You see the lack of puts in VMW? Thats the direction the market usually heads..Where the OI (open interest) is heavy, that is where resistance/support is at..
This also explains why a stock may go down a big percentage too.. Think about it..If there are few shorts in a stock, and the stock price is falling, then shorts come into the stock, selling it..More sellers than buyers, down she goes...When the sellers take profits a few days/weeks later, thats when the bounce will occur. Why? Because sellers have to buy to cover..
Watch the OI in puts..when this begins to decrease, the shorts are covering, and the stock price will start to recover..
tb
PS- I am looking for heavy calls to puts with earnings around the corner..
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