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...

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...

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...

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...

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...

We were watching several stocks towards the end of day on December 7, 2021. WMT was setting up a nice hourly divergence between the MACD and the price action. As prices bottomed in the morning of December 8, 2021, the turn up in the lower timeframes occurred around 13:00.

Given the strength of the divergence, and the slope of the MACD, we looked at WMT out-of-the-money 145 calls to expire on December 10, 2021. Acquiring them at 8c, the options went nowhere fast,  and the downturn into the following morning, if you rode it out, came to fruition by the end of the expiration day with the price soaring to over $1.

There was also a reentry point on the same option around 10.30 eastern on December 9, 2021 with price at around 4c for the call. 

 Here's what the option looked like. all the action took place at the end of the day on the 10th.

The Options Hunter approach focuses on divergences between the MACD and the price action. We don’t employ...

How about that Monday turn around, did you see that coming? We went from the low on November 30 up by 2% on the SPY by 11.15am eastern. Were we wary? yes. Our daily SPY and weekly charts on SPY are still on an MACD divergence down. Sure enough when the 5 min timeframe diverged down right at 11.15am. We were ready to strike. 

Check out the SPY 450 puts that went from .01 to 2.20 in a matter of hours.

https://www.theoptionshunter.com/2021-sale-page-v2

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...