Bootcamp Lesson 3 Flashcards
What is a vanna squeeze?
A vanna squeeze is when price action will be determined based on the movement of iv (implied volatility) rather than the movement of price itself.
How does a vana squeeze affect price?
If ivy drops to the left side of the quadrant, price will fall into purchasing support and will have to be hedged by buying shares, which can lead to a higher price. If ivy rises, price can go into selling pressure, causing price to move down.
What makes vanna squeezes potentially more impactful than gamma squeezes?
Vana squeezes have the potential to give a lot more price action than gamma squeezes because iv can fluctuate significantly, bringing price into purchasing support or straight into selling pressure.
What does a stabilizing heat map indicate?
When there is selling pressure above and purchasing support below, it suggests a stable hedging environment. This is how stable stocks typically appear, and they tend to rise to the upside most of the time.
How does a stabilizing heat map affect price behavior?
In a stabilizing heat map, price will tend to balance between selling pressure and purchasing support. However, it usually rises to the upside over time.
Why is a stabilizing heat map desirable for long positions?
A stabilizing heat map with purchasing support below is ideal for those wanting to be long on a stock. Price dips are likely to be bought up, leading to stability and overall upward movement of the stock.
What is a common misconception about a stabilizing heat map?
A common misconception is that a stabilizing heat map with selling pressure above may cause price to go down. However, the presence of purchasing support below suggests stability and a tendency for the stock to rise in value.
Why does price tend to increase in a stabilizing heat map?
In a stabilizing heat map, the presence of purchasing support below usually results in all dips being absorbed, leading to a stable stock that generally increases in value over time.
Why does the speaker prefer taking trades when the price is closer to the hourly trigger?
The speaker prefers taking trades when the price is closer to the hourly trigger because the potential loss is smaller compared to buying when the price is further above the trigger.
What strategies does the speaker suggest when taking a position far above the hourly trigger?
When taking a position far above the hourly trigger, the speaker suggests either buying a spread or taking a smaller position than usual.
How does the speaker advise using options data inspiration to structure your own trade?
The speaker advises using options data as inspiration to structure your own trade with a stop loss, an invalidation level, and a take profit level.
What is the main focus of the lesson mentioned in the course notes?
The main focus of the lesson is to identify sold puts and analyze what they indicate in terms of market sentiment and potential trading opportunities.
According to the course notes, how can one structure a low risk, high reward trade based on the data?
Once a thesis is established, combining voex, snap graphs, and heatmaps, the trader can look for triggers indicating bullish sentiment such as selling puts and then structure a trade with low risk and high reward potential.
What is the relationship between the price movement and sold puts?
The price movement usually increases when there is a large increase in sold puts.
Why is the selling of puts considered important? (study other LDP)
The importance of selling puts is explained in the LDP and how it affects the price, study other note cards
What can be inferred from the fact that the sellers haven’t closed their sold puts despite being in profit?
The sellers’ decision to not close their sold puts despite being in profit suggests that they expect further upside.
What is the timeframe under consideration for the analysis for when looking at sold puts in the past 10 days on the trading view chart?
The analysis is performed on the daily timeframe.
What is the significance of the daily velocity in the context mentioned? if there’s 3 bullish divergences
The daily velocity is indicating that the dip is being bought, otherwise it would be getting worse.
What does the weekly velocity show based on the notes?
The weekly velocity shows bullish divergences and indicates a potential move up to the weekly trigger.
What is the probability of price reaching the weekly trigger according to the notes?
There is a 66% chance that the price will move all the way up to the weekly trigger.
Why do the put sellers keep selling puts as price nears upward to the weekly trigger, as mentioned in the notes? hint Siri
They may be expecting the price to move up to the weekly trigger, hence selling puts as a strategy.
Why is it important to consider the context in the given setup, like looking at triggers, and other data?
Considering the context allows us to understand the reasoning behind put selling and assess the bullish thesis.
