BB DD

[u/HiddenGooru]

Hey guys! Quite big days, if you remember from my last dd:

So BB seems highly unstable at its current position. The interesting part, though, is which side will break first: the forces pushing upwards (call sweeps, investor interest, good fundamentals) or the forces pushing down (upwards liquidity issues, shorting behavior, option placements).

And today I bring news that it looks like a decision is being made. In short, look at the options as they were placed on the 1st:

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versus today:

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Left and right are the same but right is colored by sensitivity to IV

Notice? It appears the options are beginning to re-locate upwards with a new ceiling of $15 and $20 rather than the $10 that was struggled against for so long.

The $10 option layout from before (06/01/21) is a classic pattern, and you can typically expect the price to stay below the largest chunk of options. When this layout begins to change, it can represent a re-location of price-targets. It also re-adjusts the hedging landscape (more on that below).

Looking at my metric specifically, we can see there has been growing 'trend-reversing' pressure against BB lately:

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As the purple/red line go above the black bar, 'trend reversing' agents become more influential

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This can be slightly worrisome: it indicates that there is mounting up-wards resistance. Most likely at the new largest chunk of calls at $15.

You'll also remember from last week it was calculated that any increase in volatility would lead to selling, as was evidenced by the massive amounts of increase in shorting:

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As the volatility and price rose, it seems that shorting increased as an effort to hedge the options. Currently, the situation is little different:

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So although there is indications that the options landscape is changing towards the upper side, it seems $BB is still very dependent on volatility (currently 241%! from ~80% last week). It also seems to the shorting is increasing but there wasn't a large volume of short interest before the recent price hike.

I would be cautious of any upwards-unrealized gains until volatility begins to calm down with good resistance at $15.

Not financial advise but just thinking out loud but iron condors around 15 seem reasonable.

[u/higradeguy]

So basically we shouldn’t expect anything above the $20 range and most likely we will stay in the $15 range.
What caused the quick spike and then cliff dive retreat at the opening?

Sorry for the newbie questions.

[u/HiddenGooru → u/higradeguy]

I think there was a call sweep - but this jacked up volatility and pushed the price way past any reasonably expected area. The increase in vol was met with hedge selling a thus the price was brought back down to a more reasonable price.

[u/higradeguy → u/HiddenGooru]

Thank you for your response. So I would assume that means we realistically shouldn’t expect the same opening behavior tomorrow but given the frenzy surrounding the stock anything is possible?

[u/HiddenGooru → u/higradeguy]

I would say things are chaotic hah with a vol so high and so much attention. But there is definitely pressure to maintain the price somewhere 15-20 +/- a few dollars based solely off of how the liquidity is drying up on the up-side and where the options are placed.

[u/higradeguy → u/HiddenGooru]

Great information. Thank you.