🚨 I’ll be live at 7 p.m. ET on Sunday 🚨
Wall Street’s own hedging can help send a stock ripping higher — and this Sunday, Tim Sykes and I are revealing why we’re watching the first trading hour [tap to save your seat]!
Hey gang, say a stock starts ripping. You pull up the news. Nothing.
Before you assume somebody knows something, take a look at the options.
Because sometimes the buying feeds on itself.
Here’s how…
When a market maker sells call options, they may buy shares to hedge their exposure. As the stock climbs, those calls become more sensitive to each additional dollar the stock moves.
That sensitivity is called delta.
A standard call with a 0.40 delta represents roughly 40 shares’ worth of exposure. If its delta climbs to 0.60, a market maker hedging that short call may need to increase the hedge from 40 shares to 60.
Now spread that adjustment across a pile of contracts…
The stock rises. Dealers buy more shares to adjust their hedges. That buying can help push the stock higher.
That’s the feedback loop behind a gamma squeeze.
And you don’t have to trade the options yourself to understand why that buying could matter to the stock’s price.
But don’t go chasing every green candle like a maniac!
Heavy call volume alone doesn’t prove a squeeze is coming. Dealers’ overall positioning matters. And the same hedging activity that adds fuel on the way up can accelerate selling when the move reverses.
A fast move still needs an exit plan.
That’s why the first trading hour — the power hour! — has my attention each day. I’m looking for stocks breaking out during that window, with a plan to trade the move while it’s happening.
Get in, get out a little while later, hopefully with a BIG move.
Tim Sykes and I will reveal what we’ve been working on with Power Hour Stocks at 7 p.m. ET on Sunday.
Come with the mechanics above in mind. You’ll have a better understanding of why we’re watching this opportunity.
Save your seat for Sunday’s Power Hour Stocks event!
Order Flow:Â
This is for informational and educational purposes only. These are not official alerts issued by Lance, but rather some interesting orders picked by the team at Lance Ippolito Trading.
When you look at these plays, always take the market maker move into consideration.
You can be right on the direction but still lose money if the stock doesn’t move enough. That’s where the market maker move comes in clutch.
With puts, they’re often downside hedges in case a stock tanks, especially around earnings. The further out of the money they are, the more likely they are to be hedges.
Also be sure and check when the company’s earnings date is because many of the plays we post here are centered around earnings!
If a stock is really expensive, consider a spread to lower the cost.
And finally, always remember the golden rule when it comes to buying calls: Buy dips, sell rips — and don’t chase!
If a stock’s moved a ton already today, maybe wait for a pullback.
There is inherent risk in trading. Trade at your own risk.
Note: If no date is listed after the month, it’s the monthly expiration (third Friday).
The team at Lance Ippolito Trading
Lance doesn’t want the CCP spying on him, so you’ll never find him on TikTok. Same goes for other social media sites, which are filled with impersonators, scammers and crypto bros.
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And in his private Telegram channel: https://t.me/+-gVwEIwGJhplMTgx
Important Note: No one from the team at Lance Ippolito Trading, New Money Crew or any of its associated brands will ever contact you directly on Telegram.
*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.Â
