The Bid for Volatility Keeps Growing

Pit Stop [fstp, logo, header] Andrew Giovinazzi believes that he's pinpointed 10 companies that will be the best performing in 2025. He sees the traces that Institutions leave behind when they decide to go BIG on a company LONG term ... and now he's ready to put on trades with SUBSTANTIAL upside. [All the details are here.]( [ag views, logo, header] The Bid for Volatility Keeps Growing Even Jensen Huang, CEO of Nvidia Inc (Ticker: NVDA) could not keep SPX green today. The global strife between Israel, Iran and a good chunk of the global oil production could set things into a tailspin. What was VIX going up because of the election became VIX going up because no one knew what was up. Toss in a longshoreman strike the VIX just keeps going up. [ded] VIX 5 day chart with Sigma IVs on the bottom SPX managed down .30% with NVDA up on the day. I think there are two narratives going- get long the AI wave but hide under your desk for everything else. I still want to hold my long VIX/ short SPX into the weekend and what will be a void of uncertainty. - AG  [logo, pit profits] Want to find YOUR winning fit? Give our Customer Care Team a call at [1-888-872-3301](tel:/1-888-872-3301) Monday-Friday from 9 a.m. - 5 p.m. EST. Or email them anytime at [support@optionpit.com](mailto:/support@optionpit.com)  [logo, fvix, header,] Stock Analysis: Dell Computers Hey Traders, We had a special request for a stock analysis. That stock is Dell Computers (Ticker: DELL) [Let's break this one down.]( [ded]( [Click here to watch.]( - Mark --------------------------------------------------------------- Want to get Mark's Trader's Edge updates directly to your inbox?[Click this link to sign up!](  [frep] Meat and Potatoes of Options Hi Traders, Today, I want to hand the mic over to head of techincal analysis at Option Pit: Licia Leslie. She has an important message on the core parts of options for everyone.  So i'll hand it over to her now. --------------------------------------------------------------- I know I have discussed the options synthetics several times now. But I don’t think I have stressed the importance of this relationship between calls, puts and stock. This is literally the meat and potatoes of options trading. As long as you have two of the three, you can price the third one. Back when I was clerking, for the first of three market makers in my career ugh, in the mid 80s not everyone knew this formula. Believe it or not, there were traders in the pits that had no idea! The guy I worked for knew and he taught me. He was able to scoop literally a dollar risk free when the options got out of whack. When I say out of whack, that means the reversal and conversion were not adding up. As long as you know this formula, you can price any option. Nowadays the computers do it all for us so we know the options are generally inline. But it is still vital to know this as it can help you better understand the nuances of options, help to build better option strategies for the conditions and get you out of the jam of pattern day trading. Let’s dig in. You absolutely have got to memorize this. Memorize it first and then it will become a natural thing you just automatically know. The Reversals and Conversions are the trinity: stock, call, and put. Conversion: you are carrying long stock so you are paying interest, this matters with longer dated positions and now that we have interest rates again. You also collect any dividends. Conversion: Long stock + Long put + Short call For simplicity this is for near term options as it takes out interest and dividends. Reversal: Short stock + Short put + Long call When you are short stock you collect the interest and pay the dividends, but we are using short term so this takes that out of the equation. So, looking at the options chain you can take each strike and add up the stock and puts, subtract the strike price and that is what the call price will be. This holds for any stock at any volatility. Let’s look at Riot Platforms (TIcker: RIOT): [ded] This screenshot is taken with the stock trading $16.45. Now you can take any strike, add the put price to $16.45, subtract the strike price and that will be the price of your call. At the strike 16.50: 16.45 (stock price) + 1.08 (mid range of put price) - 16.50 (strike price) = $1.03 (call price) 16.45 + 1.08 = 17.53 17.53 - 16.50 = 1.03 Call market is 1.01 - 1.09  Here is the 15 strike: 16.45 + .40 = 16.85 16.85 - 15 = 1.85 Call market is $1.83 - $1.91  Now the 18 strike: 16.45 + 2.10 = 18.55 18.55 - 18 = .55 Call market is .54 - .62  I took the midrange of the put market to price