· wrinkle brain plays · 4 min read

Wrinkle Brain Plays

Plays for Execution on May 1, 2023. In the style of Bob Ross.

Plays for Execution on May 1, 2023. In the style of Bob Ross.

Tickers of Interest - TL;DR

Gamma Max Cross

  • LAZR 06/16 5P for $0.25 or less
  • DB 06/16 11P for $0.65 or less
  • AMAT 06/16 110P for $4.20 or less
  • JBLU 06/16 7P for $0.40 or less
  • EBAY 06/16 45P for $1.00 or less

Delta Neutral Cross

  • TSLA 06/16 160P for $7.55 or less
  • EWZ 06/16 28P for $1.30 or less
  • FXI 06/16 28P for $0.80 or less
  • CSCO 06/16 47.5C for $1.40 or less
  • UAL 06/16 43P for $1.70 or less

Trading Masterpiece - Why These Crayons are a Happy Accident 🖍️

Just like when we’re painting our happy little trees 🌳, technical analysis and indicator-based trading use past price performances to predict important price levels for today’s canvas otherwise known as the stock market.

This cheerful masterpiece 🎨 unfolds based on the current option open interest. By calculating those delightful palette-level greeks - you know, the ones we like to call Delta and Gamma - we can now simulate how they prance & dance at various price points. From there, we can find those magical price levels where the palette-level gamma reaches peak happiness and the palette-level delta is as close to 0 as our lovely little clouds in the sky ☁️.

Sometimes, during our creative journey, we’ll encounter tickers where the underlying price gives us an extra splash of paint off of delta neutral, gamma max, or even both! 💥

We’re using the reactions from those price levels in the past to drive our trading signals, just like brush strokes on canvas.

Our happy little plays 🎭 and target entry prices are calculated using a binomial option pricing model—a concoction incorporating the expected size and duration of the reaction from gamma max or delta neutral. Fear not, fellow artists, many of these plays turn profits by underlying moves in stock. And the best ones? Well, they benefit from the directional move and the increase in IV just like the prettiest painting. 🖼️

Notes – A Treat for Your Canvas 🍭

  • If the price sashays past the entry point, take a step back 🥺. Something has evolved since our happy little plays were made and market opened.
  • Shares are like paint, sell half your position on a double, and let the remaining colors ride out, exiting at your artistic discretion. 🌈
  • Allocate up to 1% of your total palette 🎨 on any trades. If your conviction wavers like a gentle autumn breeze, only dedicate 0.5% or even 0.25% of your arsenal to the trade, gracefully blending in with dollar-cost averaging.
  • These trades are based on the knowledge before the market opened, so keep that in mind when you’re jumping in like a leapfrog after the fact 🐸. New strokes of the brush may call Bob’s original thoughts into question.

FAQ - ‘Cause We’re All Learning in This Happy World 🌍

  • These plays converse mostly in puts. Could it be, you’re a gay bear? 🐻
    • Nope, my friend, that bear is just a rumor. These ventures just happen to revolve around companies reaching for the stars ✨, hinting they’re a tad overextended. Expect some form of mean-reversion toward or away from important price levels.
  • Do you partake in these wondrous plays?
    • Not all 🙅‍♂️. Sometimes, the WSB morning talks lack a little sparkle, so I dug deep into my magical bag of tricks to guide my fellow art lovers towards more gain masterpieces. Skim through these carefully handpicked plays, choose your favorites with your own paint-by-numbers system, and eternalize your name in the Gain Gallery. 🏆
  • Spot a new play on a previously encountered ticker? 🧐
    • Out with the old, in with the new 🔄! The old play likely lost its luster, and if you didn’t jump in, don’t go chasing waterfalls (or the price). Remember, a fresh day’s worth of data rolled in and the newer play reflects it, while the old one’s left out in the rain. ☔️
  • Where are those promised crayons? I see only letters. 🤔
    • Follow your heart ✨and click the links above.
  • Did you test these creative ideas in the past?
    • Indeed 🧪! The results boast a satisfactory Sharpe Ratio of 1.76, and on average, a 63% win rate of trades (give or take a 7% margin of error).
  • And the historical performance? 🎭
    • The realized Sharpe Ratio sits at 1.82 with a 66% win rate. Based on trade performances until now, there’s a 95% probability the win rate will range between 62% and 73%—painting a new world of possibilities. 🌟 (Stats as of 2023-04-30)
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