RJ Hamster
The $15 Wide Fly I Bought for 30 Cents
Don here…
The S&P opened up 40 handles this morning. That put us right at the upper edge of the expected move before most traders finished their coffee.
I bought a put butterfly anyway. The $15 wide fly filled at 30 cents. That gives me $750 max profit if we pull back to 5775 by Friday.
In today’s Live Trading Room session replay, you’ll see:
- Why the weekly expected move looks wrong for the first trading week. The $82 expected move is low compared to previous years. Opening weeks historically deliver bigger swings. I expect we crack through either edge before Friday.
- The rotation trade that has me confused about the rally.Financials ripped 2.5% while starting the day down pre-market. When they rotate into financials this hard, they sell tech. That rotation pressure could reverse the S&P gains.
- The zero DTE setup I traded for $80 risk. Bought a put at the 590 strike in XSP. Risk reward is solid. If we reverse, the $80 position could pay $120. If we rally further, I lose the full $80.
- Why call buying in Nvidia was only mildly bullish. The imbalance between traded at the ask versus traded at the bid was narrow. That signals two-sided trade ahead. Nvidia rallied 2% then faded almost immediately.
The financials hitting the upper edge of their expected move in one session tells you something. There is no fundamental reason for this move. It is pure rotation.
When XLF rallies this hard, capital has to come from somewhere. That somewhere is tech. Watch for continued sell side activity in the names that got us here.
Don Kaufman
Chief Market Strategist, TheoTRADE
P.S. Want to learn how to trade 0DTE? Check out my latest webinar where I explain exactly how I find and execute trades on the XSP, SPY, and more.
Click Here to watch the replay.
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