Categories
Commentary

Daily Brief For March 28, 2023

Physik Invest’s Daily Brief is read free by thousands of subscribers. Join this community to learn about the fundamental and technical drivers of markets.

Graphic updated 7:00 AM ET. Sentiment Neutral if expected /MES open is inside of the prior day’s range. /MES levels are derived from the profile graphic at the bottom of this letter. Click here for the latest levels. SqueezeMetrics Dark Pool Index (DIX) and Gamma (GEX) with the latter calculated based on where the prior day’s reading falls with respect to the MAX and MIN of all occurrences available. A higher DIX is bullish. The lower the GEX, the more (expected) volatility. Click to learn the implications of volatility, direction, and moneyness. Breadth reflects a reading of the prior day’s NYSE Advance/Decline indicator. The CBOE VIX Volatility Index (INDEX: VVIX) reflects the attractiveness of owning volatility. UMBS prices via MNDClick here for the economic calendar.

Administrative

Time for something inspiring! Separate from his work at Physik Invest, founder Renato Leonard Capelj is a journalist interviewing global leaders in business, government, and finance. In his desire to learn and apply the methods of those others who are far more experienced, Capelj has a long list of interviews you may find helpful in strengthening your understanding of markets. Check out some recent ones!

March 10, 2023: Portfolio Manager Prefers Option, Bond Overlays To Hedge Big Uncertainty Facing Markets

Capelj spoke with Simplify Asset Management’s Michael Green about cutting investors’ portfolio volatility while amplifying profit potential.

In response to uncertainty, Green says investors can park cash in short-term near-risk-free bonds yielding 5% or more, as well as allocate some capital to volatility “to introduce a degree of convexity,” risking only the premium paid. Alternatively, investors can take a more optimistic long view and position in innovations like artificial intelligence or next-generation energy production.

January 8, 2023: Two Major Risks Investors Should Watch Out For In 2023

Capelj spoke with The Ambrus Group’s Kris Sidial about his market perspectives.

Naive measures like the VVIX, which is the volatility of the VIX or the volatility of the S&P 500’s volatility, are printing at levels last seen in 2017, Sidial explains, noting this would suggest “we can get cheap exposure to convexity while a lot of people are worried.”

“Even if inflation continues, the rate at which it rises won’t be the same. Due to this, CTA exposures likely will not perform as well as they did in 2022, and that’s why you may see more opportunities in the volatility space.”

June 28, 2022: Former Bridgewater Associate Andy Constan Talks Recession Odds, Capturing A Macro Edge

Capelj spoke with Damped Spring Advisors’ Andy Constan about what investors should focus on and how he creates trades that lose him less money.

Constan’s trades are constructed around two- to four-month time horizons and are structured long and short using defined-risk options trades like debit or credit spreads, depending on whether volatility is cheap or expensive.

I want deltas and leverage. My macro indicators give me an edge on price and in the worst case, the loss is limited to 10%, if everything has to go against me all at once. I can be 100% invested and only risk 10%.”

May 16, 2022: 42 Macro’s Darius Dale On His Wall Street Story, The Markets: ‘This Is Not The Financial Crisis’

Capelj spoke with 42 Macro’s Darius Dale about his Wall Street story and perspectives on life and markets.

“We’re tracking at an above-potential level of output in terms of the growth rate of output. We’re also slowing and the pace of that deceleration is likely to pick up steam in the coming quarters.”

By 2023, that process is likely to “catalyze pressure on asset markets through the lens of corporate earnings and valuations you assign to a lower level of growth.”

July 22, 2021: ShadowTrader’s Peter Reznicek On His Early Days, Tips For Success And Evolution

Capelj spoke with ShadowTrader’s Peter Reznicek about his start, perspectives, success tips, and visions for the future.

Reznicek recalled two turning points in his trading career.

The first was learning from expert floor traders involved with the thinkorswim team.

“That was really the genesis of where I started to learn the broken-wing butterflyratio spread and things like that,” he shared.

Floor traders, according to Reznicek, had low capital requirements. As a result, they could put on strategies like the 1×2 ratio — a debit spread with an extra short option — for a low cost.

(See parts 12, and 3 of ShadowTrader’s how-to series on ratio spreads.)

“On the floor, it is either go big or go home,” he chuckled, remarking that ratio spreads were the way of the casino. “You either get rich or they take your house. So, why would you put on any other spread?”

The next big turning point was Jim Dalton, who’s been a member of the Chicago Board of Trade, as well as a member of the Chicago Board Options Exchange (CBOE) and senior executive vice president of the CBOE during its formative years.

