Fed Option Play 9-21-22 - volatility showed the way

Uncategorized Sep 25, 2022

We were watching the volatility index prior to the fed announcement on Wednesday. There was an upside divergence late in the day, after the fed raised rates again and the downside divergence on the majors! Here's UVXY 15 min upside divergence.

At the same time here's the SPY MACD divergence down on 10m bars shaping up nicely.

The 379 SPY puts expiring the same day led to over 40x your money in one hour or less! Here's the chart.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

 

What are Weekly Options and Why Do I use them.

Weekly options are a great way to make money, but it can also be incredibly volatile. Trading weekly should only really be considered for experienced traders who know what they're doing because there is no guarantee that any profits will even exist...

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SPY 9/1/2022 divergence forming late in the day - confirmed on 30 min next morning

Uncategorized Sep 09, 2022

SPY was setting up a divergence in lower timeframes late in the day on 9/1/2022. We waited until next day and saw the full divergence on 30 minute price bars  in first hour of trading.

A look at the options expiring that day that were out of the money, and under a dime revealed the 405 calls trading from 3 cents upward.  Holding them through the next 30 to 40 minutes of trading yielded between 17 and 22 cents gain. Not to bad for a nimble trade on the expiration day.

 

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

 

What are Weekly Options and Why Do I use them.

Weekly options are a great way to make money, but it can also be incredibly volatile. Trading weekly should only really be considered for experienced traders who know what they're doing because there is no...

Continue Reading...

The 2nd Law all Options Traders need to know

Uncategorized Aug 27, 2022
Law 2 - Plan the trade then Trade the Plan
 
Only about 10% of the traders are truly successful. The Options Hunter blueprint is a cornerstone to this success and can be distilled in 4 simple steps.
 
1. Identify the Chart Patterns
 
Scan  the major markets or ETFs for double top or double bottom price patterns. Remember to look for “M” price pattern at tops and “W” patterns at bottoms. On the daily, weekly or monthly charts. If you see exactly what you want, then tag the chart into a special group or just write it on paper to review at the end.
 
2. Check for MACD Divergence
 
If you see the price double top or double bottom, then look at the MACD to see where the second bottom is on the indicator. Is it strongly diverging from the price?
 
3. Tag for Review
 
Patterns can exist on the daily, weekly or monthly charts. If you see exactly what you want, then tag the chart into a special group or just write...
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The first law All Options Traders Need to Know

Uncategorized Aug 25, 2022
There are bold and aggressive traders, and there are older, more experienced ones. But rarely are there the old, experienced, and bold. The markets are unforgiving and the laws of the market are irrefutable. Most traders continue to challenge these laws, but very few succeed.
 
Law 1 - TRADE TO WIN
 
Trading to win is based upon the notion that trading is a journey in self-discovery and that trading as in life is about growth, courage and meeting challenges. It requires a commitment to excellence and the belief that learning is critical to success. As a trader you have to accept you will have losses and accept that losses are lessons and an expense of doing business; that failure is only feedback.
 
Traders who trade to win exhibit:
 
• Patience in waiting for the high probability trades
• Own their trading results
• Execute a repeatable trading blueprint.
 
Trading not to lose is based upon the notion that trading results must come...
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UVXY shows the way again

Uncategorized Jun 23, 2022

UVXY, the ProShares Ultra VIX Short Term Futures ETF, has been providing the Options Hunter with detailed insight into the direction of SPY. Unlike VXX, the Volatility Index linked ETF, the UVXY provides us with a 1.5x leveraged measure of the VIX volatility. When UVXY goes up, it's a sign volatility on the market is going up and likely that SPY will go down. Because it's leveraged, the UVXY tends to be more reactive.

Incorporating UVXY as an ETF we monitor for MACD divergence gives us a rapid heads up of a direction change in the SPY. Nimble traders can profit quickly from these divergences on UVXY by trading OTM options on the SPY.

Dale gave us a great example on June 6, 2022

June 6, 2022 at 11am eastern (8am pacific) the UVXY was trading down close to $13, having been at that level an hour earlier as you can see in the 3 minute and 5 minute charts of UVXY below. In both charts the MACD is showing a clearly higher bottom at 11am vs 10am (8am vs 7am pacific). The price...

