SPX Low Risk/High - Oct 28’22 3885 20Wide Butterfly
Updated
💡 SPX Beyond 0dte Trading - Oct 28’22 3885 20Wide Butterfly
Debit: $85
Max Profit: $1,915
*Will be scaling into the position with multiple tranches.
Hey everyone!, I have been trading alot of 0dte Butterfly Spreads with much success and given the attractive risk/reward profile I've been using this strategy for swing trade ideas primarily on SPX. The notes below are from our Beyond 0dte report. (graphs included in report)
Comments from Fed Daily regarding a potential slowdown in rate hikes led to a strong rally on Friday and just may have shifted the short term sentiment going into the November FOMC meeting.
Put interest was huge at recent market lows…. again. The crowd has already been offloading some of those puts as values quickly evaporate. Should this positioning continue to unwind, participants will be forced to cover their shorts or cover the possible upside risks via buying calls.
If markets can sustain upside momentum, systematic flows may provide support for the next leg higher. CTA buy levels are around $3,800 and $3,900.
VVIX, which measures volatility of volatility, has crashed while VIX remains stubbornly high despite the move higher in equities. Will VIX follow VVIX lower?
The issue for implied volatility to come down sharply is that we have another 2 weeks until two strong volatility catalysts: FOMC (11/2) and elections (11/8). However, if traders start to sell short dated volatility (anything expiring before November) that should provide a tailwind for equities.
S&P 500 Index seasonality is supportive for higher prices heading into the US midterm elections and Q4.
70% of S&P 500 companies have beaten revenue estimates to date for Q3. This is above the 5-year average of 69% and above the 10-year average of 62%. In S&P terms, this translates into 4.4% earnings beat and 0.9% revenue beat thus far.
Both S&P 500 and Nasdaq are coming off their best week since June, and are entering the busiest week of the earnings season with 46% of the S&P 500’s market cap due to announce third-quarter results.
Microsoft and Google report earnings on Tuesday (10/25) with Apple and Amazon reporting on Thursday (10/27).
Due to the current positioning, we think the market will either drift lower or “crash” higher in the form of a short cover rally.
Our base case is for a relief rally into November, all else equal. However, if big tech earnings disappoint that may negate our thesis.
Happy Trading!
0DTE TRADERS
✅ Trade Ideas & Alerts
✅ Market Analysis
✅ Education
Debit: $85
Max Profit: $1,915
*Will be scaling into the position with multiple tranches.
Hey everyone!, I have been trading alot of 0dte Butterfly Spreads with much success and given the attractive risk/reward profile I've been using this strategy for swing trade ideas primarily on SPX. The notes below are from our Beyond 0dte report. (graphs included in report)
Comments from Fed Daily regarding a potential slowdown in rate hikes led to a strong rally on Friday and just may have shifted the short term sentiment going into the November FOMC meeting.
Put interest was huge at recent market lows…. again. The crowd has already been offloading some of those puts as values quickly evaporate. Should this positioning continue to unwind, participants will be forced to cover their shorts or cover the possible upside risks via buying calls.
If markets can sustain upside momentum, systematic flows may provide support for the next leg higher. CTA buy levels are around $3,800 and $3,900.
VVIX, which measures volatility of volatility, has crashed while VIX remains stubbornly high despite the move higher in equities. Will VIX follow VVIX lower?
The issue for implied volatility to come down sharply is that we have another 2 weeks until two strong volatility catalysts: FOMC (11/2) and elections (11/8). However, if traders start to sell short dated volatility (anything expiring before November) that should provide a tailwind for equities.
S&P 500 Index seasonality is supportive for higher prices heading into the US midterm elections and Q4.
70% of S&P 500 companies have beaten revenue estimates to date for Q3. This is above the 5-year average of 69% and above the 10-year average of 62%. In S&P terms, this translates into 4.4% earnings beat and 0.9% revenue beat thus far.
Both S&P 500 and Nasdaq are coming off their best week since June, and are entering the busiest week of the earnings season with 46% of the S&P 500’s market cap due to announce third-quarter results.
Microsoft and Google report earnings on Tuesday (10/25) with Apple and Amazon reporting on Thursday (10/27).
Due to the current positioning, we think the market will either drift lower or “crash” higher in the form of a short cover rally.
Our base case is for a relief rally into November, all else equal. However, if big tech earnings disappoint that may negate our thesis.
Happy Trading!
0DTE TRADERS
✅ Trade Ideas & Alerts
✅ Market Analysis
✅ Education
Note
Confirming Indications-> Daily structure break
-> A sharp move lower in DXY/USTY
-> Short term volatility sellers stepping in (VIX down)
-> Heavy put covering (PCC down/Delta Tilt up)
Indices sold of sharply post MSFT and GOOGL earnings release.
-> MSFT beat on both the top and bottom line, but issued poor guidance as higher energy prices are cutting into cloud margins.
-> GOOGL missed on EPS.
The move is likely overdone and exacerbated by the light positioning environment.
Ideally we want to see a pullback/consolidation day to setup for an EOW rally.
$3900 remains our best case scenario this week.
Trade closed: target reached
This spread expires today and we just entered the profit zone.Now worth $440+ at the mid, looking at scaling out of the trade and locking in some profits.
Will keep partial on to play the potential pin.
Note
Closed in the profit zone by 4 points.Scaled out along the way.
550% ROI
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