Weekly GEX of QQQ | Option Chain Analysis
Iโd like to share my thoughts below after analyzing the QQQ option chain. In this analysis, I focus exclusively on the weekly time range, examining the QQQ option chain and the changes in top-tier options metrics.
๐จDecline in Put Pricing Skew and Increase in IVx
The decline in put pricing skew on Options Oscillator suggests that put options are becoming relatively cheaper, signaling a shift in market participants' expectations. This indicates increased call buying and put writing activity in the options chain. Along with the decrease in implied volatility (IV), this often points to a lower demand for downside protection strategies, which could be interpreted as a bullish sentiment.
Currently, the QQQโs IVRank stands at 31.5, reflecting a moderate volatility environment. However, with an average IVx of 19.2, trading volumes could increase, and interest in volatility-based strategies may rise further.
๐ถ Backwardation in 4-7 DTE and Time Spreads
Backwardation in the 4-7 DTE (days to expiration) period can be ideal for time spread (calendar, diagonal) option traders, as near-term options show higher volatility than longer-term ones. This creates a favorable environment for time spread strategies, especially if this backwardation persists.
๐จ Gamma Levels and Open Interest-Based Levels
Call high OI gamma walls (or call resistance levels) typically act as resistance points. However, once these levels are broken, the bullish movement can accelerate due to positive gamma exposure. Put gamma walls (or put support levels), on the other hand, act as support. If broken, downward moves can intensify due to the high negative gamma exposure.
While the current largest gamma wall was for today at 495, the upcoming expiration on 10/14 could shift this level to 500, where the greatest gamma exposure will likely be after the Monday expiration (due to the large amount of open interest expiring at 495). If the price breaks above this level, it could further bolster bullish prospects to 505 (last ATH). Additionally, the 500 strike plays a critical role as a major level in the Options Grid System, representing the 8/8 level.
๐จ OTM 16 delta probability cloud in Options Overlay
The blue Delta Curves on the Options Overlay show the 16-delta levels, helping traders identify potential price ranges. According to current data, on the call side, the 505 strike is still within the 16-delta range, reinforcing its bullish potential.
This represents the 68% probability range defined by OTM 16 delta PUTs and OTM 16 delta CALLs, showing a clear directional expected move value. It provides an insightful view of the expected price movementโs directional range, often used by delta-neutral strangle traders like those at TastyTrade.
๐จTime Spread Strategies
The aforementioned backwardation and gamma wall situation may present an advantage for time spread traders. Backwardation between 4-7 DTE provides an optimal window for those favoring time spreads, as the higher short-term volatility offers better premiums.
๐จ TanukiTrade Options Oscillator values
The TanukiTrade Options Oscillator indicates that the combination of declining put skew and decreasing IV suggests potential volatility growth on the bullish side of the market. This could be a valuable signal for both long and time spread strategies.
โ QQQ Summary
The decline in put skew and increase in IVx imply that market participants are anticipating an increase in bullish volatility. Backwardation between 4-7DTE supports time spread strategies, while the call gamma wall at 500โand soon 505โis likely to serve as significant resistance/target.
(NOTE: GEX levels is not part of the TanukiTrade Options Overlay indicator yet. The automatic GEX levels will be available soon, by the end of October!)
๐จDecline in Put Pricing Skew and Increase in IVx
The decline in put pricing skew on Options Oscillator suggests that put options are becoming relatively cheaper, signaling a shift in market participants' expectations. This indicates increased call buying and put writing activity in the options chain. Along with the decrease in implied volatility (IV), this often points to a lower demand for downside protection strategies, which could be interpreted as a bullish sentiment.
Currently, the QQQโs IVRank stands at 31.5, reflecting a moderate volatility environment. However, with an average IVx of 19.2, trading volumes could increase, and interest in volatility-based strategies may rise further.
๐ถ Backwardation in 4-7 DTE and Time Spreads
Backwardation in the 4-7 DTE (days to expiration) period can be ideal for time spread (calendar, diagonal) option traders, as near-term options show higher volatility than longer-term ones. This creates a favorable environment for time spread strategies, especially if this backwardation persists.
๐จ Gamma Levels and Open Interest-Based Levels
Call high OI gamma walls (or call resistance levels) typically act as resistance points. However, once these levels are broken, the bullish movement can accelerate due to positive gamma exposure. Put gamma walls (or put support levels), on the other hand, act as support. If broken, downward moves can intensify due to the high negative gamma exposure.
While the current largest gamma wall was for today at 495, the upcoming expiration on 10/14 could shift this level to 500, where the greatest gamma exposure will likely be after the Monday expiration (due to the large amount of open interest expiring at 495). If the price breaks above this level, it could further bolster bullish prospects to 505 (last ATH). Additionally, the 500 strike plays a critical role as a major level in the Options Grid System, representing the 8/8 level.
๐จ OTM 16 delta probability cloud in Options Overlay
The blue Delta Curves on the Options Overlay show the 16-delta levels, helping traders identify potential price ranges. According to current data, on the call side, the 505 strike is still within the 16-delta range, reinforcing its bullish potential.
This represents the 68% probability range defined by OTM 16 delta PUTs and OTM 16 delta CALLs, showing a clear directional expected move value. It provides an insightful view of the expected price movementโs directional range, often used by delta-neutral strangle traders like those at TastyTrade.
๐จTime Spread Strategies
The aforementioned backwardation and gamma wall situation may present an advantage for time spread traders. Backwardation between 4-7 DTE provides an optimal window for those favoring time spreads, as the higher short-term volatility offers better premiums.
๐จ TanukiTrade Options Oscillator values
The TanukiTrade Options Oscillator indicates that the combination of declining put skew and decreasing IV suggests potential volatility growth on the bullish side of the market. This could be a valuable signal for both long and time spread strategies.
โ QQQ Summary
The decline in put skew and increase in IVx imply that market participants are anticipating an increase in bullish volatility. Backwardation between 4-7DTE supports time spread strategies, while the call gamma wall at 500โand soon 505โis likely to serve as significant resistance/target.
(NOTE: GEX levels is not part of the TanukiTrade Options Overlay indicator yet. The automatic GEX levels will be available soon, by the end of October!)
Note
New analysis for the week 10/28
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REAL Options metrics for over 165+ liquid US symbols:
โ ๐๐๐๐ผ-๐จ๐ฝ๐ฑ๐ฎ๐๐ถ๐ป๐ด ๐๐๐ซ ๐น๐ฒ๐๐ฒ๐น๐
โ IVRank โ CALL/PUT skew โ Volatility Skew โ Delta curves
๐ 7-day TRIAL ๐ TanukiTrade.com
REAL Options metrics for over 165+ liquid US symbols:
โ ๐๐๐๐ผ-๐จ๐ฝ๐ฑ๐ฎ๐๐ถ๐ป๐ด ๐๐๐ซ ๐น๐ฒ๐๐ฒ๐น๐
โ IVRank โ CALL/PUT skew โ Volatility Skew โ Delta curves
๐ 7-day TRIAL ๐ TanukiTrade.com
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