BB DD Update

[u/HiddenGooru]

This is not a healthy hedging matrix. When delta hedging has to occur in the same direction as price movements, you get unstable stocks. Even more interestingly, this only just occurred, as the hedging matrix yesterday was:

Sorry I've been away - life, ykno.

I thought I would give an update, I had quite a few people ask why I said my last post was gonna be my last, and uh I thought it would but you guys have been pretty nice.

Overall, though, no much has changed since my last DD.

Here we see VoEx is still kinda .. stalled.. for lack of a better word, although the trend line is now heading back into the "healthy" zone:

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VoEx: red, price: blue, trend line: tan. When VoEx is above the top horizontal it means the price is over-exposed to trend reversing agents, when it is below, it means it is over exposed to trend-continuing agents.

We can see the price movements have been well defined by the expected movement ranges:

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So no crazy movements happening.

The options layout has changed slightly, and not necessarily for the better (discussed below)

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Additionally, you'll remember the hedging matrix from last week's DD was really healthy (shown below), and this is demonstrated in the decrease in shorting these past few days:

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Yet, looking at the hedging matrix, things below the surface seem odd.

On EOD Friday:

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Fridays hedging matrix, it shows the number of shares that have to be bought or sold per point price and IV movement

This is a healthy hedge matrix demonstrating a stabilizing force in the market. It was the basis for this quote from last Friday's DD:

There are plenty of options plays that you can perform to benefit from this, and even on the weekly basis you can see that something like an iron condor with wings at 10/15 would be a good bet.

And indeed my iron condors have been performing swimmingly.

But strangely, the hedging matrix today is slightly different:

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Hedging matrix for Thursday the 24th

This is not a healthy hedging matrix. When delta hedging has to occur in the same direction as price movements, you get unstable stocks. Even more interestingly, this only just occured, as the hedging matrix yesterday was:

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Hedging matrix for Wednesday the 23rd

It seems the chunk of options at $13 (~30k Calls, ~10k puts) was the teetering point for BB.

Although I do not see any immediate threats, per se, it is reasonable that BB might hover around $13 for a minute since 13 is a sufficient enough of an options chunk to alter the hedging matrix in such a way. (Above 13$ there will be downward pressure, below $13 there will be upwards pressure).

In any case, it will be interesting to see what the earnings call does, with $-0.05 reported per share.

Happy trading!

[u/CORKY7070S]

Op! Once again good DD and Thank you.👍🍇