What does the VOEX trend indicate based on the mentioned example?
The VOEX trend has been steadily moving to the upside since the beginning of May.
In the scenario of a bullish trigger with two bullish weekly divergences and with sold puts, it is favorable to take a long position?
yes
When analyzing a heatmap, should you focus on reward or risk first?
You should focus on risk first.
What happens if price moves down slightly in an unstable heatmap?
If price moves down slightly in an unstable heatmap, it can fall into all the selling pressure and continue to move down.
When does a gamma squeeze occur in relation to the crosshairs?
A gamma squeeze occurs when the crosshairs hit the 1.1 or 1.3 mark and the gamma becomes negative.
What tends to happen to price in relation to the gamma neutral zone?
Price tends to drift back into the gamma neutral zone at some point.
What does the influence distribution of a heat map predict?
The influence distribution of a heat map predicts the outcome over the next five days, with the peak representing the most probable outcome.
What does the color blue indicate in the influence distribution?
The color blue indicates an upward movement in price.
Based on the stability of the heat map, what has been happening to price recently?
Based on the stability of the heat map, price has been going down for the past two weeks.
What was the price movement when the heat map was stable?
When the heat map was stable, the price moved from about 20 to 2025-40.
What are the three ways that people use to sell calls?
The three ways that people use to sell calls are: 1) Selling calls as a bullish bet with downside protection, 2) Selling calls to profit from a “future” drop in implied volatility, and 3) Selling calls as a bearish bet to profit from a decrease in stock price.
When selling calls, what does it mean to sell naked calls?
Selling naked calls means selling calls without owning any shares of the stock. It is a synthetic short position taken to make a profit if the stock price goes down and the calls expire worthless.
What are the reasons for buying short calls?
The three basic reasons for buying short calls are: 1) Expecting an increase in implied volatility (IV), 2) Being bullish on the stock and anticipating a price increase, and 3) Taking a major short position but wanting upside exposure in case the short position takes time to play out.
What is the difference between in the money and out the money calls?
In the money and out the money are just labels for different call options. The distinction is based on the relationship between the strike price of the call and the current price of the underlying stock.
What is the purpose of buying calls when having a short position on the stock?
Buying calls when having a short position on the stock serves as a hedge in case the stock price moves higher. It provides some upside exposure to offset potential losses from the short position.
What is one of the strategies for selling calls when expecting downside in the stock price?
One strategy for selling calls when expecting downside in the stock price is to sell at-the-money calls. By selling these calls, one can capture profit if the stock price moves down while still being bullish on the stock.
What are the three types of selling calls explained in the course notes?
The three types of selling calls explained are: 1) Selling calls as a hedge for a bullish position when expecting downside, 2) Selling calls to profit from a drop in implied volatility (IV), and 3) Selling naked calls when bearish on the stock and expecting the calls to expire worthless.
What is the significance of high implied volatility (IV) when selling calls?
When selling calls, high implied volatility (IV) can provide an opportunity to capture profits. If IV drops in the future, one can potentially buy back the calls at a lower price, resulting in a profit from the decrease in IV.
What does a stable heat map indicate?
A stable heat map indicates that stable stocks tend to rise.
What is the gamma neutral zone?
The gamma neutral zone is the white spot on the heat map where there is no purchasing support or hedging environment.
What happens to price in the gamma neutral zone?
Price remains neutral and doesn’t have expectations of moving into selling pressure or purchasing support.
How can an unstable heat map be identified?
An unstable heat map has purchasing support above price and selling pressure below price.
Why is an unstable stock considered unstable?
An unstable stock can have highly exaggerated moves in either direction.
What is the general rule for unstable stocks?
Unstable stocks tend to go down.
What are the three different options you can use to have a tight stop loss while being exposed to potential upside?
Long position above the daily trigger, long position until the hourly trigger crosses back below the daily trigger, or staying long based on bullish sentiment
