Macro events aside , think I just nailed my Q1 /Q2 thesis on the market maker swings
Been sizing this up since Jan 1 (drops ) and then the Quad Witch of Jan 21 (1st fake rally) . It helped me develop a theory that allowed me to nail the swings today .
Theory : - Triple and Quad witch index call options that opened middle of last year were bought en masse by the banks . Those dates are key, because the banks will win on those bets . That’s March 17, June 16, and Sept 15 .
The near and mid term options that opened shortly after the Quad Witch Day , that are in between that day and the next Quad Witch are a bank hedge, and a retail trap. Between SPY and QQQ…the bigs are typically the wealthy ones with enough shares in holdings to sell fresh call options . They are the seller of these fresh, near term options .
CPI and PPI and fed rate dates happen in between . General market consensus Forrest-through-trees is 2024 is latest for market to recover (Those are the nearest term calls available after September btw ).
If the market trades sideways first half of the year , max pain for retail is down/flat during the in- between weeks of quad witch . That means retail loses on those fresh, less expensive calls that suddenly open during a rally . Bigs collect time premium . They sell old shares to aid the process .
Retail either sells at a partial or total loss, or jumps to next week waiting on the recovery .
Bigs then use fresh profits from collecting time premium (selling all of us stupid retailers the near term calls ), and average back into their holdings for a quad witch rally . That was this las few trading days .
What I did :
I’m not into charts but Nasdaq clearly has its resistance points at the major spots (e.g. 11k,11.5k,12k, etc )
I bought calls on the last false rally for March 21. I closed some green (SPY and DAPP), exercised a few, left a couple open (AAPL and Etsy) , and I sold out slowly of the cash call. I had a couple days to watch for the fresh calls to open for the weeks before the next big month available (April 21 has been open for a bit ).
That day was Friday and Today …..fresh calls available for cheap during a big spike . I sold AAPL and ETSY cheap and trimmed into mutuals .
When Nasdaq crossed 12k I reversed and bought calls near term calls for the inverse ETFs on all broad indexes (FAZ, SQQQ, SARK, SRS)
I effectively made money on both sides testing this theory …..although my technicals are certainly imperfect . I plan on rinse and repeating until June .
Thoughts ?
[link] [comments] https://www.reddit.com/r/stocks/comments/11ywqvs/think_i_nailed_the_q1q2_market_maker_swings/
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