Utilizing NVDA Event Vol
To add NFP vol and GTC vol
The path to this spot was not exactly hard to predict; we got the vixpiration watershed/flowsplosion terminus precisely where it should have been. This chart has to have been one of the most popular going around the trading community this month (vixpiration annotation mine):
And the flowsplosion got silly in retail buying their favorite herded stonks:
And of course, lots of yoloing the calls:
Which led to almost silly predictability of this path back to QQQ and SPX support levels. I’d put up those charts but I’m sure all of you see that like everyone else does. They say you can’t time the market, but you and I both know, that is the pure blather of the lazy manager troupe out there. I hope they are not managing for you.
And so, finally some humans sold things:
And so they sell what they own, the hottest stonks. (And associated leveraged ETFs which exacerbates it even more. Another post on that coming soon.) This performance chart reminds me of the Jerry Reed song, “When you’re hot your hot, when you're not you’re not”:
And now we’re burning some event vol premium today, ahead of the event (the 1000th time I’ve typed that phrase) which is propping the market, which leads to shorts exiting due to their post traumatic spike disorder. Again, predictable as I posted in the chat yesterday:
And thus the QQQ one-day Feb26th/27th 525/526 call diagonals in yesterday’s chat from .38 are now nearly $1, will let those go toward the close.
Now I’m looking to use NVDA event vol to own longer dated vol for at a discount. First, let’s look at how NVDA has handled earnings in recent times. Unlike TSLA which has a habit of blowing away the straddle price, NVDA does the opposite:
And what’s almost comically uncanny, is that NVDA always goes up from the open and then always comes down from there:
This makes perfect sense; there are endless derivatives swirling around this thing. Which means a gargantuan amount of premium. You know that on a spike, folks will get some call yield/overlay their longs and yolos will sell their long calls. And verticals and butterflies, etc.
But not just in NVDA, all the adjacent stuff. SMH, SOXL, NVDL, TQQQ. Even SPY/SPX and QQQ vol selling will affect NVDA.
So, I’m going to use this event vol to grab some cheap longer dated vol.