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12/09 Weekly SPX InsightsLast week’s assessment aligned well with the anticipated positive SPX range. The index moved sharply up toward the 6100 area, yet as Friday’s session progressed, the call resistance around 6100 capped further upward momentum. Looking ahead, I have doubts that the previously unbridled optimism will persist. Currently, we find ourselves in a “chop zone,” suggesting that the short-term direction is less clear. In aggregating GEX (Gamma Exposure) levels and examining the landscape a week out, it appears that 6100 remains a strong call resistance level. Meanwhile, the HVL (High Volatility Level) has crept closer to around 6080, placing the market uncomfortably close to a higher-volatility environment. Below 6080, the market may experience increased turbulence, potentially retesting 6035 and then 6000. On the other hand, if the index can break and hold above 6100, an upward gamma squeeze could emerge, pushing prices even higher. Currently, overall GEX sentiment is negative, but the approach toward the HVL zone suggests caution. From these conditions, I’m not expecting a strong, sustained rally in the immediate term. In terms of intraday and short-term dynamics, 0DTE (same-day expiry) sessions and Fridays continue to hold relatively higher positive gamma exposure compared to other days. Volatility indicators: VIX: remains low IVR (Implied Volatility Rank): also low Put Pricing Skew: currently low, although it has begun to show a very slight uptick Key Levels for This Week (for educational reference): Above 6100: Omni-bullish environment Between 6100–6065: Chop zone (directionally uncertain; not ideal for unhedged directional trades) Below 6080: Bearish tilt, with targets around T1: 6035 and T2: 6000 (near the 16-delta OTM put level) On Wednesday, inflation data is scheduled for release. Anticipation alone may drive volatility, so it’s something to keep on the radar for educational scenario planning.
SPREADEX:SPX
by TanukiTrade
Weekly GEX of QQQ | Option Chain AnalysisI’d 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. 🟨 Decline 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 QQQ’s 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. 🔶 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. 🟨 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. 🟨 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 movement’s directional range, often used by delta-neutral strangle traders like those at TastyTrade. 🟨 Time 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. 🟨 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. ⅀ 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 500—and soon 505—is 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!)
NASDAQ:QQQLong
by TanukiTrade
4
Weekly GEX of SPX | Option Chain Analysis for Option TradersI’d like to share my thoughts below after analyzing the SPX option chain. In this analysis, I focus exclusively on the weekly time range, examining the SPX option chain and the changes in top-tier options metrics. 🔶 Breakout and Bullish Outlook Last Friday's price action saw the SPX break through the 5800 call gamma wall, generating strong bullish momentum . This breakout opens the door for further upward movement throughout the week, especially if buying pressure persists. Breaking through a call gamma wall often leads to a rapid price increase, as these levels act as resistance, but once broken, they support further upward moves. However, caution is advised, as additional call gamma levels (around 5850 and 5875) could act as resistance, where the price may stall. These levels can reverse roles and, if the price falters, could act as significant resistance, potentially leading to a pullback toward the 5800 level. 🔴 Put Skew and IVx Changes The put pricing skew on the Options Oscillator shows a declining trend, meaning that while put options are still more expensive than calls at equivalent strikes, this trend is softening when looking at the November expiration. This indicates a weakening of put options relative to calls, which could be another bullish signal as demand for puts may be declining. The five-day IVx average declining , indicating a decrease in market volatility = VIX is melting down. 🟨 Backwardation and Diagonal/Calendar Strategy Opportunities It's also worth noting the 10.5% backwardation based on the IV skew for the expirations between 10/18 and 10/21 (4/7DTE). This backwardation (downward sloping volatility curve) could benefit calendar and diagonal spread strategies, as options with different expirations have varying volatility conditions. 🔶 GEX Wall Levels: Where Is Support and Resistance? 🔹Gamma Exposure (GEX) levels continue to play a crucial role in the market’s movements: 🔹On the upside, the largest call gamma wall for the next 7 days is at 5850, while the 5875 level may also act as significant resistance. The 5875 is a more likely a realistic bullish target, supported by the Options Overlay’s blue OTM delta 16 probability curve. 🔹On the downside, the 5750 put support level currently offers strong support, with sellers forming a barrier here. The 5800 level is also interesting because it was the largest call gamma level last week, meaning there could be significant volatility as bulls and bears battle around this point. (NOTE: GEX levels is not part of the TanukiTrade Options Overlay indicator yet. The automatic GEX levels will be available by the end of October.) 🟨 How Delta 16 Curves Define My Rational Price Range in Options Trading The blue OTM Delta 16 curves from the Options Overlay define the rational probability range for me based on a lognormal distribution. This is important because there’s a 68% chance the price will stay within this range by expiration. These values are also visible in the Overlay Expiry table. 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 movement’s directional range, often used by delta-neutral strangle traders like those at TastyTrade. ⅀ SPX Summary The SPX options chain is showing a bullish direction with the breakout above 5800, but it will be key to watch the gamma levels where the market might stall this week. The rising IV and declining put skew trend could provide further signals that the bull market might continue, but the possibility of resistance or a pullback remains. For those considering diagonal strategies, the backwardation may offer interesting opportunities to capitalize on. (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!)
SP:SPXLong
by TanukiTrade