Quantcast
How Gamma Squeezes Can Affect Your Trading

How Gamma Squeezes Can Affect Your Trading

Posted On November 11, 2021 11:11 am
By:

Yesterday I sent you an article about “Gamma Dynamics,” and how an increase in options activity can affect a stock’s price.

I used Tesla as an example and showed how increases in Call and Put selling (at different times) have driven the price up and down, respectively. 

[$19 Blowout Sale] Access the top-secret trading techniques you need to profit in Options Trading.

Derivatives affecting the price of an underlying asset are not unheard of.  

Gold bugs have been complaining for years that banks manipulate the spot price of metals with derivative contracts.  

I don’t think there’s any intentional manipulation going on.  But there’s no doubt in my mind that options contracts are moving stock prices right now. 

For you, that means the pricing of a stock or an options contract can be misleading.  

The options contract affects the stock price, then the stock price affects the value of the options contracts…

It’s like trying to get a touchdown on a field where the end zone is constantly moving.  

The longer this bizzaro world of pricing keeps going further it becomes disconnected from real life. 

The Options360 Trading Concierge Service is now up 54% in 2021! CLICK HERE to be a part of those profits!

There’s no doubt some people have made money in this kind of environment – just look at the meme stocks.  That situation isn’t exactly the same, but it’s close enough for demonstration purposes. 

Yes, some people made money. But far more people lost a lot of money!

In Options360, we steer clear of those kinds of volatile trades.  Instead, we focus on grinding out profitable trades week in and week out. 

I know that’s not as exciting as a 1000% home run, but it’s been 6 years now (since 2015) and we have smashed the S&P every year…

Something that 92% of large fund money managers can’t do consistently.

Right now, until this phenomenon passes it’s critical that you be VERY careful with the trades you put on.  You can see some price action that looks like a great setup only to find that in reality, it’s just a reaction to some large options activity.  

And when that happens you could easily be tempted into a terrible trade that looked great at first.  

So forget pie in the sky trades, and instead focus on grinding outsmart – repeatable – profitable trades that can help you build real long-term wealth. 

You can start for just $19 with Options360

To Your Success,

Steve

PS.  If you missed it, you can read yesterday’s article here. 

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.