“I’m still in touch with him on a regular basis and I consider him a friend,” Reznicek said in a discussion on Dalton’s works like Mind Over Markets and Markets in Profile, as well as his use of WindoTrader Market Profile software. “I went to Chicago twice to see him teach live … and I came home from those seminars with five, six, 10 pages of notes. The nuances of profile continue to mold me.”

July 26, 2021: Kai Volatility’s Cem Karsan Unpacks Implications Of Fed Taper, Shift To Fiscal Policy And More

Capelj spoke with Kai Volatility Advisors’ Cem Karsan about the implications of record valuations and the growth of derivatives markets on policy, the economy, and financial markets.

“It’s not a coincidence that the mid-February to mid-March 2020 downturn literally started the day after February expiration and ended the day of March quarterly expiration. These derivatives are incredibly embedded in how the tail reacts and there’s not enough liquidity, given the leverage, if the Fed were to taper.”

July 13, 2021: Ambrus Group CIO On Taking Advantage Of Volatility Dislocations

Capelj spoke with The Ambrus Group’s Kris Sidial to understand how to capitalize on volatility dislocations.

Unlike standard tail-risk funds which systematically buy equity puts, Ambrus’ approach is bespoke, cutting down on negative dynamics like decay with respect to time.

Given dislocations across single stock skew, term structure, and volatility risk premium, Ambrus will position itself in options with less time to maturity, buying protection up to six weeks out.

“The market will underestimate the distribution,” Sidial said in a conversation on Ambrus’ internal models that spot positional imbalances to determine who is off-sides and in what single asset. “We’re buying things that have happened before and we’re looking for it to carry a heavier beta when the sell-off happens.”

So, by analyzing flow, as well as using internal models to assess the probabilities of deleveraging in a risk-off event, Ambrus is able to venture into individual stocks where there may be excess fragility; “I know if stock XYZ goes down five percent, it’s going to go down 10% because this fund needs to deleverage.”

To aid the cost to carry, Ambrus utilizes defined-risk, short-volatility, absolute return strategies.

“I’m basically giving you a free put on the market – with a ton of convexity – with something that offers a payout that’s just more than a regular put,” Sidial summarized. “If the market doesn’t do anything, and we do an amazing job, we’re flat and you made money on all your long-only equity exposure.”

“You had a free hedge the entire time.”

February 1, 2021: Volatility Arbitrage Trader Talks GameStop, Market Microstructure, Regulation

Capelj spoke with The Ambrus Group’s Kris Sidial about the meme stock debacle of 2021.

“You have distressed debt hedge funds that focus on shorting these types of companies. Melvin Capital is the one that is singled out due to the media, but they aren’t the only ones.”

Market participants added to the crash-up dynamics. Retail investors aggressively bought stock and short-term call options, while institutional investors further took advantage of the momentum and dislocations.

“You have this dynamic in the derivatives market where there is a gamma squeeze when people are buying way far out-of-the-money calls, and dealers reflexively have to hedge off their risk,” Sidial said.

“It causes a cascading reaction, moving the stock price up because dealers are short calls and they have to buy stock when the delta moves a specific way.”

The participation in the stock on the institutional side has not received much attention, he said. 

“We’ve noticed that some of the flow is more institutional,” he said in reference to activity on the level two and three order books, which are electronic lists of buy and sell orders for a particular security.

“You have certain prop guys and other hedge funds that understand what’s going on, and they’re trying to take advantage of it, as well.”

This institutional activity disrupted traditional correlations and caused shares of distressed debt assets like GameStop, BlackBerry Ltd, and AMC Entertainment Holdings Inc to trade in-line with each other.

“This was not some WallStreetBet user, … if you look at how some of these things were moving premarket, you would see GME drop like 2%, BB’s best bid would drop and AMC’s best bid would drop. That’s an algo.”

The takeaway: although the WallStreetBets crowd is getting most of the blame, institutions are also at fault for the volatility.

Technical

As of 7:00 AM ET, Tuesday’s regular session (9:30 AM – 4:00 PM ET) in the S&P 500 will likely open in the lower part of a balanced overnight inventory, inside the prior day’s range, suggesting a limited potential for immediate directional opportunity.

The S&P 500 pivot for today is $4,003.25. 

Key levels to the upside include $4,026.75, $4,038.75, and $4,049.75.

Key levels to the downside include $3,980.75, $3,955.00, and $3,937.00.