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Mechanics of the VIX

Uncategorized Jun 02, 2022

The Volatility Index (VIX) is a relatively new financial indicator. The VIX was first created in 1993 using options on the S&P 500, but has since expanded to include other indexes and options. The VIX measures the market's general expectation of volatility, and due to this, it is often used as a leading indicator of market volatility. The VIX is calculated using prices for call and put options on the S&P 500, so it represents expected future volatility of a future market path - it's not a market predictor in and of itself.
 

The VIX in technical terms is the volatility of a variance swap; the square root of the par variance swap rate for a 30 day term beginning on the present day. Simply, it is the anticipated annualized fluctuation in the S & P 500 index.

The volatility index (VIX) refers to a measure of implied market volatility. It tends to move inversely with the markets – when the market is in calm waters and low volatility, the VIX will be low – and...

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IWM 10 minute charts May 3 - 4, 2022 several patterns, which to trade?

Uncategorized May 11, 2022

During the May 3 and 4 trading sessions we monitored 3 divergences in MACD, two divergences up and one down with accompanying patterns on the 10-minute charts. Here are the three patterns we identified.

When considering the first MACD divergence up on May 2, 10 minute chart at around 2pm eastern, a look at the higher timeframe like the hourly chart below, gave us an MACD divergence to the upside at the same time.

Selecting say the OTM 195 calls expiring May 4, 2022 (he closest expiration), entry at the divergence could have been had at around 10c. exit before the day was over around 20 to 24c was the best you could get from this modest move.

The divergence down, that was a fairly narrow double top on May 3 around 3pm eastern is clearly still within the influence of the hourly divergence up from May 2. Any trade here would be fighting against the longer term opposite pattern.

The third divergence was an upside one on May 4th at around 2.30pm eastern. Again looking at the higher...

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Distinct Patterns pay off on UVXY

Uncategorized Apr 18, 2022

There were a couple of patterns evident on April 13 and 14, 2022 on UVXY. There was a distinct 5 min chart upside divergence on UVXY at about 1.15pm EDT, 10.15 am PDT on April 13.

That led to modest gain on the UVXY 14 calls expiring April 14 and the gain only took about an hour. 16c to 24c.

Here's the pattern on UVXY, it's really clear.

 

On April 14, 2022 the divergence appeared at 2pm EDT, 11am PDT and was most distinctive on the 15 minute chart below.

In this instance entry could be had at around 3c on the April 13 calls expiring that day, with exits at around 23c or 35c if you rode out the pullback. That's a 1000% if you took the whole ride.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

 

What are Weekly Options and Why Do I use them.

Weekly options are a...

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Facebook bottomed out with a divergence

Uncategorized Mar 22, 2022

A classic triple bottoming pattern with an MACD divergence to the upside culminated on 3/18/22 with a huge upturn for facebook.

The first bottom with MACD divergence happened on 3/7/22 and was followed by 2 days rapid move to the upside. The nimble options trader could have made good gains on this move. The second bottom was on 3/15/22, and this was lower than the prior bottom with MACD even higher than the first bottom. On this move the gains on out of the money options were much greater.

This chart of FB shows the two bottoms and the MACD divergence on daily price action.

The first move lasted 2 days. Buying the FB weekly 200 calls that expired on 3/11/22, at or near the open on 3/8/22 would have cost around 62c.  Usually we look for options under 10c, but in this instance the 200 calls sufficed for a gain of 300%.

This 30m chart shows the FB weekly 200 calls that expired on 3/11/22

The second lower bottom on 3/15/22 that was very clear on the daily chart, and also had...

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IWM divergence 12-29-21 - one for the nimble trader

Uncategorized Jan 02, 2022

This setup on IWM happened in the first 45 minutes of trading on December 29, 2021. Notice the bottoming in prices at 10:15 eastern and the definitive MACD divergence up at that time in the Chart below. As it's on the 3 minute chart, this one played out in just one hour.

Here's what the IWM 12/29/21 224 calls did in under an hour (note time stamp on the tweet and the options chart are Pacific time. The Chart of IWM itself is eastern. The 224 calls expiring that day 12/29/21 could have been had for 8 or 9cc and reached a high of 40c.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ other indicators such as RSI, Stochastics or Bollinger bands as we keep our approach simple, straightforward, and repeatable

 

What are Weekly Options and Why Do I use them.

Weekly options are a great way to make money, but it can also be incredibly volatile. Trading weekly should only really be considered for experienced...

Continue Reading...
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