This week, traders faced a market shaped by low conviction setups, flat indexes, and pre-earnings uncertainty. Despite muted volatility, pockets of opportunity emerged through early-session divergence plays and short-term technical patterns.

Key Highlights

• Nvidia Earnings Shadowed the Market: Traders remained cautious with the broader market lacking direction ahead of Nvidia's announcement.

• Russell 2000 Advantage: Early-day divergences offered rare clarity, with RUT options showing notable strength despite broader market stagnation.

• Option Mispricing Provided Edge: Gaps in underlying prices weren’t reflected in option premiums, allowing scalpers to benefit from short bursts of price action.

Market Trends

Volatility: Volatility remained subdued. Gaps in UVXY supported brief market rallies, but lacked sustained follow-through needed for larger moves.

Performance: Leverage indexes like SOXL and TQQQ showed strength. Still, short-term setups remained the best option in the absence of clean long-term divergence patterns.

Best Trades of the Week

• QQQ 522 Calls: Moved from $0.09 to $0.56, delivering up to a 6x return during early strength in tech.

• Russell 2000 206 Puts: Opened at $0.15, peaked near $0.67 — a near 4.5x move on early divergence.

• COY Stock: Rose from $6.11 to over $9.00, backed by strong divergence and favorable dividend action — a 50% equity gain.

Trading Philosophy

• Follow Options vs. Price Divergences: When indexes gap up but options lag, buying pressure favors option buyers early in the session.

• Avoid Weak Patterns: Without clean double bottoms/tops or strong divergences, most setups remained unreliable.

• Use Leveraged ETFs for Edge: TQQQ and SOXL offered quicker exposure when options were less reactive or too far from expiration.

Looking Ahead

Traders should monitor upcoming earnings and stay alert for early-session technical patterns that diverge from price. Avoid forced trades and remain focused on clean volatility divergences that offer scalable setups.

P.S. Wait for the pattern, trust the divergence, and scale in smartly.

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Best Trades of the Week

• SPY 590 Calls: Moved from $0.09 to $0.27 (~3x return) following an afternoon divergence pattern.

• Russell 2000 204 Calls: Rose from $0.14 to $0.53 (~3x return), capitalizing on a modest afternoon move.

• Crypto Stocks: Coinbase surged nearly $20 after joining the S&P 500, attracting strong upside momentum.

Trading Philosophy

• Patience is Key: In slow markets, avoiding overtrading and waiting for volatility divergence confirmation remains critical.

• Focus on High-Probability Zones: Most successful trades occurred around key time intervals—opening 30 minutes and final hour.

• Technical Discipline: Relying on clear patterns, like matching volatility divergence with price support/resistance, kept traders in control despite choppy markets.

Looking Ahead

Heading into next week, traders should continue monitoring Russell 2000 and SPY for divergence-driven setups, while staying nimble in crypto-related equities. With larger timeframes remaining range-bound, short-term precision will remain the edge.

P.S. Market momentum may be slow, but discipline and setup clarity will still get you paid.