NVDA - Sellside Liquidity Run to Long ITM Calls >7 Days out
I'm already long NVDA in a net profitable hedged position. I went long at 129 and overhedged at 151. The CES event stank of buy the rumor, sell the news. The chart structure also supported a clear buyside liquidity run to that level.
The double wicks at the top of the range indicate an intent to run through buyside again. Before the CES run, a gaping block shaped void near ATH was clearly visible. This was a bearish selling block that has since been filled. That seller had to be bought out before NVDA could continue its run.
There has been evident presence of sellside liquidity at ~129 since the beginning of the run. Initially I believed that would get run out before the buyside run, but I was wrong. Given the state of the VIX, TSLA, Silver, and Long term bond yields, a volatility spike capable of driving any weak hands (i.e. unhedged) out of NVDA feels imminent. I made a few mistakes on this run and my current NVDA position, though profitable and riskless is still at risk of being called away (at a profit).
None the less, I intend to add onto my position if a volatility spike and liquidity run does occur and fix my risk using shorter dated ITM calls. A volatility expansion of this magnitude has the ability to run out even very conservatively placed stops, so ITM calls are the best bet I have to enter into a risk managed position.
A large scale volatility bid will very quickly get sold by volatility sellers and traders (like myself) who mop up the blood in the streets. My short volatility positions are already hidden liquidity on the books.
The double wicks at the top of the range indicate an intent to run through buyside again. Before the CES run, a gaping block shaped void near ATH was clearly visible. This was a bearish selling block that has since been filled. That seller had to be bought out before NVDA could continue its run.
There has been evident presence of sellside liquidity at ~129 since the beginning of the run. Initially I believed that would get run out before the buyside run, but I was wrong. Given the state of the VIX, TSLA, Silver, and Long term bond yields, a volatility spike capable of driving any weak hands (i.e. unhedged) out of NVDA feels imminent. I made a few mistakes on this run and my current NVDA position, though profitable and riskless is still at risk of being called away (at a profit).
None the less, I intend to add onto my position if a volatility spike and liquidity run does occur and fix my risk using shorter dated ITM calls. A volatility expansion of this magnitude has the ability to run out even very conservatively placed stops, so ITM calls are the best bet I have to enter into a risk managed position.
A large scale volatility bid will very quickly get sold by volatility sellers and traders (like myself) who mop up the blood in the streets. My short volatility positions are already hidden liquidity on the books.
Note
This of course assumes realized volatility actually does expand, but IMO I'd be very careful going short volatility (i.e. selling puts), in this current market. We are really only sitting at the 50/200 day moving averages on the VIX, selling volatility here is very risky IMO and is quite possibly the fuel for a major upwards move in volatility as short sellers are incinerated.
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