Generational Dynamics Forum - New Site

Higgenbotham wrote: Fri Nov 18, 2022 1:42 am

richard5za wrote: Thu Nov 17, 2022 10:22 am Higg,
I'm having trouble working out the maths / logic on why if the Thursday before option expiry there is a big move then option expiry week will be in the opposite direction.
The expression" From failed moves come fast moves"because the majority get caught on the wrong side of the line, might just apply here.
But why the Thursday? Any views?

My philosophy on things like this is: The Wall Street insiders run the sausage factory. All we can figure out about this is what happens the Thursday before the opex week sausage factory goes into operation can in some extreme cases influence how the sausage is made. But if you're not inside the sausage factory there is no way in hell you're going to figure out how they actually make the sausage. It's never entered my mind to even try to figure it out. If I tried my guess is there's about a 90% chance I'd get it wrong enough to make my trading worse.

The thought I had over night was perhaps using weekly options which are issued on a Thursday to fix trading errors on the monthly options which both expire together the next Friday. It also explains why Thursday is the day to watch. If there are enough options on the wrong side of the line it could act as a squeeze and hence the need for a big move on the Thursday.

richard5za wrote: Fri Nov 18, 2022 2:35 am

Higgenbotham wrote: Fri Nov 18, 2022 1:42 am

richard5za wrote: Thu Nov 17, 2022 10:22 am Higg,
I'm having trouble working out the maths / logic on why if the Thursday before option expiry there is a big move then option expiry week will be in the opposite direction.
The expression" From failed moves come fast moves"because the majority get caught on the wrong side of the line, might just apply here.
But why the Thursday? Any views?

My philosophy on things like this is: The Wall Street insiders run the sausage factory. All we can figure out about this is what happens the Thursday before the opex week sausage factory goes into operation can in some extreme cases influence how the sausage is made. But if you're not inside the sausage factory there is no way in hell you're going to figure out how they actually make the sausage. It's never entered my mind to even try to figure it out. If I tried my guess is there's about a 90% chance I'd get it wrong enough to make my trading worse.

The thought I had over night was perhaps using weekly options which are issued on a Thursday to fix trading errors on the monthly options which both expire together the next Friday. It also explains why Thursday is the day to watch. If there are enough options on the wrong side of the line it could act as a squeeze and hence the need for a big move on the Thursday.

I think this trading rule was around before weekly options were introduced. The reason I say it is Marty Schwartz's heyday was a long time before that and somewhere along the line I think I read it came from him. It was actually my thought that since weekly options were introduced they may have somewhat negated the effectiveness of this rule. There is someone on another forum who claims he calculates where the S&P should end up at expiration and it's well above yesterday morning's low. I'm not in a position to know whether that's right. It's my opinion that just looking at options on the S&P won't yield a reliable answer, which is why I've never tried and don't pay a lot of attention to this. I think someone would have to look at all the components of the S&P too and factor all of the individual stock options in as well as options on the ETFs.

Option Expirations

I am very cautious of expiration strategies: options and
futures have an expiration date, and I've noticed that the mar-
ket will often have a severe drop into the Thursday or Friday the
week before expiration, only to then turn up and rally into the
following week's option expiration. If I see this pattern set up,
I'm leery of getting caught on the short side because I've seen
this pattern before. Many times during option expiration, buy
and sell programs will hit and shake you out of your position
and fool you into leaning the wrong way.

This is from Marty Schwartz's book Pit Bull published in 1998. Maybe someone modified his observation a bit. He doesn't say why.

I found it on a site called forexfactory from a google search and it is downloadable.

Higgenbotham wrote: Fri Nov 18, 2022 3:48 am
I think this trading rule was around before weekly options were introduced. The reason I say it is Marty Schwartz's heyday was a long time before that and somewhere along the line I think I read it came from him. It was actually my thought that since weekly options were introduced they may have somewhat negated the effectiveness of this rule. There is someone on another forum who claims he calculates where the S&P should end up at expiration and it's well above yesterday morning's low. I'm not in a position to know whether that's right. It's my opinion that just looking at options on the S&P won't yield a reliable answer, which is why I've never tried and don't pay a lot of attention to this. I think someone would have to look at all the components of the S&P too and factor all of the individual stock options in as well as options on the ETFs.

I think you are right. Trying to second guess trading options would no doubt be fruitless -just focus upon the price action

richard5za wrote: Fri Nov 18, 2022 7:21 am

Higgenbotham wrote: Fri Nov 18, 2022 3:48 am
I think this trading rule was around before weekly options were introduced. The reason I say it is Marty Schwartz's heyday was a long time before that and somewhere along the line I think I read it came from him. It was actually my thought that since weekly options were introduced they may have somewhat negated the effectiveness of this rule. There is someone on another forum who claims he calculates where the S&P should end up at expiration and it's well above yesterday morning's low. I'm not in a position to know whether that's right. It's my opinion that just looking at options on the S&P won't yield a reliable answer, which is why I've never tried and don't pay a lot of attention to this. I think someone would have to look at all the components of the S&P too and factor all of the individual stock options in as well as options on the ETFs.

