Trading Edge For Swing to Short-Term Traders

luckystar2006

One way to trade successfully is by analyzing option chain expiration dates with an assumption that those who trade options are sophisticated traders.

By looking at November 4th (this Friday) expiration date, you can see heavily CALL bets ~ the price target of 211 (as shown in green circles).   This clearly tells you market sentiments of professional traders.  Using this info along with your trading system will definitely improve your trading results.

Before today, there were >70,000 PUTs betting SPY would hit below 209.xx.  Today, data showed most options traders expecting SPY to hit 211.xx by tomorrow.

mojideheng

学习了，谢谢星大！

ranchgirl

Welcome back！
接着再拜读！！！！

yanzi

Does it mean it will most likely be 211+ by tomorrow? Thanks.

mitwkwk

星大这个图是从哪里找来的啊，一目了然

风行过

nice one. I was just looking at the option price action. One thing to be noted is that there are lots amateur in option trading, so open interest might be skewed some what. Basically you are looking at similar like max pain.

luckystar2006

Data from below screenshot for next Wednesday expiration date might change by tomorrow.

So far, it shows most selling calls and puts activities (not a lot of activities) are at the money range.  There is one histogram (in red circle) which is causing somewhat trouble for bulls going forward because there are ~3800 puts (not a lot) at strike price of SPY 205.5.

This might suggest that a group of options traders having bearish view sometime between now and next Wednesday.  So, be careful if you trade on the long side at the present.

wnd4

luckystar2006

I'm done with posting for now and back to trading.  I've NOT accumulated any losing trade or cutting any losing trade for weeks.  I'll try all of my best to keep that record for as long as I could.  That means I'll come up here to post sometimes, but not much during intraday hours as I need to focus.

mojideheng

常回来看看！哈哈！
同问，这个指标可以从哪里看到？

zhutou3

so, that is to say , there will be likely big down late this afternoon to wipe out all of those calls tomm..?

luckystar2006

One last chart, intraday SPY calls/puts chart so far suggest most options traders don't feel bullish today, as you can see way more puts than calls being purchased, especially before 10am.  

P.S.  I prefer to track Volume much more than Open Interest which show much more accurate picture.

luckystar2006

Up-to-date data shows intraday market is bullish right now.

georgeyn

csw2002

Option buyers are the dumb money - with very few exceptions.

csw2002

Case in point, SPY Wednesday expiration has seen max pain pinned for the last 8 weeks since Wednesday expiration started. That means vast majority of puts and calls expired worthless.

luckystar2006

csw2002 发表于 2016-11-4 02:28 AM
Option buyers are the dumb money - with very few exceptions.

Thanks for your input.  I agree with your opinions about mostly dumb money, but not all of them are.

There are few tricks that I use while reading those orders so I could filter out all dumb ones.   That said, I'm only interested in orders with >200 contracts (most novice traders couldn't afford to buy >100 contracts per each order) being bought with strike price that is very close to market price (209 is an example in this case) and then I look at the ASK side to see whether or not there is any high demand at the time that my trading systems get triggered.

Highlighted in white squares in below screenshot is an example prior to market taking off before 10am.

trend

LK LD, What's your view for next Monday to Wed.?

qunzong

Good to have you back

luckystar2006

trend 发表于 2016-11-4 11:53 AM
LK LD, What's your view for next Monday to Wed.?

It could be V shape rally (no idea at this stage yet as there isn't any confirmation from key signals) or a dead cat bounce.  In the meantime, shorting market today is probably a dumb move because a) ST signals are at extremely oversold level with SPX & QQQ dropping for 8 consecutive days; b) intraday signals from bigger time frames are quite bullish; c) Friday tends to be a trend day, especially for bulls; and d) gains are small on the short side today with extremely high risks.

Lastly, US election result will come out on next Tuesday night.  Market is likely going to be very volatile on both sides.