Well, the markets did what I expected! How about you? The hourly upside divergence on January 18 on the UVXY and matching downside divergences in every major index has led to a great move that takes the pressure off from only looking at short-term charts!

Here's the clear divergence and double bottom on UVXY hourly completing at the first hour of trading on January 18, 2023

The SPY showed a divergence in the opposite direction with the increased volatility.

Looking at Out-of-the-money puts expiring the same day January 18, 2023, the 392 Puts were as low as 4c after the first hour of trading and reached over 50c in 2 hours.

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...

If you're like us, and watching the SPY intraday, you will have seen this one on Friday 10/21/2022. The first 15 minutes of the trading day gave us this MACD divergence. At this timeframe, nimble traders took a chunk of  change on call options.

As usual we look for out of the money options, with low premiums (expiring on the same day 10/21/2022), and trading at 10c or under.

We found the SPY 374 calls, expiring 10/21/2022 with premium at 10c, and entered the position.  Within 25 minutes the price shot up to over 50c. A quick exit netted us 4 times our money as the lower timeframe MACD turned down.

If you took your eyes off the ball you'd have given back half this gain within 40 minutes of entry.

Not a bad start for a Friday. A possible rentry can be seen below on the same 15 minute chart when the MACD turns back up. The same 374 calls were trading around 6c this time. 

The calls were over 1.00 later in the day, although exiting on pullbacks would likely...

Prices dropped sharply on SPY in the first hour of trading on October 13, 2022. The MACD on the hourly chart clearly shows SPY should be higher in price. 

The hourly divergence on the 13th showed us prices should be higher.

Time to look for some calls expiring the next day . We want low premiums so we want:

• Out of the money options
• Trading at less than 10c
• Expiring as soon as possible (October 14th)

In the first hour of October 13, SPY was trading at 348. nearby out of the money options in the 348 - 368 range were over 10c. Options too far out of the money like 380 or above have insufficient time to gain headway.

We selected a middle ground and bought the SPY 370 calls expiring October 14th, for under 10c. The 15 minute chart shows the SPY 370 calls expiring October 14th trading up as high as 1.60 with an entry under 5c during the day on October 13.

The MACD on the 30 minute chart clearly shows SPY should be higher in price. We waited until Monday October 3rd in the first hour of trading and still got in at under 10c an option. Let me explain.

The 30 minute divergence on the 30th showed us prices should be higher.

Come Monday morning, we started looking for options on SPY. We want low premiums so we want:

• Out of the money options
• Trading at less than 10c
• Expiring as soon as possible (October 5th)

In the first 30 minutes of October 3, SPY was trading at 361. nearby out of the money options in the 362 - 375 range were over 10c. Options too far out of the money like 382 or above have insufficient time to gain headway.

We selected a middle ground and bought the SPY 379 calls expiring October 5th, for under 10c. The 5 minute chart shows the SPY 379 calls expiring October 5th trading up as high as 25c with an entry under 5c during the day on October 3.

Clearly between 5 and 10 times your money.

Want to learn how we do this?

...

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...

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...

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...

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...