· wrinkle brain plays · 3 min read

Wrinkle Brain Plays

Plays for Execution on April 27, 2023. In the style of an Velma Dinkley.

Plays for Execution on April 27, 2023. In the style of an Velma Dinkley.

Tickers of Interest - TL;DR

Gamma Max Cross

  • SQQQ 05/19 31P for $1.40 or less
  • SBUX 05/19 111P for $3.20 or less
  • ASTS 05/19 5P for $0.45 or less
  • VOD 05/19 11.5P for $0.25 or less
  • TMF 05/19 8.5P for $0.20 or less

Delta Neutral Cross

  • WBD 05/19 13C for $0.65 or less
  • DVN 05/19 53C for $1.60 or less
  • USO 05/19 66C for $2.05 or less
  • XLK 05/19 147C for $2.20 or less
  • SNOW 05/19 147P for $6.50 or less

Trading Thesis - Why These Crayons Taste Like Scooby Snacks 🖍️🍪

Jinkies! Technical analysis and indicator-based trading are like solving mysteries, using clues from the past to predict important price levels today. 🕵️‍♀️

In this groovy analysis, we’ll dig into current option open interest like searching for a secret passage in a haunted mansion. By calculating portfolio-level greeks (say that five times fast!) such as Delta and Gamma, we can simulate the changes in greeks at different price points. Now, we’re one step closer to unmasking the villain… or in our case, price levels with the highest gamma and delta around zero.🔍

Some tickers are like scrappy pups, reacting strongly to both delta neutral and gamma max. It’s these past reactions that’ll have us driving our Mystery Machine towards juicy trading signals. 🚐💰

The plays and target entry prices are as calculated as Velma’s uncanny knack for finding clues, using a binomial option pricing model that reflects the expected size and duration of reactions from gamma max or delta neutral. Many of these plays profit from underlying moves in stock. The best plays benefit from directional moves as well as increased IV.

Notes - Mind-bending mysteries to ponder 🤔

  • If the price has zoomed past the entry price like the gang when they’re late for a Scooby Snack break, watch out 🔎. Something changed between creating these plays and the market opening.
  • Sell half your position on a double, and freeroll the rest quicker than Fred can say “trap time!” ⏲️
  • I risk up to 1% of my total capital on any trades like a brave dog down a dark hallway. If my conviction wavers, I’ll allocate only 0.5% or even 0.25% of my capital and dollar cost average in.
  • The trades were calculated before the market opened, so they’re based on information up until yesterday. Keep this in mind when deciding to jump into the mystery well after the fact 🗓️

FAQ - The gang’s all-too-familiar inquiries 🕵️

  • They’re mostly puts. Are you a Gloomy Gus bear? 🐻
    • Nope! Companies may have some recent gains that suggest they’re ripe for a mean-reverting move.
  • Are you tackling all these mysteries? 🔦
    • No way, Jose! I’m sharing more plays with a spooky edge to help my fellow mystery-solving apes find some gain possibilities 🦍💰
  • There’s a new play on the same ticker? What’s the sitch? 🚩
    • Ditch the old play! The new play has fresher data like Daphne’s latest fashion line.
  • But where are the crayons? 🖍️
    • Click the links above, silly!
  • Was it back-tested? 🧪
    • You bet! Results give us a moderate Sharpe Ratio (1.76) and a ghoulishly good win rate of 63% (± 7%).
  • And the historical performance? 📊
    • The realized Sharpe Ratio stands at 1.85, boasting a win rate of 68%. There’s a 95% chance the expected win rate will be between 63% and 75%. (Stats as of 2023-0321)
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