I did a lot of work already on a different post. The only reason I am posting the link is I cannot embed pictures in this community. But I'd love to hear from the investor community on what they think of the work.
For me this is Due Diligence. This is how I want to determine good entries, good exits, and build (accumulate) my long term holdings.
I grew tired of watching most of my portfolio yo-yo around and having learned more about Gamma in options trading I decided to apply it to my two most tracked stocks and see if it helped put the pieces together on why they behaved the way they did.
Sure enough. Gamma Exposure seems to completely explain why MSFT is trading in a lower volatile range right now, and why JPM is a yo-yo.
Further more it demonstrates where the big money has hedged their bets on where the price will be by end of next week. Depending on what the price is, delta-hedging can force that price across the finish line into a new strike price, or to add profits to the existing intrinsic value, or prevent total loss.
MSFT was a near equal battle between Calls and Puts while Long Gamma so their behavior pinned the stock.
Meanwhile JPM was well out of the money from where most open interest Calls were positioned and as a result they didn't even try to influence the price. Put-open-interest tent-pegged the stock into the ground for maximum profits in what is called a Gamma Trap.
This type of analysis, I think, is an icing on the cake to simply help your entry or your exit after other considerations such as fundamentals, long term strategies, and if the stock is higher or lower risk.
Let me know what you all think:
https://www.reddit.com/r/Trading/comments/olz0z6/eureka_i_think_i_put_most_of_it_together_msft_vs/
Submitted July 17, 2021 at 02:41AM by DarthTrader357 https://ift.tt/3iiXW4u
