Option Strike Price Estimation using Option max pain strategy, Gave us a great IV crusher on this Earnings. Will wait until TV releases options data. This is a crusher Strategy for selling Options Premium on ANY ticker.
let me know what you come up with. This one has potential. ....I've just been liking the puts on any big pop...for some time now...now its got traders/shorts/hedge funds attention...so anythings possible...but the lockup will be real overhead..still not sure how many know about it....even though cnbc mentioned it yesterday...so many new traders in the market that have only known a bull run...they dont know what happened to the cool hype runner ipos at end the last bubble...I came back into the market to ride TSLA down but this popped up as a better opportunity for now...my other targets, a few bio's...good luck out there.
My trading strategy is simple. I don't consider trading this size Gaps. When I have a sizable gap, then look for 30 Mins Optimized Squeeze, and then take the trade. Flip it soon the momo loses. Then I wait for Daily Optimized squeeze, Use the profit (if) from the 30 mins squeeze as risk and trade the Daily Breakout (else) no Daily Squeeze trade. Simple and effective way to manage Risk, IMO.
thanks...interesting...sounds good...I like mo pops and sqeezes as well. I like to scan for up big ytd or year...with big negative earnings etc. (irrational runs) then dig into those looking for weakness...love hype runner ipo's...anything that is overly irrationally exhuberant...to ride them back to reality on mo pops...like to have something on my side other than just pure technicals or fundamentals...like gpros overhanging lockup expiration.. Also like to scan for prices far away from the 200 ma...for reversion to the mean...etc etc If I find those...I then look to trade it similar to the way you describe. I'de like to hear more about your maximum option pain thinking
For example when GLD was at 124. The option pain analysis predicted the gold will have to be below 118 for max pain. For Feb expiry. So I simply buy a put and added a call credit to take care of premium erosion. That decision was made based on the stretch wave reaction... The mono oscillator. For the LUV trade, sold the puts because of earnings and bought a immediate call flip before earning.
Currently in the put credit on USO. And a put buy on FXE from two days ago.
The concept is, At what strike price, the option buyers will face max loss? At what strike price, they start defending the options. There are the two criteria I look for. Profession Defend the options by adjusting the winning side, they do not defend adjusting the losing side. When I say professional, The hedge fund traders. If you refer to the same BABA chart before the massive run, I posted the Pain Analysis and Mentioned the $92 is the breakpoint where the Defending will take place. I treat Max pain as a zone. Where the OI is small between two extreme strike prices.