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Simply Options > Bootcamp Lesson 3 > Flashcards

Bootcamp Lesson 3 Flashcards

1
Q

What is a vanna squeeze?

A

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.

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2
Q

How does a vana squeeze affect price?

A

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.

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3
Q

What makes vanna squeezes potentially more impactful than gamma squeezes?

A

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.

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4
Q

What does a stabilizing heat map indicate?

A

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.

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5
Q

How does a stabilizing heat map affect price behavior?

A

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.

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6
Q

Why is a stabilizing heat map desirable for long positions?

A

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.

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7
Q

What is a common misconception about a stabilizing heat map?

A

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.

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8
Q

Why does price tend to increase in a stabilizing heat map?

A

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.

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9
Q

Why does the speaker prefer taking trades when the price is closer to the hourly trigger?

A

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.

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10
Q

What strategies does the speaker suggest when taking a position far above the hourly trigger?

A

When taking a position far above the hourly trigger, the speaker suggests either buying a spread or taking a smaller position than usual.

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11
Q

How does the speaker advise using options data inspiration to structure your own trade?

A

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.

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12
Q

What is the main focus of the lesson mentioned in the course notes?

A

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.

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13
Q

According to the course notes, how can one structure a low risk, high reward trade based on the data?

A

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.

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14
Q

What is the relationship between the price movement and sold puts?

A

The price movement usually increases when there is a large increase in sold puts.

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15
Q

Why is the selling of puts considered important? (study other LDP)

A

The importance of selling puts is explained in the LDP and how it affects the price, study other note cards

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16
Q

What can be inferred from the fact that the sellers haven’t closed their sold puts despite being in profit?

A

The sellers’ decision to not close their sold puts despite being in profit suggests that they expect further upside.

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17
Q

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?

A

The analysis is performed on the daily timeframe.

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18
Q

What is the significance of the daily velocity in the context mentioned? if there’s 3 bullish divergences

A

The daily velocity is indicating that the dip is being bought, otherwise it would be getting worse.

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19
Q

What does the weekly velocity show based on the notes?

A

The weekly velocity shows bullish divergences and indicates a potential move up to the weekly trigger.

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20
Q

What is the probability of price reaching the weekly trigger according to the notes?

A

There is a 66% chance that the price will move all the way up to the weekly trigger.

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21
Q

Why do the put sellers keep selling puts as price nears upward to the weekly trigger, as mentioned in the notes? hint Siri

A

They may be expecting the price to move up to the weekly trigger, hence selling puts as a strategy.

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22
Q

Why is it important to consider the context in the given setup, like looking at triggers, and other data?

A

Considering the context allows us to understand the reasoning behind put selling and assess the bullish thesis.

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23
Q

What does the VOEX trend indicate based on the mentioned example?

A

The VOEX trend has been steadily moving to the upside since the beginning of May.

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24
Q

In the scenario of a bullish trigger with two bullish weekly divergences and with sold puts, it is favorable to take a long position?

