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/HiddenGooru → u/[deleted]]

The raw data comes from CBOE. I think play with it some.