Pump or Dump? Bargain Hunt or Choose Options on Quad Witching Day?
The first Quadruple witching day of 2024 is on its way - this Friday!
On this day, 4 kinds of derivatives will expire. Heavy trading volume makes the market highly volatile compared to normal days.
Quadruple witching may provide arbitrage opportunity to profit on temporary price distortions.
What happened when large numbers of options expired?
On February 16th, $SUPER MICRO COMPUTER INC(SMCI)$ experienced a significant surge in buying pressure due to a gamma squeeze fueled by the high volume of options expiring on that day. This surge led to a rapid increase in share prices.
What can you do to profit from the volatility?
Bargain hunt stocks!
On 16th Feb., $SUPER MICRO COMPUTER INC(SMCI)$ SMCI experienced a price fluctuation of 26%.
0DTE options!
Zero-day expiration (0DTE) options, also known as same-day expiration options, are options contracts that expire on the same day they are traded.
This concept has been expanded: options expiring that week can also be counted as 0DTE.
How do you prepare for roller coaster ride?
Which stock will experience gamma squeeze on the day?
Leave your comments and also post to win tiger coins~
Every valid comment will get at least 5 tiger coins!
The hot and insightful comment will even get hundreds of tiger coins!
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Pump or Dump? No correct no wrong! [Doubt] [Doubt] [Doubt]
Quadruple witching does not have a quantifiable bullish or bearish bias. Instead, the event is largely a function of speculation and investor sentiment. When quadruple witching occurs, traders should expect increased volatility and manage their positions accordingly. The resulting market swings could be bullish or bearish depending on how investors interpret the situation. [Chuckle] [Chuckle] [Chuckle]
Traders who expect a sharp rise in volatility during quadruple witching may decide to buy options, anticipating that prices will rise due to increased extrinsic value. Long options strategies such as long straddles and long strangles have no directional bias, and may profit form a large move either direction. Conversely, investors anticipating a decrease in volatility after the event may opt for short straddle or short strangle positions to capitalize on IV crush.
It is important to note that predicting price movements during quadruple witching can be difficult because of its unpredictable nature. Ultimately, whether you should enter a long or short position depends on your outlook for the markets and how you expect them to react when faced with high levels of options expirations. [Blush] [Blush] [Blush] [Silence] [Silence] [Silence]
@GoodLife99 @Fenger1188 @b1uesky @icycrystal @Universe宇宙 @koolgal @rL @TigerStars @CaptainTiger @MillionaireTiger @Tiger_comments @TigerClub
it's that time of the year - first Quadruple witching day of 2024 this Friday!
Quadruple witching could provide arbitrage opportunity to profit on temporary price distortions.
time to Bargain hunt stocks! [Grin] [Grin] [Grin]
@Shyon @Aqa @GoodLife99 @LMSunshine @koolgal @Universe宇宙 @rL @HelenJanet
How do you prepare for roller coaster ride?
Which stock will experience gamma squeeze on the day?
Leave your comments and also post to win tiger coins~
Every valid comment will get at least 5 tiger coins!
The hot and insightful comment will even get hundreds of tiger coins!
Not an expert on derivatives and options. But I guess the same principles hold. May want to exit earlier if the volatility is beyond’s one risk appetite.
As with all, buying and selling decisions are both a science and an art. Stay calm and trade wisely.