Disclaimer: Click here to load the updated key levels via the web-based TradingView platform. New links are produced daily. Quoted levels likely hold, barring an exogenous development.

Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.

Definitions

Overnight Rally Highs (Lows): Typically, there is a low historical probability associated with overnight rally-highs (lows) ending the upside (downside) discovery process.

Volume Areas: Markets will build on areas of high-volume (HVNodes). Should the market trend for some time, this will be identified by a low-volume area (LVNodes). The LVNodes denote directional conviction and ought to offer support on any test.

If participants auction and find acceptance in an area of a prior LVNode, then future discovery ought to be volatile and quick as participants look to the nearest HVNodes for more favorable entry or exit.

POCs: Areas where two-sided trade was most prevalent in a prior day session. Participants will respond to future value tests as they offer favorable entry and exit.


Definitions

Volume Areas: Markets will build on areas of high-volume (HVNodes). Should the market trend for some time, this will be identified by a low-volume area (LVNodes). The LVNodes denote directional conviction and ought to offer support on any test.

If participants auction and find acceptance in an area of a prior LVNode, then future discovery ought to be volatile and quick as participants look to the nearest HVNodes for more favorable entry or exit.


About

The author, Renato Leonard Capelj, spends the bulk of his time at Physik Invest, an entity through which he invests and publishes free daily analyses to thousands of subscribers. The analyses offer him and his subscribers a way to stay on the right side of the market. 

Separately, Capelj is an accredited journalist with past works including interviews with investor Kevin O’Leary, ARK Invest’s Catherine Wood, FTX’s Sam Bankman-Fried, North Dakota Governor Doug Burgum, Lithuania’s Minister of Economy and Innovation Aušrinė Armonaitė, former Cisco chairman and CEO John Chambers, and persons at the Clinton Global Initiative.

Connect

Direct queries to renato@physikinvest.com. Find Physik Invest on TwitterLinkedInFacebook, and Instagram. Find Capelj on TwitterLinkedIn, and Instagram. Only follow the verified profiles.

Calendar

You may view this letter’s content calendar at this link.

Disclaimer

Do not construe this newsletter as advice. All content is for informational purposes. Capelj and Physik Invest manage their own capital and will not solicit others for it.

Categories
Methodology

Successful Traders’ Tips To Beat The Markets

Separate from his work at Physik Invest, founder Renato Leonard Capelj is an accredited journalist interviewing prestigious global leaders in business, government, and finance.

In his desire to learn and apply the methods of those others who are far more experienced, Capelj has a long list of interviews you may find helpful in strengthening your understanding of markets.

March 10, 2023: Portfolio Manager Prefers Option, Bond Overlays To Hedge Big Uncertainty Facing Markets

Capelj spoke with Simplify Asset Management’s Michael Green about cutting investors’ portfolio volatility while amplifying profit potential.

In response to uncertainty, Green says investors can park cash in short-term near-risk-free bonds yielding 5% or more, as well as allocate some capital to volatility “to introduce a degree of convexity,” risking only the premium paid. Alternatively, investors can take a more optimistic long view and position in innovations like artificial intelligence or next-generation energy production.

Michael Green of Simplify Asset Management

January 8, 2023: Two Major Risks Investors Should Watch Out For In 2023

Capelj spoke with The Ambrus Group’s Kris Sidial about his market perspectives.

Naive measures like the VVIX, which is the volatility of the VIX or the volatility of the S&P 500’s volatility, are printing at levels last seen in 2017, Sidial explains, noting this would suggest “we can get cheap exposure to convexity while a lot of people are worried.”

“Even if inflation continues, the rate at which it rises won’t be the same. Due to this, CTA exposures likely will not perform as well as they did in 2022, and that’s why you may see more opportunities in the volatility space.”

Kris Sidial of The Ambrus Group

June 28, 2022: Former Bridgewater Associate Andy Constan Talks Recession Odds, Capturing A Macro Edge

Capelj spoke with Damped Spring Advisors’ Andy Constan about what investors should focus on and how he creates trades that lose him less money.

Constan’s trades are constructed around two- to four-month time horizons and are structured long and short using defined-risk options trades like debit or credit spreads, depending on whether volatility is cheap or expensive.

I want deltas and leverage. My macro indicators give me an edge on price and in the worst case, the loss is limited to 10%, if everything has to go against me all at once. I can be 100% invested and only risk 10%.”

