 4175 would be a reject level to keep on watch.

[ajlaxmn]

Currently in 4150 calls of 4150 bounce. Previous close and key level. Out of this trade, although volume showed sellers, I took the calls off Key level/Previous close. Volume should have been the confirmation, which it did not confirm, bad trade. Live and learn.

[ajlaxmn]

Originally Posted by Blazed

Feb 2nd 1 hour chart.



Correct. 4150 resistance turned support & whole psych number. It's also tradeable range, 4175 as a key level would make the days range off balance. But 4175 would be a reject level to keep on watch.

Got it. Thanks.

[Blazed]

Originally Posted by ajlaxmn

Currently in 4150 calls of 4150 bounce. Previous close and key level. Out of this trade, although volume showed sellers, I took the calls off Key level/Previous close. Volume should have been the confirmation, which it did not confirm, bad trade. Live and learn.

I was actually showing someone in a DM how to scalp levels and saw your post here. Personally I don't care to scalp I like the longer trades, but 4150 was a major level and I saw the 5 min candle close above it - this is key.

So the trade was good for a scalp. When we're in a down trend and volume is showing sellers are strong, you can still get a scalp off of a major support level as long as as the level isn't ignored completely.

I took a call @ the touch of 4150 and scalped it for a $160 gain. Notice I was only in the position for about 2 mins but was able to get a 16% return on it - I'll take these returns all day.

[ajlaxmn]

Originally Posted by Blazed

I was actually showing someone in a DM how to scalp levels and saw your post here. Personally I don't care to scalp I like the longer trades, but 4150 was a major level and I saw the 5 min candle close above it - this is key.

So the trade was good for a scalp. When we're in a down trend and volume is showing sellers are strong, you can still get a scalp off of a major support level as long as as the level isn't ignored completely.

I took a call @ the touch of 4150 and scalped it for a $160 gain. Notice I was only in the position for about 2 mins but was able to get a 16% return on it - I'll take these returns all day.

This is good info to know, granted for the time being I don't care to scalp SPX or SPY. Still good info to know, I know why I took the trade (major level) and I know why it didn't work. We're moving the same today as yesterday.

[ajlaxmn]

Blazed is this type of market movement typical during OPEX week? Also can you elaborate on OPEX week, is it when different Options all expire at once? I vaguely remember this from the stock market thread. Sorry for having you explain it again.

Was 4150 treated just like 4130 yesterday? Hang around it and burn Theta for anyone taking 4150 puts?

[Blazed]

Originally Posted by ajlaxmn

Blazed is this type of market movement typical during OPEX week? Also can you elaborate on OPEX week, is it when different Options all expire at once? I vaguely remember this from the stock market thread. Sorry for having you explain it again.

For the most part. I have yet to see an OPEX where there wasn't a big move the last day or 2. Large OPEX's usually bring unusual price action in one way or the other. Usually it's about the amount of gamma they're carrying so it's natural to be in this order OPEX > weekly, quarterly > weekly.

We also have the daily "OPEX's" that are referred to as 0dte's, don't confuse the 2, but when traders talk about OPEX they're referring to the monthly/quarterly.

Here's the OPEX calendar - I think I linked in the other thread.

Was 4150 treated just like 4130 yesterday? Hang around it and burn Theta for anyone taking 4150 puts?

Correct. They'll range us right around the key level to kill both sides premiums. So if I miss the move off the open I usually don't bother trading the rest of the day because then you'll just end up having to scalp and scalping is for the ants.

I also like these 2 sites - they just give you an overview of calls/puts.

Put to Call ratio

Max pain options

[Blazed]

SPX: 4175 top (break above 4180 > 4195 > 4200) / 4100 bottom / 4150 key level (4140.34 gap)



Watching:

SPY 414 reject for puts
SPY bounce 410 for calls

TSLA on watch - Looking weak, still want to see that 120 area for heavy equity add. Earnings on deck.

Originally Posted by Blazed

Anyone who likes equity, I will be adding TSLA equity if it can get down to 170ish area (over the next week or so, won't get there today). If things really get bearish I'll fully add TSLA in the 120's.