The tape has been boring AF over the past few days which is an excellent time to teach you guys a thing or two about price action. And let me start out by ripping off the band-aid and telling you straight forward that relying solely on indicators – ANY indicator – is HUGE mistake. One that may in fact cost you your trading account.
It has been four long months in the making but I am extremely proud to finally announce my long awaited course on trading butterflies. While Options 201 was mainly focused on ‘structure’ and how to create, price, and analyze vertical as well as diagonal spreads, this new course dives deep into the ‘criteria’ of trading butterfly spreads successfully on a weekly basis.
Financials kicked off the final earnings season of 2020 and as a card carrying manic market megalomaniac it is incumbent on me to start parsing for potential IV squeeze victims. Much to the chagrin of some of you directional cowboys that is my favorite play but I would be remiss to not point out that implied volatility is not the only way to play earnings. But let’s take things from the top by looking at the overall market:
It’s Friday morning before the open and the SPX is pinned right at the edge of the weekly expected move (EM). The ES futures pushed a little bit higher overnight but are now treating water awaiting further instructions. Which makes it a textbook example of the very phenomenon that has driven equity markets to the edges of the weekly EM since the introduction of weekly options by the CBOE in 2016. But what exactly is causing this phenomenon, or market behavior in the first place?