Andy Constan of Damped Spring Advisors

May 16, 2022: 42 Macro’s Darius Dale On His Wall Street Story, The Markets: ‘This Is Not The Financial Crisis’

Capelj spoke with 42 Macro’s Darius Dale about his Wall Street story and perspectives on life and markets.

“We’re tracking at an above-potential level of output in terms of the growth rate of output. We’re also slowing and the pace of that deceleration is likely to pick up steam in the coming quarters.”

By 2023, that process is likely to “catalyze pressure on asset markets through the lens of corporate earnings and valuations you assign to a lower level of growth.”

Darius Dale of 42 Macro

July 22, 2021: ShadowTrader’s Peter Reznicek On His Early Days, Tips For Success And Evolution

Capelj spoke with ShadowTrader’s Peter Reznicek about his start, perspectives, success tips, and visions for the future.

Reznicek recalled two turning points in his trading career.

The first was learning from expert floor traders involved with the thinkorswim team.

“That was really the genesis of where I started to learn the broken-wing butterflyratio spread and things like that,” he shared.

Floor traders, according to Reznicek, had low capital requirements. As a result, they could put on strategies like the 1×2 ratio — a debit spread with an extra short option — for a low cost.

(See parts 12, and 3 of ShadowTrader’s how-to series on ratio spreads.)

“On the floor, it is either go big or go home,” he chuckled, remarking that ratio spreads were the way of the casino. “You either get rich or they take your house. So, why would you put on any other spread?”

The next big turning point was Jim Dalton, who’s been a member of the Chicago Board of Trade, as well as a member of the Chicago Board Options Exchange (CBOE) and senior executive vice president of the CBOE during its formative years.

“I’m still in touch with him on a regular basis and I consider him a friend,” Reznicek said in a discussion on Dalton’s works like Mind Over Markets and Markets in Profile, as well as his use of WindoTrader Market Profile software. “I went to Chicago twice to see him teach live … and I came home from those seminars with five, six, 10 pages of notes. The nuances of profile continue to mold me.”

Peter Reznicek of ShadowTrader

July 26, 2021: Kai Volatility’s Cem Karsan Unpacks Implications Of Fed Taper, Shift To Fiscal Policy And More

Capelj spoke with Kai Volatility Advisors’ Cem Karsan about the implications of record valuations and the growth of derivatives markets on policy, the economy, and financial markets.

“It’s not a coincidence that the mid-February to mid-March 2020 downturn literally started the day after February expiration and ended the day of March quarterly expiration. These derivatives are incredibly embedded in how the tail reacts and there’s not enough liquidity, given the leverage, if the Fed were to taper.”

Cem Karsan of Kai Volatility Advisors

July 13, 2021: Ambrus Group CIO On Taking Advantage Of Volatility Dislocations

Capelj spoke with The Ambrus Group’s Kris Sidial to understand how to capitalize on volatility dislocations.

Unlike standard tail-risk funds which systematically buy equity puts, Ambrus’ approach is bespoke, cutting down on negative dynamics like decay with respect to time.

Given dislocations across single stock skew, term structure, and volatility risk premium, Ambrus will position itself in options with less time to maturity, buying protection up to six weeks out.

“The market will underestimate the distribution,” Sidial said in a conversation on Ambrus’ internal models that spot positional imbalances to determine who is off-sides and in what single asset. “We’re buying things that have happened before and we’re looking for it to carry a heavier beta when the sell-off happens.”

So, by analyzing flow, as well as using internal models to assess the probabilities of deleveraging in a risk-off event, Ambrus is able to venture into individual stocks where there may be excess fragility; “I know if stock XYZ goes down five percent, it’s going to go down 10% because this fund needs to deleverage.”

To aid the cost to carry, Ambrus utilizes defined-risk, short-volatility, absolute return strategies.

“I’m basically giving you a free put on the market – with a ton of convexity – with something that offers a payout that’s just more than a regular put,” Sidial summarized. “If the market doesn’t do anything, and we do an amazing job, we’re flat and you made money on all your long-only equity exposure.”

“You had a free hedge the entire time.”

Kris Sidial of The Ambrus Group

February 1, 2021: Volatility Arbitrage Trader Talks GameStop, Market Microstructure, Regulation

Capelj spoke with The Ambrus Group’s Kris Sidial about the meme stock debacle of 2021.

“You have distressed debt hedge funds that focus on shorting these types of companies. Melvin Capital is the one that is singled out due to the media, but they aren’t the only ones.”

