Financial Select Sector SPDR® Fund
# Tickers of Interest **Gamma Max Cross** * [BP](https://options.hardyrekshin.com/#BP) 09/16 31P for $0.95 or less * [PCG](https://options.hardyrekshin.com/#PCG) 09/16 11P for $0.15 or less * [M](https://options.hardyrekshin.com/#M) 09/16 19P for $1.55 or less * [NEE](https://options.hardyrekshin.com/#NEE) 09/16 87.5P for $1.70 or less * [KMI](https://options.hardyrekshin.com/#KMI) 09/16 18P for $0.25 or less **Delta Neutral Cross** * [XLF](https://options.hardyrekshin.com/#XLF) 09/16 35P for $0.75 or less * [BAC](https://options.hardyrekshin.com/#BAC) 09/16 35P for $0.85 or less * [PFE](https://options.hardyrekshin.com/#PFE) 09/16 50C for $0.80 or less * [ABBV](https://options.hardyrekshin.com/#ABBV) 09/16 145C for $2.65 or less * [HPQ](https://options.hardyrekshin.com/#HPQ) 09/16 34P for $1.45 or less # Trading Thesis Technical analysis and indicator based trading tend to use past price performance in order to predict important price levels today. This analysis is based on the option open interest. With that option open interest, it calculates portfolio-level greeks--notably Delta and Gamma. More importantly, once the portfolio level greeks are established, I can now simulate the change in greeks at different price points. From there, I can find the price levels where portfolio-level gamma is the highest, and the portfolio-level delta is close to 0. For some tickers, the underlying price reacts strongly off of delta neutral, gamma max, and sometimes both. It's the reaction off of these price levels in the past that is being used to drive trading signals. The plays and target entry prices given are calculated using a binomial option pricing model that reflect the expected size and duration of the reaction from gamma max or delta neutral. A lot of these plays are profitable by underlying moves in stock. The best plays benefit from the directional move as well as the increase in IV. # Notes * If the price has moved past the entry price, exercise caution. Someone knows something that I don't know. * Look to sell half your position on a double, and freeroll the rest. * I tend to risk up to 1% of my total capital on any trades I take. If my conviction is lower, I'll only allocate 0.5% or even 0.25% of my capital to the trade, and dollar cost average in. # FAQ * These plays are mostly puts. Are you a gay bear? * No. It so happens that the companies have had some recent run-up which implies they are overextended. These trades are primarily some form of mean-reversion either toward or away from an important price level. * Are you entering all these plays? * No. There have been a dearth of plays in the WSB morning talks, and so I opened up my bag of tools slightly wider to point out more plays with a probable edge to help lead apes to more gain porn. Go through this curated list of plays, pick the ones you like based on whatever additional analysis you use, and get that gain porn.
Opened a long/short play today. Went short on CACC and long XLF. I think CACC could be hit hard with auto loan issues. I need to do some more dd, so I've started my position as only 2% of my port. Will increase the position to 20% in stages if further dd supports. The CACC missed earnings by 38% last Monday and is only down 6% since. Short interest is about 13% of float. Option premium is way to expensive on this one for me, so using a less risky long/short strat. Will share dd if I come up with anything useful.
Two more random thoughts, as i have a knack for finding trash. \- FCX - Gold has been quietly basing and going higher, and inflation is not going anywhere since the FED is chicken shit and not raising rates fast enough. Perhaps copper on the rebound even though it goes against a slow global economy? \- JPM - this stock looks poised for a breakout but i have a big sneaky that its a trap. XLF while under performing the other indexes is still in an overbought state technically yet JPM has based out and not moved at all.
You playing the DOW? NASDAQ off .4. All fake and fat and hoping for another rip in the morning, but I went really short dated and really OTM on my entries today (TXN and XLF). Would really like to see them run tomorrow.
I don't know about community favorites, but these are on my watchlist after fundamental due diligence and high IVR: HAL, PARA, XLE, MGM, XLF, SCHW, BAC. I missed the big move on the last three, didn't think their earnings would be so good last week.
Mostly just cashed out winners today at open. Not the day with the biggest gains, but it was definitely up there (~10% of total AUM). Sold YCS calls, SPY puts, and treasury puts. All i have left open are September BITI calls and some October SHY puts Opened some XLF 8 dte strangles for earnings. If they don't print tomorrow i might hold until Monday. Unfortunately, my 0dte strangles didn't fill so no fun for me tomorrow. Longer term, I'm not sure what the market is going to do. It seems like its trying to price in a recession and fed pivot in Q4, but who knows if that will actually happen. I'm still working on developing a model for determining if 1dte strangles during power hour will be profitable, but my vacation has ironically not given me much time for data entry and number crunching.
OP here. I do want to take a side on this debate, however I’ll try to explain to you what I personally understand in relationship between Beta and risk would like to hear if you have any additional thoughts. To bring up an extreme case for illustration purposes, the way I understand risk of beta is that if the standard deviation is much higher then so is the risk of a prolonged recovery, if not a total wipeout. If I invest into consumer staples which generally have lower beta it’s unlikely they will experience a significant loss during a recession since the demand is always somewhat stable. On the hand, if I’m investing into financial services, which are highly sensitive to many economic and financial factors it’s very possible that a drawdown will be so massive that the recovery time will be prolonged, and therein lies the risk of time value of money, or just an investor wanting to have cash at the moment for any reason. Looking at XLF vs XLP isn’t that what we see? A massive drawdown in 2007 for financial sector but which a much more aggressive bounce after the bottom, whereas XLP had a smaller drawdown but also a much smaller gain. Interestingly, XLP has outperformed XLF since inception in 1998, but therein lies the whole point of beta, doesn’t it? We’re talking about probabilities. And this case the investor wasn’t rewarded for taking on larger risk, or maybe because the severity of 2007 recession and its effect on financial services so severe that recovery will take much longer and will only outperform on much larger time scaled, which once again ties in nicely with beta and risk
>Bank earnings are guaranteed shit show, any friend working in a bank shouldve told you their businesses in 2q went shit good thing im holding XLF puts...but im taking profits on qqq and aapl puts that I have...not sure what I wanna do with my IWM puts
Quickly browsing the option chain and there's a sizeable appetite for XLF puts in August and September, bank earnings and forward guidance might be total dogshit and trigger the next legs down. what plays are people looking at to potentially short financials?