TSLA Trade during options expiration week....

 

Options expiration week happens each week, but it's the 3rd week of month that is most critical, and more importantly, the triple witching week which is most critical.

DEFINITION of 'Triple Witching'

An event that occurs when the contracts for stock index futures, stock index options and stock options all expire on the same day. Triple witching days happen four times a year on the third Friday of March, June, September and December.

This phenomenon is sometimes referred to as "freaky Friday".

INVESTOPEDIA EXPLAINS 'Triple Witching'

The final trading hour for that Friday is the hour known as triple witching. The markets are quite volatile in this final hour, as traders quickly offset their option/futures orders before the closing bell. If you are a long-term investor, triple witching will have a minimal impact on you.

Triple Witching months...

MARCH
JUNE
SEPTEMBER
DECEMBER

During the 3rd week of the month, stock prices tend to be drawn towards the largest open interest by expiration Friday.

In the case of TSLA, it was the $220 strike. Knowing this ahead of time is important, as you can plan accordingly.



However, analysts on TSLA had other plans in mind for this week...or did they?

But, notice the stock price for TSLA had bottomed on Wednesday, 12/17...

 

 

 

With all that bearish news, why would TSLA ever go up in price?
Answer: Options Expiration week.

The $212.50 strike calls were $0.45 at the open.
They closed at $0.75 on Wednesday. Almost 100% return, not bad...

but, Thursday, 12/18, the stock jumped 6% to 218ish. Calls closed at $6.40!

a $450 investment from Wednesday's opening low, turned into $6,400, by closing bell, in just 2 days.

Happy Holidays!

tb

USO Chart... closing in...

closing in on the round number $20 for USO... but, I would expect the market to take it lower than $20, before the major bounce....

tb

TWTR Chart

It looks like TWTR might be looking to fill a gap... Intraday trading is showing 39 as resistance. To be safe, if it can break 39, it increases the probability of a gap fill at 47. Nice 20% move from here.

tb

GOOGL Chart

GOOGL does not look healthy here. Laggard to most stocks in 2014. Final move to low 400's would put in the bottom.

-tb

USO Chart

 

if USO found support, then energy stocks will do well in the near term. According to JK, Big Oil Co priced in $70, not $80 a barrel. In other words, the stocks are priced at a discount.

tb

VIX - Oct 4 -

The VIX needs to fill its gap around 12ish. Once that is done, the market will have rallied, probably to some former support levels, which could possibly become resistance.

but first, we rally until the VIX falls to 12ish. that's the next step...

I know FOCM minutes are out Wednesday. so, expect some volatility this week.

TSLA has some "D" news on 10/9.

If TSLA announces a driver-less car (self driving car), its $300 bucks in a blink.
October 300 calls are about 0.25.

if not, it might just be another "sell the news" trade.

tb

VIX - Next phase

 

ok, so we hit the target this week. 17ish. boom.

Now what?

 

I listed 3 possible scenarios.

 

Take a look at the June/July lows, that was a FIRST for the VIX. it finally broke down, below 12, to all time lows. When that happened, it became a crowded trade. Everyone was posting how dead the VIX was. My post from early July shows the sentiment of the market towards the VIX, BEFORE it starting its move.

 

Now, everyone knows we got hit this week. The VIX bounced in a big way, catching a lot of traders by "surprise". Well, almost everyone was surprised. :)

 

Now the fun part. Where from here?

 

The IWM shows a double top, which must be assumed. It looks to me like a rounding top formation.

the SPY is still in an uptrend. But, we are sitting on a upper trend line right here. While it seems like a great buying opportunity, the moving avg for the blue line is still a ways off.

I will be watching the VIX closely next week.

thanks.
tb

PS- I hope at least 1 person benefit from my trading idea.

 

The forgotten volatility... VIX

The VIX is being "laughed" at by many traders, but I stay focused on the VIX, and when it will have a good hearty laugh back. I am early, but you can see the pattern forming. A modest spike to 12-13, can happen any day now. However, the spike to the 200 weekly moving average (17ish) will take more time, but will be very profitable. Patience.

tb

SCTY Trade

SCTY Trade....

tb

PS- I am watching GOOGL for 540 bottom. I see a V bottom there...

TLT Update - 5.2.2014

The move up in TLT was expected. But, the market has been flat/up, during the move in TLT.

That's not typical.

So, lets see if the market will rally next week, with a retracement in TLT.

OR

Will the market sell off, to further strength in TLT?

tb

TLT Chart - 4.3.2014

If the bond chart can start to firm up here, the market will reverse. Bonds will find 112.50ish, soon.

tb

SPY Chart - 2.3.2014

the market is weak, the VIX closed above 21, TLT is over 108, and SDS looks like it has more upside. All signs point to weaker SPY. But, that does not mean we cannot stop and retrace, right here.

tb