Market participants added to the crash-up dynamics. Retail investors aggressively bought stock and short-term call options, while institutional investors further took advantage of the momentum and dislocations.

“You have this dynamic in the derivatives market where there is a gamma squeeze when people are buying way far out-of-the-money calls, and dealers reflexively have to hedge off their risk,” Sidial said.

“It causes a cascading reaction, moving the stock price up because dealers are short calls and they have to buy stock when the delta moves a specific way.”

The participation in the stock on the institutional side has not received much attention, he said. 

“We’ve noticed that some of the flow is more institutional,” he said in reference to activity on the level two and three order books, which are electronic lists of buy and sell orders for a particular security.

“You have certain prop guys and other hedge funds that understand what’s going on, and they’re trying to take advantage of it, as well.”

This institutional activity disrupted traditional correlations and caused shares of distressed debt assets like GameStop, BlackBerry Ltd, and AMC Entertainment Holdings Inc to trade in-line with each other.

“This was not some WallStreetBet user, … if you look at how some of these things were moving premarket, you would see GME drop like 2%, BB’s best bid would drop and AMC’s best bid would drop. That’s an algo.”

The takeaway: although the WallStreetBets crowd is getting most of the blame, institutions are also at fault for the volatility.

Kris Sidial of The Ambrus Group
Categories
Commentary

Daily Brief For January 21, 2022

The Daily Brief is a free glimpse into the prevailing fundamental and technical drivers of U.S. equity market products. Join the 200+ that read this report daily, below!

What Happened

Overnight, equity index futures auctioned sideways, mostly, after a weak close, Thursday.

Measures of implied volatility remained bid while bonds rose after yields briefly surpassed 1.9%.

Ahead is data on leading economic indicators (10:00 AM ET).

Graphic updated 6:30 AM ET. Sentiment Neutral if expected /ES open is inside of the prior day’s range. /ES levels are derived from the profile graphic at the bottom of the following section. Levels may have changed since initially quoted; click here for the latest levels. SqueezeMetrics Dark Pool Index (DIX) and Gamma (GEX) calculations are based on where the prior day’s reading falls with respect to the MAX and MIN of all occurrences available. A higher DIX is bullish. At the same time, the lower the GEX, the more (expected) volatility. Learn the implications of volatility, direction, and moneyness. SHIFT data used for S&P 500 (INDEX: SPX) options activity. Note that options flow is sorted by the call premium spent; if more positive, then more was spent on call options. Breadth reflects a reading of the prior day’s NYSE Advance/Decline indicator. VIX reflects a current reading of the CBOE Volatility Index (INDEX: VIX) from 0-100.

What To Expect

Fundamental: The Nasdaq dipped into correction territory as stocks extended lower, Thursday.

Weakness was compounded by geopolitical tensions, the prospects of reduced stimulus to combat high inflation, as well as poor responses to earnings results.

Shares of Amazon Inc (NASDAQ: AMZN) just missed the round $3,000.00 figure and Peloton Interactive Inc (NASDAQ: PTON) fell on waning demand, while Netflix Inc (NASDAQ: NFLX) traded down just over 20.00% on a weak subscriber outlook.

“Thursday’s trading pattern looks exactly like a typical session from the summer of 2007 as the sub-prime crisis was beginning to send the first shock waves through the stock market,” said Bloomberg’s John Authers on wild changes in sentiment exacerbating the volatility. 

“Big changes of direction in the last hour, with no obvious news to trigger them, became a fact of life.”

Moreover, with pandemic-era speculation still embedded in prices, Authers adds, the removal of central bank liquidity opens the door to even lower prices as the “process to correct a lot of excess is now underway.”

Regardless of how aggressive contractions in monetary policy are, the Federal Reserve will spell out its plans well in advance, Fed Governor Christopher Waller explained

“I don’t see a 50 basis point hike in March. We have not prepared markets for anything that dramatic. One of our key themes has been not to surprise market, giving well enough advance, in terms of what we’re trying to do.”

Graphic: Per The Market Ear, “Equities usually deliver lower returns but with lower volatility during faster Fed hiking episodes.”

At present, a full 25 basis point hike is priced by March. 

Graphic: Via Bloomberg, there are four rate hikes priced for the year.

Per S&P Global Inc (NYSE: SPGI) analyses, these hikes are likely to “cause shorter-term rates, such as the 1- and 2-year Treasury yields, to climb more rapidly than longer-term rates,” potentially pressuring consumer credit, and increasing the costs of loans.