A

yes

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25
When analyzing a heatmap, should you focus on reward or risk first?
You should focus on risk first.
26
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.
27
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.
28
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.
29
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.
30
What does the color blue indicate in the influence distribution?
The color blue indicates an upward movement in price.
31
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.
32
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.
33
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.
34
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.
35
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.
36
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.
37
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.
38
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.
39
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.
40
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.
41
What does a stable heat map indicate?
A stable heat map indicates that stable stocks tend to rise.
42
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.
43
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.
44
How can an unstable heat map be identified?
An unstable heat map has purchasing support above price and selling pressure below price.
45
Why is an unstable stock considered unstable?
An unstable stock can have highly exaggerated moves in either direction.
46
What is the general rule for unstable stocks?
Unstable stocks tend to go down.
47
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
48
How can you use sold puts to structure your trades?
By using the sold puts as inspiration and an inkling of an idea for a trade
49
Do sold puts always work out?
No, sold puts don't always work out, although they do most of the time
50
When should you be long?
You should be long when the price is above the hourly trigger or above the daily trigger
51
What was the significant increase observed in buyer calls for the stock Siri?
Almost a 4,000% increase in buyer calls
52
Why were the sold calls closed out?
Because there was an expectation of lots of upside to occur
53
What is the main message the speaker is trying to convey?
The main message is to structure a trade based on sold puts and be ready to cut the trade if it gets invalidated
54
why would 90% of the sold calls be closed out
because there's an expectation of upside price movement
55
According to the course notes, why was the bootcamp organized from least exciting to most exciting?
The bootcamp was organized from least exciting to most exciting so that as time goes on, things get more and more fun as opposed to the opposite. MACRO >
56
Based on the course notes, what topics did the bootcamp cover before diving into live trading?
The bootcamp covered deep dive stocks data and educational concepts, providing a macro overview of the stocks that were traded.
57
What does the instructor mention about the homework in the course notes?
The instructor mentions that there will be homework over the weekend and encourages students to try answering the questions even if they seem difficult.
58
In the course notes, what is the instructor's expectation after the next three weeks of live trading?
The instructor expects that after the next three weeks are over, students will be on their way to hitting trades at an extremely consistent rate.
59
According to the course notes, what advice does the instructor give regarding the homework?
The instructor advises students to use their own intuition and not immediately give up when facing challenging questions, as trying and putting in the work will lead to better understanding and learning.
60
When is the next lesson mentioned in the course notes?
The next lesson is mentioned to be on Monday.
61
What specific topics are planned to be covered next based on the course notes?
The next topics planned to be covered are heatmaps, options tables, triggers, and the PPM.
62
In the course notes, what does the instructor say about the divergence of P and W in relation to VOEX?
The instructor mentions that the divergence of P and W in relation to VOEX provides a fantastic view on Vopak's divergence and can be a good example to understand what the divergence looks like.
63
What zone did VOEX step right under?
The inhibition zone
64
What is the timeframe when VOEX trend broke out of the bearish zone in the propagation zone?
Right in the beginning of July
65
During which time period was VOEX in the propagation zone?
The entire time
66
When did VOEX trend move from addition back into stability?
In the timeframe mentioned as 'right here'
67
What happened to the price when VOEX trend moved into stability?
Price experienced downside
68
When did VOEX trend finally move back into stability?
A couple of days off from July 1st
69
What is important to note about the trend of VOEX?
It is moving higher
70
Based on the way VOEX looks, what is the likelihood of further upside?
There is a very good chance of further upside
71
What is the purpose of selling puts as a hedge?
To hedge a bearish bet. The strategy of selling puts while shorting the stock allows you to collect a premium, which can cushion against potential losses if the stock price goes up a bit. It also can enhance your gains if the stock price goes down but remains above the put's strike price. However, if the stock price falls significantly below the put's strike price, you might end up giving back some (or even all) of your gains from shorting, as you have an obligation to buy the stock at the higher strike price.
72
Why would selling puts be considered a hedge for a bearish bet?(short)
Because if the price goes down, the short position is working. The strategy of selling puts while shorting the stock allows you to collect a premium, which can cushion against potential losses if the stock price goes up a bit. It also can enhance your gains if the stock price goes down but remains above the put's strike price. However, if the stock price falls significantly below the put's strike price, you might end up giving back some (or even all) of your gains from shorting, as you have an obligation to buy the stock at the higher strike price.
73
What is the hedge for if the price goes up?
Drop the puts.
74
What is the percentage increase in sold calls over the last one day?
125% increase.
75
What is the average amount of sold calls per day in the past five days?
43.
76
What happened to 26% of the calls in the last table?
They were closed out or moved in the money.
77
If the price of a call option moves higher, where does it show up?
In the in the money table.
78
What was the average amount of sold calls in the past ten days?
72.
79
What is the main point about selling long calls?
Long calls are calls being shorted by me or you or institution or fund.
80
Who buys the calls when they are sold?
The dealers buy the calls.
81
What does it mean when a dealer is long?
It means that they believe the price will go down, and they usually sell puts
82
Why would someone sell puts?
There are a few reasons to sell puts: to profit off high IV, to bet on a significant bottom and expect the price to rise, or to hedge a short position.
83
What can happen to the value of a put if the IV drops?
If the IV drops, the value of a put can also drop.
84
Who sells the puts when they are bought?
The dealer sells the puts.
85
When would someone buy puts?
Someone might buy puts if they think the stock price will go down, if they expect the IV to rise, or as a hedge for a bullish position.
86
Is buying puts always bearish?
No, buying puts can also be done as a hedge, not necessarily as a bearish bet.
87
What is the purpose of going to the DPM chart and removing the five minute and 15 minute timeframes?