these. As you can see, the call markets are leaning a bit higher, meaning the call value is closer to the bid. That tells us the liquidity providers would rather be buyers of these calls. And looking at the stock chart and the implied volatility, this makes sense: [ded] The stock just rallied seven bucks in six days on a stock trading under $20. That is a massive move of over 61%. I guarantee you these market makers do not want to be short call units! Knowing these two formulas, not only helps you price the options, but you can literally create any of the three with the other two. So, you want to go long? Go short? Close a position synthetically? Know these formulas. Next time I will demonstrate the synthetics with the corresponding charts. Thanks for reading, Join Licia's trading community and start receiving her Profits In Pumps Newsletter. [Click this link to sign up!](  [fpri] Stock Watch: House of Morgan (JPM) Hey Income Hunters, The House of Morgan is a good read about the rise of, what I like to call, the Wall Street Baking Casino … The book reflects on how JPM navigated through the 20th century and ultimately adapted to globalization and the modern financial world … That of course is the short version … In the real world what they did was create, what Warren Buffet called, weapons of mass destruction, or derivatives and other “bank created” financial products that turned commercial banks into hedge funds. The question is, in today’s environment of de-globalization and high debt, is JPM’s model of hedge fund trading breaking down? The JPM stock chart is at a critical point and where it goes from here offers a huge signpost for where the markets are headed in 2025. [Click through for the details …Â]( - Bill --------------------------------------------------------------- Never miss an edition of Bill Griffo's Power Income Newsletter ever again. [Click this link to sign up!](  [fpip] A New Drink & A New Trade Hi Shoppers, I have a new drink for you! Sorry it is nonalcoholic, we can do one of those another day. Since I stopped drinking coffee I was drinking all kinds of herbal teas with Egyptian Licorice being my favorite. Now I have switched to hot water with ¼ teaspoon of cinnamon, ¼ teaspoon of turmeric, ½ teaspoon of ginger and a squeeze of fresh lemon. It is healthy and supposed to help with inflammation which apparently we are all dealing with. If you, like me, freeze in the air conditioning, this hot drink is the best, you can drink it all day. And it’s a great way to get your required five or more glasses of water a day. [On with the trade idea in C3 AI (Ticker: AI).]( - Licia --------------------------------------------------------------- Join Licia's trading community and start receiving her Profits In Pumps Newsletter. [Click this link to sign up!](  Don't miss when our traders go live! Get an alert everytime we open the live rooms to all of our readers for free by selecting the calendar you use below. Add Option Pit Live Events to Your Calendar [Apple]( [Google]( [Outlook]( [Outlook.com]( [Office 365]( [Yahoo](   [glossary, logo] There are plenty of terms in the trading world that need explaining. The Option Pit Glossary is here to help. Today's phrase is:  Near the money - An option is considered near the money if the underlying share price is close to the option strike price. [ftsp] All the Right Options. The Option Pit Team brings more than 150 years of experience to you every day. From the trading pits of Chicago to the world's largest banks to the halls of power in DC -- they've done it all. Now they’re collectively focused on one thing: making YOU a better, more profitable trader. Click the button below to schedule a call with our concierge Customer Care Team to find your best fit today. DISCLAIMER: FOR EDUCATIONAL AND INFORMATION PURPOSES ONLY; NOT INVESTMENT ADVICE. The materials presented from Option Pit LLC are for your informational and educational purposes only. Neither Option Pit LLC nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational and educational purposes intended is at the user’s own risk. DISCLAIMER: OPTION PIT LLC IS NOT AN INVESTMENT ADVISOR OR REGISTERED BROKER. Option Pit LLC is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented materials. Specific trading ideas or strategies discussed in the presentations or materials are entirely illustrative and do not constitute the solicitation of a transaction (or transactions) or a recommendation to execute a particular transaction or implement a particular trading strategy. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. 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