“By launching the reduction in the balance sheet, the Fed could match the rise in short-term rates with a similar rise in longer duration rates,” thus reducing the Fed’s need to hike rates, S&P Global explained.

“Given mortgage rates and corporate borrowing costs are more impacted by movements in 10-year yields than 3-month rates, the Fed funds target rate may not need to be increased as aggressively to get inflation under control,” James Knightley, an ING Groep NV (NYSE: ING) economist, added.

Positioning: Per Morgan Stanley’s (NYSE: MS) prime brokerage data, investors are deploying a more defensive tilt to portfolios in the face of a deceleration in sales and margin compression.

This “stock liquidation played into the large negative gamma position which accelerated selling into the close,” according to options modeling and analysis service SpotGamma.

For context, “when a position’s delta falls (rises) with stock or index price rises (falls), the underlying is in a negative-gamma environment.”

In such an environment, the expansion of volatility as a result of demand for downside (put) protection (a lot of which is short-dated and increasingly sensitive to direction) for instance, leaves dealers compounding weakness. 

Graphic: Implied volatility term structure shifts higher, mostly at the front-end.

Therefore, in the case of heightened demand for downside put protection (a negative-delta trade), higher implied volatility increases dealer exposure positive delta. 

To offset this positive delta exposure, dealers sell more underlying, exacerbating weakness.

The passage of the monthly options expiration (OPEX) ought to clear some of the put-heavy positioning; “removal of this exposure post-OPEX,” coupled with a reduction in embedded event premiums tied to the approaching Federal Open Market Committee (FOMC) event, “will leave dealers with less positive delta exposure to sell against.”

This opens up a window of strength wherein dealers are to take less liquidity (buy strength and sell weakness) and pressure less the market in hedging put-heavy positioning. 

Graphic: Taken from The Market Ear. In a lower liquidity environment, dealer hedging matters more.

Technical: As of 6:30 AM ET, Friday’s regular session (9:30 AM – 4:00 PM ET), in the S&P 500, will likely open in the middle part of a balanced overnight inventory, inside of prior-range and -value, suggesting a limited potential for immediate directional opportunity.

Spikes: Spike’s mark the beginning of a break from value. Spikes higher (lower) are validated by trade at or above (below) the spike base (i.e., the origin of the spike). The base is $4,549.00.

In the best case, the S&P 500 trades higher; activity above the $4,471.00 point of control (POC) puts in play the $4,526.25 high volume area (HVNode). Initiative trade beyond the HVNode could reach as high as the $4,581.00 untested point of control (VPOC) and $4,619.00 HVNode, or higher.

In the worst case, the S&P 500 trades lower; activity below the $4,471.00 POC puts in play the $4,425.00 VPOC. Initiative trade beyond the $4,425.00 VPOC could reach as low as the $4,349.00 and $4,299.00 VPOCs, or lower.

Click here to load today’s key levels into the web-based TradingView charting platform. Note that all levels are derived using the 65-minute timeframe. New links are produced, daily.
Graphic: 65-minute profile chart of the Micro E-mini S&P 500 Futures.

What People Are Saying

Definitions

Volume Areas: A structurally sound market will build on areas of high volume (HVNodes). Should the market trend for long periods of time, it will lack sound structure, identified as low volume areas (LVNodes). LVNodes denote directional conviction and ought to offer support on any test. 

If participants were to auction and find acceptance into areas of prior low volume (LVNodes), then future discovery ought to be volatile and quick as participants look to HVNodes for favorable entry or exit.

POCs: POCs are valuable as they denote areas where two-sided trade was most prevalent in a prior day session. Participants will respond to future tests of value as they offer favorable entry and exit.

Options Expiration (OPEX): Traditionally, option expiries mark an end to pinning (i.e, the theory that market makers and institutions short options move stocks to the point where the greatest dollar value of contracts will expire) and the reduction dealer gamma exposure.

About

After years of self-education, strategy development, mentorship, and trial-and-error, Renato Leonard Capelj began trading full-time and founded Physik Invest to detail his methods, research, and performance in the markets.

Capelj is also a Benzinga finance and technology reporter interviewing the likes of Shark Tank’s Kevin O’Leary, JC2 Ventures’ John Chambers, FTX’s Sam Bankman-Fried, and ARK Invest’s Catherine Wood, as well as a SpotGamma contributor developing insights around impactful options market dynamics.

Disclaimer

Physik Invest does not carry the right to provide advice.

In no way should the materials herein be construed as advice. Derivatives carry a substantial risk of loss. All content is for informational purposes only.