To clear the chart and get a better look at liquidity on a larger scale.
88
What do the green and blue colors represent on the DPM chart?
The green represents the hourly timeframe and the blue represents the daily timeframe.
89
When can we say that bulls have taken control of a trigger or the daily trigger?
When the price remains above the trigger or the hourly PM level long enough for the lower timeframe triggers or multiples to cross above as well.
90
Why is it not advisable to buy based solely on price breaking above the daily trigger?
Because it does not necessarily mean that bulls have taken control of the daily trigger unless the hourly trigger also crosses above.
91
What is the significance of the hourly and four-hour LDPM levels in relation to money?
If both the hourly and four-hour PM levels are above, it indicates that bulls have taken control. If not, bulls haven't taken control yet.
92
What does it mean if the daily PM could cross above in a day or two days?
It suggests that bulls could potentially take control of the daily trigger within that timeframe.
93
What can heat maps be helpful for understanding?
Heat maps can be helpful for understanding the orientation of a stock as stable or not.
94
How can heat maps be helpful for identifying risk?
Heat maps can be helpful for identifying risk based on where the selling pressure is.
95
What can distribution on a heat map give clues about?
Distribution on a heat map can give some clues as to where the price is going.
96
Why wouldn't someone be ultra bullish if the price stays low?
Someone wouldn't be ultra bullish if the price stays low because there is the potential for selling pressure.
97
What would make someone feel more bullish about the price?
If the price starts to move higher, it would make someone feel more bullish.
98
What does the options table show?
The options table shows...
99
What is the significance of entering the inhibition zone?
Entering the inhibition zone can lead to a price increase.
100
What are some indicators that suggest the price might go up?
Stable heatmap, bullish snap graphs, put selling for ten days, and a bullish trigger cross.
101
What are the conditions for closing a winning trade?
Close if the sold puts close, the price hits the weekly trigger, or eVOEX trend moves into propagation.
102
What information suggests a potential rise in price?
VOEX trending up, close to breaking into the inhibition zone, and a previous rise from $120 to $220.
103
What is the purpose of the sold puts?
The sold puts provide additional confirmation of the bull thesis.
104
What are some similarities in the setups of price going down?
Bullish divergences, trigger cross, and a fake out followed by a second trigger cross.
105
What can be inferred from the massive rip up in price?
The break into the inhibition zone led to a significant increase in price.
106
What does rising I.V in a bullish market indicate?
Rising I.V in a bullish market indicates a higher likelihood of price moving upwards.
107
What is the impact of rising I.V on price movements?
What is the impact of rising I.V on price movements?
108
What should be monitored closely when trading money?
When trading money, I.V should be closely monitored to understand potential price movements.
109
How can rising I.V be a positive indicator for a bullish outlook?
Rising I.V can signal a possible escape from selling pressure, making one more bullish.
110
If a stock sees a surge in dealer short calls and dealer long puts, what type of option position was most likely opened?
The dealers appear to be taking a bearish stance on the stock. When dealers are short calls, they are selling the right for someone to buy the stock from them at a certain price, suggesting they don't expect the stock to rise above that price. When dealers are long puts, they are buying the right to sell the stock at a certain price, indicating they might expect the stock price to fall below that point. Therefore, the most likely option position being opened is a bearish one.
111
If a stock sees a surge in dealer short puts and dealer long calls, what type of option position was most likely opened?
The dealers appear to be taking a bullish stance on the stock. When dealers are short puts, they are selling the right for someone to sell the stock to them at a certain price, suggesting they don't expect the stock to drop below that price. Being long calls means they have the right to buy the stock at a certain price, indicating they believe or hope the stock will rise above that price. Therefore, the most likely option position being opened is a bullish one.
112
If a stock sees a surge in dealer long calls and dealer short puts, what kind of options position was most likely opened?
This also suggests a bullish stance by the dealers. Long calls mean the dealers have the right to buy the stock at a certain price, hoping it will rise beyond that. Short puts mean they've sold the right to someone to sell them the stock at a particular price, anticipating the stock won't fall below that price. The most likely option position being opened, in this case, is also bullish.
113
If a stock sees a surge in dealer short calls and dealer long puts, what type of option position was most likely opened?(layman)
The dealer thinks the stock might go down or won't go up much. They're setting up for a possible decline in the stock's price.
114
If a stock sees a surge in dealer short puts and dealer long calls, what type of option position was most likely opened?(layman)
The dealer is expecting the stock to go up or at least stay around the current price. They're preparing for the stock to rise.
115
If a stock sees a surge in dealer long calls and dealer short puts, what kind of options position was most likely opened?(layman)
The dealer believes the stock is likely to go up or won't drop a lot. They're betting on a brighter future for the stock.
116
If a stock sees a surge in dealer short calls and dealer long puts, what type of option position was most likely opened?
When dealers have a surge in short calls, they are essentially selling calls, which indicates a belief or strategy that the stock may not rise above the strike price before the option expires. If they also have a surge in long puts, it means they are buying put options, betting on the price of the stock to go down. Together, these positions are bearish in nature. So, the dealer is expecting the stock price to either decline or not rise significantly. This combination also indicates a protective or hedging strategy against a potential drop in the stock's price.
117
If a stock sees a surge in dealer short puts and dealer long calls, what type of option position was most likely opened?
When dealers short puts, they sell put options, suggesting they believe the stock might not decrease below the strike price before expiration. If they also have a surge in long calls, they are buying call options, anticipating the stock price will rise. Combined, these positions express a bullish sentiment. The dealer expects the stock price to rise or remain stable at higher levels. This combination also might suggest the dealer is hedging against an upward move in the stock.
118
If a stock sees a surge in dealer long calls and dealer short puts, what kind of options position was most likely opened?
A surge in dealer long calls indicates dealers are buying call options, hoping for or hedging against the stock price going up. If they are also shorting puts, they are selling put options, implying they believe the stock will not decrease significantly. This combination of positions reflects a bullish sentiment where the dealer anticipates a rise in the stock's price or at least doesn't foresee a significant drop.

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