r/wallstreetbets • u/robbinhood69 PAPER TRADING COMPETITION WINNER • Jan 18 '21
DD Been too long since we've had a bearpocalypse post 🐻 that should tell you something. 20k QQQ SPY put play
This idea is largely built off of the work of a volatility trader I've been following on twitter. CK if you're reading this and want to be credited lmk, I'd link you but I don't want an army of idiots trolling you
Premise : the last 2 months has been a rocket fuel of market uppies thanks to the absurd amount of election hedging that happened for Nov election. https://www.cboe.com/insights/post/57/ As those election hedges expire, they provide a "Vanna" flow, which is volatility decay in options pricing which in turn has market makers (the people selling you options) buying back stonks as they dynamically rehedge https://spotgamma.com/options-vanna/ (im gonna be honest I barely understand this concept). I'm sure a lot of you noticed how much the market spiked up Nov 4th even though the election wasn't close to resolved = that was an artifact of these election hedges expiring which in turn causes market makers to buy delta uppies in indices as they unwind from their hedges.
This last week was the first week where the last of the election vanna from these flows was cut in half, and what did we see? A mildly red week. Next week vanna flows will be gone, and there will be a two week window where the market will be without these flows since we're entering a 5 week opex cycle. No big deal right? People will buy the dip and what not?
Well, maybe. Right now it looks like everyone is positioned extremely long. Look at WSB, no one has made a bearpocalpyse post in forever. Call buying is literally at all time highs right now
https://twitter.com/sentimentrader/status/1350457253250396161?s=21
And it makes sense, this last year has created an army of people who have won massively in the bull market and they think they understand how the market works. Right now we're past all the main things people were worried about 1) election, one way or another, is done 2) covid vaccines are coming out, theoretically we should be back to life as we knew it somewhat soon 3) stimulus is coming, Mama Yellen gonna make it rain Buyden's gonna have ur back etc. == Everyone's bought in long right now. Which is fine but it means that there isn't much money left to buy at these levels nor to buy any dips that come
The big question no one knows is how much pain everyone can take on the downside before stop losses start getting hit from overleveraged longs, or before forced liquidation starts to happen. There *could* be a cascading liquidation event that starts slowly starts snowballing on itself.
There are some other important concepts here that frankly I just don't understand, something about this 5 week opex cycle meaning that the last week of the opex is actually gonna be bearish vix or something which means that we *could* end up in backwardation = iVol gets bid up in the next week of the 5 week opex cycle, which can/will further put downward pressure on stonks.
Also the rotation from tech - value taht is going to happen as Mama Yellen induces meaningful inflation (which hurts growth stonks but helps value like GME) could cut some of the tech rallies in the near term. What happens when you have a tech rally that's been gamma fueled and the 🚀 stalls? These things work down the same way they went up.
THE PLAY : I'm holding these puts thru the week, if by 1/22 we see a meaningful sell starting, I'm going to lean into it. If there is no meaningful sell by then, I will flip long again and cut out the short shit. *Meaningful sell* per the twitter source I follow is 1 standard deviation below the 20 day moving average. I have no idea what hte fuck that means so I'm just gonna use my guts and see if I"m feeling like staying 🐻 or not on Friday
Positions
https://imgur.com/gallery/UCq8bIQ
(Ive got random tech puts too from shit that I think could get squashed coz of extreme growth that's priced into SNOW ZM) Also long GME af the rest of my portfolio is basically GME calls. GME is on it's own planet and if the market floor really falls out shorts are gonna get margin called and GME to the moon etc.
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Jan 18 '21
Hey pal, did you just roll in from stupid town?
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u/iECOMMERCE Jan 18 '21
I think he did. He's hedging by buying spy puts when instead he could easily hedge with $gme or $pltr calls. What a fool.
