Short lived buyable moment this morning across the board until people figure out you can't exit something your not really in. It's like breaking up with someone, but you've both been seeing other people, and will still continue to date each other anyhow. It's a meaningless gesture if it even happens? Cover or buy all your favorite stocks by 10:30
I put it out there for nformational purposes. Maybe someone gets something from our dialogue that's useful here or somewhere else? Same stuff essentially works everywhere you go. Maybe if I talk about another stock they'll get the info without trying to see an angle on FIT. That way the next time I give high value input on August derivatives before anyone even notices them, we can all move right to having useful discussion.
I suspect if you keep an eye on put activity, you can see today's new interest changing hands now through Thursday at which point I'd almost expect a reversal and Friday rally which means going long at some point Thursday and holding through the weekend. Could see a move down to the 80s and back to 90+ that profits both ways if you time it correctly. Make adjustments to timeline as it unfolds. Somebody was selling a lot of 92.00 straddles today. That means they're selling volitility with the intent to collect premium, they'll want to see it as close to 92.00 as possible by Friday. This would be about the point institutional traders get retail to run the ball while they prep for the opposing move. Soon time to start easing off the bear, and shift weight to the bull.
Still being blocked from answering your question. Research the role of a market maker, that should satisfactorily answer your buyer question.
Let me first state that my belief is that an investor simply buying and holding long term will have superior gains. Disclaimer out of the way, I enjoy playing with various methods, it keeps things fun and interesting. They don't always work, and it's just as important to share the fails. That's what real trading looks like. I hold overnight a lot, several days or even weeks on a swing, this stock has many of its biggest moves outside of the session.
Today's retrace from the 10 sma certainly offered a call seller or put buyer an opportunity, but for me I simply used 13.24 as the "good enough" spot to make my adjustment knowing full well 13.00 could still show up. If it showed up it meant we'd likely test 14.51, and if it didn't show up we'd be looking for 14.00 with minimal retracement before that target. I don't try to time perfect tops and bottoms, though I often get vey close, instead I look for the easy money where the outcome is heads I win tails I win. Friday's end of day purchase was almost a gimmie, a thoughtless pull of the trigger. We almost surely test the 20 sma coming of the setup of oversold (low 30s RSI for this stock) and below the lower bollinger band.
Plus, I already posted last Thursday that this was reversal week when I tried to shed light on put selling. By the way, lots of comments in other places are just now picking up on aug 13.00 puts, and are completely wrong in their observation. For all the reasons I shared elsewhere already. Gotta study the underwriters of contracts not the buyers, who in this case where just specialists honoring their obligation. I think there was less than 200 open contracts coming into Thursday. That is somebody hoping for assignment at 11.20 or just collecting the premium. If open interest remains the same but there is observable turnover represented in volume, it can be interpreted as the market maker unloading those high risk puts he had to buy into retail hands.
I'll never understand traders that employ less than half of the volatility. The reversal points are the same for bulls and bears. Which is why its so ironic and comical that bashers hate my bullish targets. They should be looking at the same numbers, duh, lol If you're a bear you don't want to see a 13.00 test before 14.00, meanwhile bulls could expect a bigger rally if 13.00 occurs before 14.00. Put your feet on your shoulders and push hard until you hear a pop.
Careful what you wish for...if you give bulls a gap fill, they'll make a right shoulder out of the inverse h/s forming, and instead of a 14.00 reversal you'll get a rally to 14.51. Bears best bet is that it NOT be allowed to get close to 13.00 until the pattern can be broken down.
I took 50%+ gains around 13.50 on some calls I picks Friday, already back in with new ones. You have to notice the prior oversold and outside lower bollinger band last week. It has to be one the most reliable reversal indicators I know of. Use anywhere on any stock, just tweak it for each stock's personality.
In case you're interested in what I'm watching...a little intraday resistance observed at the 10 sma. I like the next near term resistance to be 13.82 derived fom June 13/14 close and high, with the next resistance above that to serve as a possible short term reversal around the combination of the 20 sma and 14.00
What part of sell August 13.00 puts sounded like buy expiring 14.00 calls? Don't be a dope
Since its new open interest, the transaction was most likely initiated by the put writer. A market maker bought them. After all that is their job, and if you can't count on them to make a market, then why keep them around? Here near the 52 wk low is the time to sell puts and buy calls (also big bullish aug call spread 17/20). At the top you can look for synthetic shorts and collars (sells calls buy puts)
How'd you like to boast of your 11.20 purchase when others brag of buying the all time low of 11.91? They'd call you all kinda names, accuse you of lying, and insist that there's no way to buy for less than it ever traded, but now you and I know how to actually do it. Word of caution...if you pick up on these totally awesome life changing ideas and are successful at employing them, keep it under your hat, people are likely to resent the info
It's not a recommendation to use, or abstain from any options, just be more aware and get the wheels turning for how their use can be analysed to make certain inferences about stock behavior. It's really about reading what's in everyone else's hand to know who is bluffing and who is holding a pair of aces.
The importance here stems from the what the underwriter is doing; is it someone like a market maker collecting premiums, or a party hedging a play into a position? We tend to assign bullishness to calls, and bearishness to puts, but as you well know call writing allows you to be bearish while maintaining shares, put writing can likewise be a bullish maneuver. So bullish and covert in fact, that it can serve as misdirection to anyone assuming a large open interest amongs puts to be bearish.
Also important is the nature of the two derivatives. Calls are a debit transaction to the holder, you've got to spend money to exercise them, thus they don't often exercise early. Puts are a credit transaction to the holder, you unload your cheap shares for a higher price and cash it's deposited. the puts are more likely to see early assignment.
It's that early assignment and the intentions of the recipient that will determine the relationship of supply / demand of shares on the market.
I can see we need to go over put writing with a real world example. Let's say we [sell to open] an August 13.00 put. Someone would pay us $180 for that contract. We are now on the hook to take delivery of 100 shares at 13.00 if/when they choose to exercise their right. But look...they already gave us 1.80 of the 13.00 making our true cost 11.20. "but Cowbell, that means we might end up buying stock for less than it will ever trade, or possibly just keep $180 for doing nothing if the stock returns to above 13.00" Yup. Go ahead, I'll wait for your mind to finish being blown...
I don't know...options are hinting at that. Seems hard to imagine unless you expand your awareness of puts from just a way to bet against a stock, or protect shares (bearish application) and think like a put seller who is really the originator of a particular put's existence. There are two ways (bullish application) a put writer wins. 1) the stock moves higher, the option expires worthless, and the writer keeps the premium. 2) the stock moves lower, the option gets exercised and the writer is "forced" to buy the stock at the strike price less the premium collected.
Judge the open interest of puts carefully here. Being forced to buy what you were willing to pay more for, but now at a reduced cost isn't exactly punishment to a put writer. In fact it's an excellent way to pseudo short your way into a stock.
I was looking for a reversal to materialize next week, but tomorrow may yet prove to be very interesting depending on who wrote which derivatives. Unwanted share assignment obviously creates additional liquidity, but what if that assignment is exactly what a put seller intended? He just covertly grabbed some shares out of the market, and the entity delivering shares may soon find themselves with a need to reacquire said shares.
I really thought we'd see a 50 day test and overbought condition to preempt a foundry sell. Always suspicious of a "no material news" selloff. More often than not, it is intended to create misdirection. Pretty safe to grab it here for a sing trade even without defining the upper range of the swing. Sometimes opportunities that don't require a lot of thought just present themselves.
I forgot to mention we're approaching one of my favorite setups on the daily chart; trading outside bollinger bands accompanied by corresponding overbought or oversold relative strength index (70/30). It's reversal time next week.