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GammaEdge

@GammaEdges

Aug 14

If you're not incorporating Options Structure Analysis into your pre-trade checklist for Stocks/ETFs, you're trading blindfolded!

This data provides us a wealth of insights.

Let's explore how Options Analysis can transform your trading decisions and boost your performance.👇

Quick Detour:

We just launched the Master’s Module of our flagship education course, The GammaEdge Framework.

This new module is specific to stock/ETF trading over a multi-day to multi-week timeframe.

• 2 days ago, we covered how to establish a directional thesis on the general market

• Yesterday, we covered how to utilize our scans to find actionable stocks in-line with the directional thesis established.

NOTE: Links to both threads are provided at the bottom of this one

Read 47 tweets

GammaEdge

@GammaEdges

Jul 6

It’s no secret today’s markets are driven by options activity.

As a trader using Technical Analysis, have you wondered how options market analysis could complement your system?

It can—and we've seen it benefit our members’ trading.

Here’s the 3-part framework we teach👇

Our framework at GammaEdge consists of 3 main pillars:

1⃣ Market Sentiment
2⃣ Market Trend
3⃣ Market Structure

Each pillar plays off the previous, and over the next section of tweets, we’ll lay out each one so you have a deep understanding:

1⃣Market Sentiment

It's our belief that markets are driven by OTM call & OTM put speculation.

Using options market analysis, we seek to understand who is winning the battle between call and put speculators above and below the spot price.

This then forms our directional bias.

Read 43 tweets

GammaEdge

@GammaEdges

Jul 4

Ever noticed sharp pullbacks when trading $SPX #0DTE after moving through large gamma strikes (e.g., +GEX)?

Curious why this happens?

Here are our thoughts! 👇

Below is a visualization of $SPX #0DTE from 07/03/24.

This example illustrates the 'gamma profile' of a #0DTE structure, with the largest gamma strike (+GEX) clearly at 5525.

For background, +GEX represents the strike with substantial short-term OTM call bets from traders.

Without further upside OTM call speculation beyond +GEX seen transact intraday, we tend to see monetization as we push through the +GEX.

Read 10 tweets

GammaEdge

@GammaEdges

May 4

We've taken the role that the dealers play in the market, specific to how they utilize the option Greeks & simplified the concepts into a relatable analogy:

Driving a car. 🚗

If you're easily confused about complex options terms & dealer dynamics, this thread is for you🧵

1/ Like using different inputs to the gas, brakes, and steering wheel based on traffic and road conditions, dealers use 'the Greeks' - delta, gamma, charm, and vanna - to navigate the market and manage risk.

Let's dive deeper into how these play out in real-world trading 👇

2/ As a refresher, dealers are not in the business of making money from predicting price moments.

Their role is to provide liquidity to the markets by facilitating transactions.

Therefore, they are focused on eliminating the directional risk within their portfolio.

Read 23 tweets

GammaEdge

@GammaEdges

Apr 20

A prevalent misconception is viewing +GEX as a "magnet" that attracts price.

It's more like a repellant—pushing price away until it's decisively overtaken. This is why it's a good strike to at least take partial profits at.

Here's why: a 🧵 ...

At the core of our analysis, we view options primarily as tools for speculation, not hedging.

+GEX represents the strike with substantial short-term OTM call bets from traders.

Underneath, this level repels price due to the nature of 'moneyness'.

1/ Remember: Moneyness Matters.

Call options opened above spot price are OTM and have a delta of less than 0.5.

Put options opened below spot price are also OTM and have a delta of less than -0.5.

Read 17 tweets

GammaEdge

@GammaEdges

Apr 14

🌇Good Afternoon Traders. Time to go around the horn and see what the structure on the #Mag7 stocks looks like for this coming week:

Before we get going on single stock structure, we should review the Market Trend Model, which is our tool to gauge trend/momentum in the market. We can clearly see that all trends are lower, with significant selling seen throughout the week. Caution is certainly warranted here, and we need to see improvement in this structure before any kind of conviction to the upside.

Additionally, let's take a quick look at $SPX. You'll notice the amount of red in the dashboard. This indicates that the bears are out in full force, dominating both above and below spot price. Again, caution is warranted, and we need to see significant improvement in structure before any kind of conviction to the upside.

$AAPL -> What was once living below its transition zone, now is not. Relatively strong end to last week in the face of prevailing general market headwinds (see $SPX and MTM post above). Price is now currently above transition zone and for the next month with call speculators targeting $180 being both +GEX and COI. Additionally, when looking at the GEX ratio, which is a measure of speculation, we can see that this has increased last week.

$TSLA -> Continues to be in a downtrend from the start of the year, which is confirmed via its GEX ratio, meaning we aren't seeing speculation to the upside.

When looking at structure through our dashboard, we can also see the lack of call speculators above spot price for the next month (note the red delta numbers above spot price (first column)). $170 has been -Trans in this name (currently ZeroGex) and key psychological number. Below here, and $160 is being targeted. We need to see structure improve to the upside before being interested in that side of the trade.

Read 11 tweets

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