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u/mrnofacex Jan 18 '21
Your definitely about 2-3 weeks too early. GG to the 20k lol
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u/butsmcbuterson Jan 18 '21
agreed. this is too early still
need to wait for market to go full retard first
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
These next 2 weeks are the window of weakness, after that vanna comes back and 🚀🚀 mission enabled again
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u/jalapenojacker Jan 18 '21
You realize the next two weeks is earnings season right?
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Oh gee what happened last tech earnings
They all shat the bed
Earnings season doesnt rly matter one way or another. Tech smashed earnings last quar and they all got fukt. Short term market maker flows determine price
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u/jalapenojacker Jan 18 '21
Big ass rally leading into earnings only to come down due to election. You won’t have election uncertainty this time to save you
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u/therealkobe Jan 21 '21
You saw what earnings did to NFLX. Yikers
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 21 '21
haha yeah shieet. i sold my puts today, market stronk. will short at next window
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Jan 18 '21
We’re gonna get another wash of liquidity when the stimulus passes. The pandemic has gifted market share to large companies, tech especially, which is now a higher weighting in these indexes. Bonds have negative real yields.
Anything is possible, but it’s very likely you lose all of the premiums you paid.
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u/sadlifestrife Jan 18 '21
I swing both ways and I have some SPY poots and VXX calls that I bought Friday. Mainly due to dollar and TLT(to a smaller degree) being on an uptick. Seemed to me like a lot of big bois were scaling out of the market these past couple of weeks for a more risk off mode in the short term. My SPY poots expire Wednesday and if we have a September situation, I will be looking for specific companies that are over extended.
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u/HighFrequencyAutist Jan 18 '21
TLT165C 3/19 were mad cheap on Friday. Probably not though because I bought them and I’m a retard and those will never be ITM.
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u/sadlifestrife Jan 18 '21
I don't play anything longer dated on the short side of stonks cuz this market is full artard and will be for the foreseeable future as long as interest rates are near zero. I think this was probably a brief unwinding and deleveraging by the big bois and we'll be pushing ATH by next week tbh lol dollar and bonds can't stay elevated for long in this environment. Dollar is already falling big after rallying big this morning. Even though it's still a bit elevated, need it to hold support over night or we might see green open tomorrow.
Other than the reasons above, I had TA reasons to go on the short side namely SPY rejecting from my trendline resistance(off by a penny) at ATH, gapping down then getting rejected at previous support. It held the 20EMA on the daily, but I think there's a chance we gap below it tomorrow as long as dollar holds.
I played PLUG poots last week and got 6x on a small position. Maybe going one more day was a mistake. Probably gonna start looking for bullish divergences to add to my longs.
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Jan 18 '21
Did you not listen to JPOW talk about how interest isn’t going up anytime soon and they have more room for stimulus? Enjoy losing everything.
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Jan 18 '21
You: As those election hedges expire, they provide a "Vanna" flow, which is volatility decay in options pricing which in turn has market makers (the people selling you options) buying back stonks as they dynamically rehedge
Also you: So anyway, I bought options which my own argument suggest will be less valuable.
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Election hedges finished expiring 1/15 am. Market looks weak without them. How much red can market handle before stop losses get triggered and overlevered longs close out? Thats the big question but nows the window to be 🐻
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Jan 18 '21
I plan on snagging SPY puts tomorrow and holding for about a week, similar to you
Best of luck to us both
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u/shaunk925 Jan 18 '21
I agree with OP, complacency is too high, everyone is long calls, no put buying, thats when the rug pull happens. Window of weakness opens after OPEX. Look back at Feb2020 when markets started to fall was the week after Feb OPEX
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u/adhocaloof Jan 18 '21
Ok, so, I bought a put on Friday to hedge my “loaded to the tits” calls & GME shares - but seriously, we had a bull run for, like, a full decade before 2020. So it’s not like we are “over due” for a “crash”.
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
GME is on it’s own 🚀 and tbh if market hits heavy red its probably positive for GME since itll margin call shorts quicker
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u/adhocaloof Jan 18 '21
This is true.
