How Traders Are Using 0DTE Options to Trade Futures Now
Apr 27, 2023
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Matt, a former chemical engineer and self-proclaimed tech geek and fitness junkie, and Ashton, a stock and options trader and published author, discuss the rise of zero DTE options in trading, identifying bullish and bearish markets with options data, predicting market direction and trading high volume pivots, analyzing options movement, and the use of zero-day options in futures trading. They also mention their collaboration with Edgclear, engage with social media, and invite listeners to join their live stream trading challenge.
Traders can use the resilience indicator to identify strong market conditions and make informed trading decisions.
The monthly map analysis reveals bearish sentiment deterioration and the potential for a short squeeze, supporting a bullish outlook.
The monthly map tool helps traders understand market sentiment, anticipate volatility, and navigate earnings seasons.
Deep dives
The Resilience Indicator Shows Strength in the S&P
Today's trading session began with the S&P opening above the resilience level, indicating a strong market. Despite some selling pressure, the resilience indicator showed that the market had the potential to push higher. Based on this information, the trader went long on the S&P and added to their position during a pullback. Ultimately, they exited their trades as the market continued to show strength.
Monthly Map Analysis Supports Bullish Sentiment
By analyzing the monthly map, it becomes apparent that the bearish sentiment in the market has been deteriorating rapidly. Bears are trapped in their positions, while call sellers are forced to go long. The market is experiencing a short squeeze, as shorts are being proven wrong. This analysis supports the bullish sentiment and provides insight into the potential for further upside in the market.
Arbitrage Opportunities and Gap Filling
The resilience indicator also indicates potential arbitrage opportunities by highlighting the gap between the gap-filling levels of individual stocks and the S&P. When the S&P opens above the gap-filling level, there is a potential for the stocks to move higher or the S&P to move lower, narrowing the gap. This creates opportunities for traders to take advantage of price discrepancies and trade these instruments against each other.
Bears Struggle to Exit Positions Amidst Market Strength
The monthly map analysis shows that bears are finding it difficult to exit their positions as the market continues to show strength. With stocks gapping down and the S&P gapping up, there is a discrepancy between the two that presents an opportunity for market participants. Bears are getting squeezed out of their positions, leading to further upward pressure in the market.
Understanding Bull and Bear Zones in Trading
In this podcast episode, the hosts discuss the concept of bull and bear zones and how they can be used to gain insights into the market. By analyzing the monthly map tool and observing the positioning of bulls and bears, traders can anticipate volatility and make informed trading decisions. The hosts explain that the color-coded zones represent areas where there are either bulls or bears without opposing traders. The distance between the zones indicates the expected volatility for a given day or period. The hosts also highlight how the monthly map tool can help traders understand and navigate earnings seasons, as it provides valuable information about the expected market sentiment and potential price movements.
Using Volatility and Earnings to Inform Trading Strategies
Another key topic discussed in the podcast is the relationship between volatility and earnings. The hosts explain that analyzing the volatility levels in relation to upcoming earnings reports can help traders gauge market expectations and potential price movements. For example, low volatility combined with a bear zone may suggest that earnings are expected to be flat or even negative. On the other hand, low volatility with a bull zone may indicate positive earnings expectations. Traders can utilize this information to determine whether they should adopt a net buying or selling strategy and adjust their position sizes accordingly. The hosts emphasize that the monthly map tool can assist not only swing traders but also day traders in understanding and capitalizing on the market landscape.
Matt and Ashton are two experts in the trading world. Matt, a former chemical engineer and self-proclaimed tech geek and fitness junkie, brings his knowledge of algorithmic tools for the modern trader to the table. Ashton, a stock and options trader and published author, joins the conversation with his expertise in the industry. Join us […]
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