To The Moon

Thursday saw more rolling activity compared to Friday, which aligns with the concept we discussed yesterday - taking profits on the initial selloff by rolling winning put positions.Additionally, we saw a decent amount of options being exercised rather than closed out. This implies traders felt this week's move may have fallen short of expectations, whether that's not reaching a target strike or having negligible premium left. However, by exercising, it suggests they maintain a view for further downside ahead, just not necessarily continuing through Friday's session.In plain English, Friday's trajectory could differ from next week's, essentially a bet on a bounce Friday but continuation lower next week. But that's more of an isolated view from the exercise flows - we'd need to look at overa

I have some good news and bad news: The bad news is that we're only halfway through this selloff, with another potential 2% downside for the broad market. The good news is that even though we're just halfway, individual stocks have already seen significant pullbacks, leaving ample room for upside following earnings releases and setting expectations that price reactions may not be overly negative. $SPDR S&P 500 ETF Trust(SPY)$ Let's start with the market overview. Wednesday's plunge saw a rare put-buying frenzy. For those who bought puts ahead of the move, the decision was:A) Take profitsB) Roll down to lower strike putsDealers opted for (B), rolling out of higher strikes to position for further downside:Closing Sept 20 526 puts, rolling to Sept

$Tesla Motors(TSLA)$ Down 8.8% post-earnings, those 300 calls are likely dead unless we see another miraculous 50% rally over the next couple of weeks. If you ended up with short puts that are now in-the-money, either close them out or convert to a call sale - no need to overthink it in this pullback environment.The first question post-print is whether TSLA could revisit the 220 area?The results weren't necessarily disastrous - top-line growth deceleration was expected, cash flows remain robust. However, the robotaxi delay to Oct 2024 was disappointing, though Tesla's new initiatives rarely hit initial timelines.The 8% plunge reflects expectations simply getting too frothy, requiring a reset lower. Conveniently timed with the broader pullback, the

Even I am getting numb to the constantly shifting winds. What were the catalysts over the past couple days? Biden not running? September rate cut?Regardless of the reason, on Monday we saw a massive 23,462 volume buyer in the $TSLA 20240920 300.0 CALL$  .The good news is that most of the option buying was outright, not part of a spread. The bad news is that the order flow seems to fall between retail and institutional in terms of style.So these 23,462 calls could either be thousands of retail traders piling in, or institutions putting on an initial position that others are chasing.I'm leaning towards the latter, as retail tends to favor shorter-dated weekly or monthly options rather than going all the way out to Septembe

Last week's unusual option activity suggests July-August could be turbulent. After all, we've been anticipating this pullback since late May – the "wolf" cries have persisted for over a month. Wall Street's bears have patiently waited through the holiday period, so a correction would only be courteous at this point.While I previously projected SPY towards 550, now that we're here, it doesn't signal an end, but rather the start of the second pullback phase.The second phase target, based on option positioning, appears to be 520-525, implying a 4-5% further drawdown for the S&P 500.Typical buy-side flows include: $SPY 20240816 522.0 PUT$ For this week specifically, there's a chance we test 540 first.

$CrowdStrike Holdings, Inc.(CRWD)$ - How severe is this incident? There is no updated open interest data in the market currently. The available data is only from Wednesday. It's safe to assume the OCC system is still down and brokers cannot retrieve the latest information.It's a relief the markets can still open normally today, but with July 19th option expiration, traders are essentially operating blind without full data visibility.I was planning to further analyze the rationale behind the NVDA 100 put buying, but that will have to wait until next week.Time for the usual weekly roll: $Apple(AAPL)$ Sell $AAPL 20240726 235.0 CALL$  Sell

Based on the current trend, SPY is likely headed towards 545, although a fresh rally to new highs is possible after risk is released. However, the potential downturn could be painful. $Netflix(NFLX)$ Netflix has a high probability of leading the earnings pullback, as major option flows are skewed bearishly, though this doesn't necessarily imply disappointing results.This week's put spread targets 600-570:Buy NFLX 20240719 600 PutsSell NFLX 20240719 570 PutsNext week's put spread strikes are 660-580:Buy NFLX 20240726 650 PutsSell NFLX 20240726 580 PutsImplying around a 10% potential downside. $Microsoft(MSFT)$ While Netflix bearishness is expected, the emergence of large MSFT put buyers is surprising, incl

The pullback has arrived again, but after Wednesday's shakeout, sentiment turned more optimistic ahead of TSM's earnings on Thursday. $NVIDIA Corp(NVDA)$ There were an abnormally high number of "doomsday" option trades for this Friday's expiration, but that's understandable - positions need to be actively managed or rolled as the landscape shifts daily into expiration.We first saw a large 30k lot buyer in the NVDA 20240719 133 calls on Friday, which was unwound on Tuesday.Then on Tuesday, a massive 120,000 lots contract bearish put spread was initiated:Buy $NVDA 20240719 119.0 PUT$ Sell $NVDA 20240719 115.0 PUT$ 

$Netflix(NFLX)$ - While the outlook seems positive, option flows are skewed towards bearish spreads, though that doesn't necessarily mean the earnings will disappoint. Here are some notable trades for reference:Calendar SpreadBuy $NFLX 20240719 650.0 PUT$ Sell $NFLX 20240726 650.0 PUT$ Bearish Put SpreadBuy $NFLX 20250117 590.0 PUT$  x1Sel $NFLX 20250117 470.0 PUT$  x2(Not a 1:1 ratio, buying 1 lot of 590 puts, selling 2 lots of 470 puts)Iron CondorBuy

$Apple(AAPL)$ Monday saw a 1.6% rally in Apple on an upgrade, but this week's institutional flows have skewed bearish - buying 230 puts, selling 225 puts; buying 227.5 puts, selling 222.5 puts.So let's start by selling some upside calls first: Sell $AAPL 20240719 240 CALL$ That said, there were some bullish trades as well, employing a rather ingenious "free-ride" call spread strategy:Buy $AAPL 20240816 230 CALL$  x1Sell $AAPL 20240816 260 CALL$  x10The rationale is to buy 1 lot of 230 calls while selling 10 lots of 260 calls - essentially betting