🤑SPY & QQQ - Friday - 9-Strike Move - 644.49% Max Gain
Case Study: On Friday every option is 0DTE making flow very unpredictable and often difficult to trade. This time all you had to do was buy calls.
Summary:
On October 6, 2023 we opened lower on NFP (non-farm payrolls) coming in super hot at 336k versus forecasts of 170k. It was a back and fourth week on jobs data and it looked like the lizards were going to send us straight to hell. However the market did the thing the market normally does which is fuck the max amount of participants possible bottoming in the open period and hitting a 9-strike move. It's one of the biggest we've seen in the history of RIGD and totally broke our charts. We left a TON of money on the table by selling too early.
Fridays:
On Friday almost every option in the stock market is 0DTE, which makes trading options extremely difficult. We normally avoid Fridays.
However on the list of RIGD Rules... avoiding Friday is way lower than the number one rule which is "Never fade a hulk rally".
That's what we got.
Bad data -> Market nukes -> Everyone goes short -> Market rips -> Lizards win.
Open Period:
RIGD works by scoring the Open Period (first hour) and determining a trend for the rest of the session (full day).
ON FRIDAYS THIS STRATEGY DOES NOT WORK
In fact, on Friday the probability is actually slightly higher that if you fade the open trend you will make money.
Really it's a coinflip either way... so we do not advise using the OPEN TREND as a guide for Friday trading.
We get 6 BEARS to 2 BULLS which is an extremely bearish open.
If it were any other day of the week, we would be looking at any and every chance to get into puts.
But again it's Friday.
EASY MONEY MIDDLE PERIOD
You trade small on the difficult days, so you can learn when it's an easy day and it's time to size up.
This was Friday.
Trading days do not get easier than this.
This is what we wake up for every day and pray for.
When we get parabolic hulk moves up there are normally a few factors involved:
market has looked like crap (we've been selling off)
data is absolute crap (hot jobs means higher for longer)
furus on twitter are extremely bearish
everything is going straight up
This is what everything is going straight up looks like:
Yes, there are more stocks in the market but these are the only ones that matter.
Yes, there are other opinions on the market and they are extremely wrong.
If each one of these stocks in the magnificent seven is moving, then we are going straight up buy calls on anything and you will make money.
The discord was electric crushing NVDA 450, TSLA 255, META 310, and AAPL 177.50 and then crying because our 100%+ returns could have been 4-5x.
Unfortunately we faded the rule of never fade parabolic hulk moves.
Individual names going insane = indices (SPY & QQQ) going insane and it showed up in the option flow.
Here's what the 0DTE flow looked like and how to trade it.
10:44 AM - 1740 BULL BOMB this roughly translates to 1.5 - 1.9 MILLION in bullish option flow
If it were not Friday, we would have went full position size but we were still a little scared and only took it with a medium position.
We sold a few times, eventually exiting even the runners at a 4-strike move at 250%+ gains. This was actually a mistake as they went to 400-500%.
12:29 - 521 BULL BOMB the market gods gave us a perfect opportunity to re-enter the trade if we missed the first move up.
All of the bullish flow here is an indicator (but not a guarantee) that the price action will continue in that direction.
Let's compare the final end of session returns for the 1740 BULL and 521 BULL.
QQQ MIDDLE PERIOD
The QQQ was easy to trade with a 764 BULL CLUSTER BOMB firing off at 10:48.
Cluster bombs represent 3 of the same side alerts within a 1 hour period with no opposite flow. We're constantly monitoring and tweaking these parameters over time.
This was an easy trade and if you were watching the magnificent 7 stocks or chatting in the discord, it was a party over how rich everyone was becoming.
The middle period did not see a ton of additional bullish flow, which we likely attribute to calls being bought on the other popular stocks like NVDA and TSLA.
Perhaps the BEAR flow was hedging or possibly small lizard rage trading because they got caught offsides by the price action.
There was a drawdown of 38.66% on this BULL CLUSTER but you ultimately returned 272.62% if held until the end of the session.
IMPORTANT LESSONS:
Trading 0DTE options profitably is all about catching THE MOVE in your direction.
On average, THE MOVE is 2-3 strikes from your entry price.
Friday was a very rare day where we had a 9-STRIKE move from the bottom (10:08 - 12:01) and then a second MOVE 4-STRIKES higher from 12:35 to 14:48.
Trading the second MOVE is significantly more difficult because the market has had an opportunity to react to the first. If we take the 521 BULL BOMB, we are looking to exit the trade as quickly as possible and are less inclined to hold runners until the end of the session.
Other:
Fridays are weird outlier days where the open trend is unreliable.
There was significant high score BEAR flow during the open and start of the middle periods. It's important to look at what else is happening in the market before making any other trading decision.
Market news (NFP, CPI, whatever) can lead to bias which is unreliable. Trade what's happening, not what you think will happen or what should happen. You and us are not so smart.
Also follow RIGD RULE #1 - never fade a hulk.
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