Rebalances, 0DTE’s and much more in this week’s recap
By:Ryan Gaynor
Active trading gurus Tom Sosnoff, Jermal Chandler and Chris Vecchio discussed upcoming market events, focusing on Friday's index rebalancing and its impact on Nvidia (NVDA) and Apple (AAPL) shares, coinciding with quad witching. They emphasized the influence of interest rates on stocks during rebalancing, noting that expectations are likely priced in. Vecchio highlighted low implied volatility in crude oil (CL), making it unappealing, and suggested ZN as an alternative for trading on oil-driven fear. They concluded the conversation with a discussion of how flat the markets have been and what that could mean for future markets.
Tom Sosnoff and Tom Preston discussed a recent study on implied volatility and days to expiration in options trading in this week’s Market Measures. They highlighted the fact that volatility is mean-reverting while price is not. And they explored optimal trading strategies based on current market conditions. They found that managing options at 50% of max profit within 45 days was most effective, particularly in high volatility scenarios, emphasizing the importance of sound risk management and mechanical decision-making.
This powerful episode of Market Measures featured Tom Sosnoff and Jermal Chandler discussed market indices' performance and skepticism about AI stock valuations, highlighting notable pullbacks in key stocks like AMD, Taiwan Semiconductor, Netflix, Microsoft, and Tesla. They examined how correlations between the SPY and sector ETFs change with varying implied volatility (IV) levels, noting stronger correlations in high IV environments and weaker ones in low IV environments. They emphasized the importance of staying cautious in low correlation periods.
Ryan Gaynor is a video content specialist at tastylive.
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