Under a bear market, it's just a rebound
An environment with high interest rates will still lead to a decline in performance, or even a recession. There was a rebound due to favorable news, or the agency boosted shipments. It is estimated that after a few more days or Christmas, there should be a decline. Ambush first, wait to earn money 😄
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razo2 : quad witching this week bro. people love to buy options. they make sure all the puts lose this Friday as there is a huge order for hegies to eat up.
Moon so COLD : Yes, but the price over Christmas may be cheaper than the price now
JohnCS razo2 : bro. just wondering, is it possible that the max pain price change to favor the put side, if too many influx into call option suddenly? just an example.
razo2 JohnCS : so my guess for today will have mini rally if 0.5 then it will continue to fall back Thursday and Friday. they need to reach 392 for SPY to get max pain to wipe all the puts. one more thing to note, most index are basically small portion of the stock added into the index. these days hegies just trade the futures and index to manipulate the market. that is why Michael Burry says if the collapse does happen it will be a huge spriral downwards because rather than having individual companies to trade, we have index that influence the market ditectly and there is alot of people buying the index these days.
razo2 JohnCS : how traders believe the max pain target will be achieved is usually by hegies trading between multiple computers to buy/short to either pull or push the market down. retail investors like us usually don't have large capital in our pockets enough to influence the market unless it is a common goal like a short squeeze like GME. usually how market decide where to move is based on fed government -> macro economics -> market maker/ retail investors (large bias) -> retail investors (individual). so to answer your question, if this Friday the sentiment changed to favour the option calls for some reason then these hegies will trade towards the upside. you need to remember how these hegies trade and add more call options. an experienced trader usually trade both ways with some bias one one side. that is why sometimes you see short covering/long unwinding after a quad witching.
JohnCS razo2 : thanks a lot for your detailed explanation. I will google more about it to fully understand what you wrote. too deep haha.
JohnCS razo2 : maybe I should ask in this way. is max pain at 392. eg., closing at 393 and 391 would have lesser pain regardless of call or put side.
razo2 JohnCS : you can see in the chart clearly there are more puts than calls. so to maximize the "pain" they need to swing the spy to a bias of 392 to eat up all those option puts
razo2 JohnCS : ok in a nut shell max pain is the price where it is the most amount of lost regardless of call or put. so if the close price target is at higher for SPY means they need to pay out more people on calls which the hegies don't want that. they want both sides to lose, if the strike price is at 392, anything below the option puts of 392 will get nothing. option calls that is above 392 get the pay out. but don't forget about premium.
JohnCS razo2 : okay! crystal clear now! thanks for the great explanation! god bless for many more returns.