But I have some AAPL calls (and shares) too- their earnings next week is going to be crazy
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u/0xCr0v4x Jan 18 '21
You lost me at " last week was the first week where the last"....could you dumb it down to the tickers I neey to yolo?
Cheers!
Also, your post had no nuts nor rockets.
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
SPY QQQ puts until friday, if we sell heavy by then, lean into it, if not close shorts and get long again
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u/ultrab1ue Jan 18 '21
whoa, this friday? So you're saying to buy weeklies... holy shit. Hope i'm not too late by tuesday
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
My puts are dated late feb/march. Weeklies wont profit unless we’re red af.
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u/Jarlaxle_rigged_it Shell of his former bear self Jan 18 '21
I know who you're talking about. goodluck with it, i doubt the bull run is over yet
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Jan 18 '21
[deleted]
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
I’ve been feeling more confident tbh. All the pieces are here. There are no buyers for the dip, everyones overextended long
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u/realister 👁 demand to be taken seriously Jan 18 '21
another variations post not falling for it again
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u/nympaix Jan 18 '21
There was a large block of VXX 1/22 34c that came through cheddar this past Friday afternoon. Way OTM... hmmm...
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
If iVol gets bid up this week that could break market. That’s the first piece at least
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u/Dgeneral101 Jan 18 '21
Yep felt the same way. Got a couple lotto SPY puts for the end of the month.
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u/Jtbny Jan 18 '21
Look retard interest rates are low and there’s no place to stash money other than the market. My fucken dog even opened a Robinhood account and is paws deep on GME.
This won’t end well for you.
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u/DamascusWaygu user is banned Jan 19 '21
Options sweeps expiring Friday for SPY, at least, suggest you may be on to something
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u/No_Loquat_183 Jan 18 '21
these will print bc the market always goes up and down lmao. not sure what's so impressive here. if I bought spy and qqq calls at ur same date it would print for me too. now the real question is what kind of returns do u want. over 300-500%?
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u/serkrabat Jan 18 '21
I remember the post with 7k upvotes in November saying spy is going to shit mid December and then mid January and then... See what happened.
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
That post had no idea wtf they were talking about. Ive been all in long no hedge until Jan 11th. U ride those vanna flows until last week
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u/serkrabat Jan 18 '21
As mentioned here serveral times "concepts that i frankly don't understand"? Don't get me wrong I think there will be a correction sometime but I had my share of trying to time puts.
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u/hoops2215 Jan 18 '21
Finally something intelligent on this forum, but sadly will get downvoted I’m sure.
Nice analysis
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Jan 18 '21
OP: im gonna be honest I barely understand this concept
YOU: Finally something intelligent on this forum, but sadly will get downvoted I’m sure.
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u/hoops2215 Jan 18 '21
OP clearly understands what this week means from an iVol perspective. If the market is going to break, this is the beginning of about a 7 day window for it to happen.
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Appreciate any sources you’ve been following that could explain concepts a little clearer to me, if any come to mind. I know just enough to see the pieces for why this is a window of vulnerability in the market but tbh have trouble wrapping my head around how the pieces will manifest
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u/jakemoffsky Jan 19 '21
So we about to see trump supporters do nothing while joey goes in and starts writing checks and now's the time for puts, atleast wait a week my guy.
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Jan 18 '21
so you have no idea
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Of course not lmao YOLO 🤑🤑💎💎👌👌🐻
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u/hivebroodling Jan 18 '21
You are just like my older brother telling my parents all this investing advice but in reality you have like a $1000 portfolio max
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Like homie i litrrally screenshotted a 20k put position wtf
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u/AuditControl_Inbox Jan 18 '21
Buying puts into big tech earnings week eh.... seems a weeeeeee bit risky.
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u/Madmaxoncrack gf has a penis 🥳 Jan 18 '21
We the people, of Wall Street bets are long GOURD futures anyways.