I think you are right. Trying to second guess trading options would no doubt be fruitless -just focus upon the price action

It is fruitless for most and I see examples on an almost hourly basis when I'm not even an expert on options and pay little attention to them. Liz Ann Sonders tweeted this out this morning

https://twitter.com/LizAnnSonders/statu ... 9986922498

and I saw on a board that someone linked this and said equity put call was at a record high implying this was bullish for the market. First, it's not equity put call. What she actually posted is CBOE put call which is where OEX traders are positioned on the S&P 100 and OEX traders tend to be right.

PS Looking at this more closely, it looks like it's me who doesn't know what I'm talking about.

By some measurements, the world economy has taken a worse hit then it did in 2008.

https://www.youtube.com/watch?v=-b2nmBaT1Z0

The 2023 recession will be bad. Or will it? There's almost no doubt now that a recession is coming, but in reality, nobody can predict just how badly it's going to affect our lives.

Economists, world leaders, and CEOs are all weighing in on the coming recession, and discussing what could be ahead for the Unites States, and the world. One such person is Amazon's owner Jeff Bezos, who has even gone so far as to tell people to stop buying large items to save for the future, an announcement that could obviously affect his company's profits.

But just how bad might the 2023 recession be? And are our leaders really properly preparing us for what might be coming? I'll try to answer that in this video.

President last week touted, "The US economy is expanding, and income has increased faster than inflation".
two things:

First, here is a simple but impactful fact;
Since the start of this year, Stock Market losses have wiped $9 Trillion from Americans' wealth.

Second, if wages are growing faster than inflation
( Inflation grew exponentially in comparison to the last 40 years), then why is the data showing an immense gap between Labor costs & Corporate profits?
https://www.epi.org/blog/corporate-prof ... s-respond/
Its best to see the data for yourself.
Corporate profits- (2020 Q2-2021 Q4= 53.9%) & (1979-2019= 11.4%)
Unit Labor Cost- (2020 Q2-2021 Q4= 7.9%) & (1979-2019= 61.8%)

That is roughly a 155% difference in the wrong direction. (Unit Labor Cost)

This exact same dynamic was the main reason for the Great Depression to have happened in the first place. Corporation profits grew larger while Labor Wages vastly lagged behind. It not only led to a complete collapse of industrial spending but would condemn the economy to almost a decade of misery and mediocrity.

Yes we see it. As we noted it will be a very very long time before uniparty even pretends. No date needed here.

H is correct. So is E.
https://www.tradingview.com/chart/SPX/6 ... -Stronger/

https://www.youtube.com/watch?v=wM0Q__hBauk

Here's an interesting extract from John Mauldin's weekly letter published today:

Investors trusted their financial advisor who trusted a fund manager who trusted FTX. All these people now have a lot of explaining to do. This kind of trust, once broken, is very hard to regain.

If the FTX drama ends there, then it will have been just drama—terrible for those involved but leaving others unharmed. Will it end there? Right now, it doesn’t look like it will. There appears to be a great deal of contagion brewing.

I think that FTX has the potential to be the biggest financial debacle of our lives. Bigger than Enron, bigger than Madoff.

I recall Vince that you asked this question last week?

If you liked the Covid and Ukraine supply chain disruptions, you'll just love the next one:

How China’s Water Challenges Could Lead to a Global Food and Supply Chain Crisis
November 14, 2022 | Gabriel Collins, Gopal Reddy
https://www.bakerinstitute.org/research ... ain-crisis

Avery Ruxer Franklin - Nov. 17, 2022
POSTED IN: RICE NEWS > Current News > 2022
Drought in China could devastate global supply chains, energy transition efforts, experts warn
https://news.rice.edu/news/2022/drought ... perts-warn

tim wrote: Fri Nov 18, 2022 4:55 pm By some measurements, the world economy has taken a worse hit then it did in 2008.

https://www.youtube.com/watch?v=-b2nmBaT1Z0

The 2023 recession will be bad. Or will it? There's almost no doubt now that a recession is coming, but in reality, nobody can predict just how badly it's going to affect our lives.

Economists, world leaders, and CEOs are all weighing in on the coming recession, and discussing what could be ahead for the Unites States, and the world. One such person is Amazon's owner Jeff Bezos, who has even gone so far as to tell people to stop buying large items to save for the future, an announcement that could obviously affect his company's profits.

But just how bad might the 2023 recession be? And are our leaders really properly preparing us for what might be coming? I'll try to answer that in this video.

Yes, this is clear to anyone with discernment. It has been this way for over 6 months (obvious). The question for us is how to position ourselves and when or by when.