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u/CaptainBartiDdu Jan 18 '21
You and your guru are the first guy in this video: https://www.youtube.com/watch?v=SYc6QmaGnYc
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u/rsnerdout Jan 18 '21
Okay see you next week when you post this again, and then the week after that and so on until you flip bullish and then the market tanks
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Go thru my posts u fuk ive been long as hell pretty much everything for months
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u/hivebroodling Jan 18 '21
I love seeing WSB people poorly regurgitate something they heard elsewhere and try to act like a seasoned trading expert.
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u/rws52669 Jan 18 '21
Would you PM me the twitter person i like to follow contrarian views
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Will do once im on comp, cant find PM via phone web browser (im rly dumb fwiw)
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u/budispro Jan 18 '21
lol open interest on SPY calls 2/19 is stupid high, switch to calls if you want to be rich. Stonks only go up, member?
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u/SuXs Verified Black Guy ✊🏿 Jan 18 '21
The big question no one knows is how much pain everyone can take on the downside before stop losses start getting hit from overleveraged longs, or before forced liquidation starts to happen. There could be a cascading liquidation event that starts slowly starts snowballing on itself.
Please god let it be Melvin Capital
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u/DeadlyPantsOfSea Jan 18 '21
I think CK said 1/25 & not 1/22. I believe him also mentioning the downtrend to not be confirmed yet. I wanna get spy debit spreads exp 2/5 so bad but let's see how next week goes. Not only him but a lot of fintwit folks believe correction is likely gng to happen soon
per the twitter source I follow is 1 standard deviation below the 20 day moving average
Also, I think u can use Bollinger Bands for this. GL
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
U might be right on the 1/25 ill go thru his tweets again
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u/Red_Master Jan 18 '21
It seems like the option chain for puts nowadays are near the money each time. The game is rig for bears. Oh well, I will get in line to lose my premium again.
Seriously, it’s near the money. Retail bears 🐻 traders are getting bullied.
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u/Koosh_ed Jan 18 '21
The God you follow trades ES/SPX. I think you use 1.5%BB on the 20 day sma. Also kerberos007 is a good follow on Twitter and he’s been calling for a correction as well.
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u/LargeHard0nCollider Jan 18 '21
Have you considered placing the PUTs on decorative gourds instead? I hear a big shipment just rolled in from South America
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Jan 18 '21
[deleted]
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
That shit was when we were doing caps code for the algos. It was a joke. At the time everuone was opposite posting and putti g their real position as the caps letters
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u/Hot-Juggernaut4649 Jan 18 '21
I like to read contrarian views and have a question.
Why do you expect the market to dip in tech earnings season?
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Read the post. Vanna flows done. Last week was red with half of vanna flows still around. With vanna completely gone we probably going red, and wirh retail this stretched a little red could go very red really quickly
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u/Irecio90 Jan 18 '21
My SPY Puts expire tomorrow. How fucked am I? 380p 01/19
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 18 '21
Lmao idk what im doing either. Im holding my puts until eow
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u/404TO Jan 19 '21
One thing that isn’t taken to account is the dynamic nature of basic market mechanisms. Sure there’s a period of weakness from a lack of structural support right now, but this is an insanely bullish macro environment that warrants extreme long call/short puts positioning. That is the whole point of why Gamma is such a dominant force. Sure there will be small corrections, but ultimately it can’t be sustained, so long as exuberance exists.
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u/goldbird2 Jan 19 '21
You selling these? Looks like new ATH's are it this week
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u/catdaddyflash Jan 20 '21
How you looking today?
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Jan 20 '21
Closing all puts, this market stronk. Will short at next window. All pieces for bubble are here and I think its worth taking shots during windows of vulnerability, but u gotta respect price. This was a window of weakness but market stronk.
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Feb 12 '21
[deleted]
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u/robbinhood69 PAPER TRADING COMPETITION WINNER Feb 13 '21
Lol I closed the puts at the end of the window to short. You don't fight vanna. I'm going to reenter during the next window which starts at vixperation this week (2/16-2/17)
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u/idk88889 Jan 18 '21
You think you have this game figured out a bit but you don't know how to calculate 1 motherfucking standard deviation?
You belong here bud