Dan Passarelli, CEO - Market Taker Mentoring

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The market overall didn't fare super great today. Not the end of the world, but the energy sector really got hit pretty hard. We can talk about the fundamentals. But what I want to talk about here right now are specifically the technicals.

If you look at a pattern recognition sort of scenario on the six month chart here; we've seen a couple of times where the energy sector (and I'm measuring that by XLE; which is the Select Sector Spider Trust Energy ETF) where it's kind of gone up this wall of worry a little bit and as I like to say sometimes: up the stairs and out the window. Where we sort of climb. Climb. Climb. Climb. Climb. And then boom. Falls out of bed.

Then climb, climb, climb in a much bigger fractal. And then after climbing, boom, falls out of bed. We saw this on a smaller fractal version of that. And where're we right now, I don't know, we could be seeing this exact same pattern play out yet again. Or it could be a dip. So look, tomorrow is going to be a pretty pivotal day when it comes to the XLE. I'm going to be watching it closely. If we rebound, this might just be a small little pullback and we could maybe place some high volatility by selling some put credit spreads in there.

However, if it ends up heading lower, it might not be a bad long put purchase. Either way, we'll keep an eye out. I hope that helps. 

Dan Passarelli, CEO - Market Taker Mentoring

⇐click the image to view the video and then watch fullscreen to see the charts (and the transcript below will be illustrated!)

Bloomberg's "Five Things to Know Today" had a poll that they did about 'Are Meme Stocks Still Alive?'

Everybody knows that answer: Of Course They Are!  We got proof positive of that today by looking at Best Buy.

Best Buy is one of those stocks that showed up on Options Raider a whole bunch of times over the past couple of weeks; had some pretty profound moves over the past couple of weeks as well.

Today it lit up Options Raider in tons of different strikes and it really jumped quite a bit. It's up over 30% on the day. Why is that? We can go look at some of the news on it. But here's what it really all comes down to with some of these meme stocks: 

It comes out to just this massive amount of call buying.

Look at the volume of calls that traded today in Best Buy in just the first two expirations here. Many many times the open interest, this provides a lot of legs.

When retail customers buy these calls, market makers sell them and they may have to buy stock to hedge, which pushes the stock up. Furthermore, those market makers end up getting short a lot of what's called Gamma. And when stocks go up and market makers are short Gamma, they have to buy more stock. And that's some of what we're seeing going on here today in Best Buy. Not just a short squeeze, but also a Gamma squeeze.

So I have got my eye on Options Raider. It really gave us a lot of early signals here in Best Buy and I'm going to stick with that and keep at it. Hope that helps.

Dan Passarelli, CEO - Market Taker Mentoring

⇐click the image to view the video and then watch fullscreen to see the charts

Dan Passarelli, CEO - Market Taker Mentoring

⇐click the image to view the video and then watch fullscreen to see the charts

Dan was looking at some of the big credit spreads that were trading today and there was one, actually one pair of credit spreads that really caught his eye and it was in Amazon.

"These two credit spreads traded basically within about eleven minutes of each other and the first one was selling the August 22nd. Those are the ones expiring tomorrow for those who are watching this live or at least on today Thursday, August 25. The 140-142 call credit spread. So somebody sold that they sold a good number of times and then there was another trade that traded, like I said, just several minutes later selling the 135-133 put credit spread."

"Now this is what is called an Iron Condor. When we trade two credit spreads at the same time, that's called an Iron Condor. And the benefits there are you're taking in two credit but only one of those credit spreads can possibly lose and hopefully they both win. It's only a one day trade. So it's just got to basically stay between 135 and 141. That's a six dollar range, which is a pretty good size range if you look at it as $3 either way, Amazon did move $3 today. So the markets or whoever put on this trade is looking for it to be a little less volatile in Amazon than today. But this was a more than typical volatility move in Amazon today. So it's a very interesting trade."

"The other side of that, the implied volatility level in those front options is pretty elevated compared to where it should be. So the person who sold this pair of spreads is getting a really sweet deal on it selling some overpriced options. So I wanted to point that out. Very interesting. I'm going to be watching this and see how that person did and when I see some of these pop up I look for the opportunity to jump on and trade some of them."

"I'm going to have a webinar that unveils my new system of getting alerts to see when these credit spreads are trading and how to select which ones to trade and how to trade them. I think it's the best thing that we've ever created here at Market Taker. And so please try and attend the special online training tonight at 7PM Eastern time, that's 6PM Central and you can attend that by going to the web page that pops up right after this. And register please."

"I believe this is the most important webinar that we've done in at least a year. So try and make every effort to attend it. Really hope that helps. Trade smart."

Join us for the webinar!

Dan Passarelli, CEO - Market Taker Mentoring

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Never too old to keep learning. That's Dan's mantra. And he's been doing this trading, at least involved in the options space, for about 29 years now. That is a great mantra to live by. The more you learn, the more you earn.

What's new with Dan: "One of the ways that I've been learning some things lately is I've been watching what professional traders trade: live-realtime, specifically with credit spreads. I sort of have this scanner that shows what's trading. My initial reason for it was to see what smart money is trading and be able to jump onto it. Which sounds great, right?"

"But in addition to that, I'm getting this sort of inside look, this inside sneak look at how the big dogs really trade. And I saw something really interesting show up yesterday in Meta, formally known as Facebook. (The artist formerly known as Facebook.) Yesterday in Meta, in the August 26 expiration, somebody sold a whole bunch, hundreds of the August 26th, $151-$155 put credit spreads. And if you look, like this fits our system exactly."

"So not only did I look at it, but I went through all the Market Taker criteria and we've got wonderful support here. The options are priced right, everything lines up exactly perfectly. I couldn't have picked a better credit spread myself. And here one of the pros traded it in really big size. That's interesting."

"But you know what's really interesting is that today, somebody came in (a big professional) and traded 1000 of the August 26th, $165-$167 and a half call credit spread. Look at this: they sold the put spreads yesterday and today it's up. There's a pretty big range. There's like $7 range on the day or almost a six dollar range on the day. Then towards the end of the day, they end up seemingly maybe completing the other leg of an iron condor."

"Now, to be fair, there were a lot more of the call credit spreads that traded, but they may have broken up the put credit spreads into a couple of different trades. So I found that very, very interesting that I know I do, and I know a lot of our successful student traders leg into iron condors in this exact same way. And here I am watching it play out live-realtime, by a real professional trader, trading hundreds, trading a thousand spreads at a crack here. So that is one of the things that I've learned recently about what the smart money does as I watch them."

"Now, you're probably wondering, Dan, where do you have the scanner to find credit spreads and such? Well, I'm going to do a webinar tomorrow night. For those of you who are watching this live: tomorrow, Thursday, August 25 in the evening, 7PM Eastern time, 6PM Central and I'm going to be talking about the scanner that I built. It took me six months to build. You're going to love it. No one else has anything like this in the entire world. It was built specifically by me, my team and my folks that I know over at the Chicago Board Options Exchange. I'm going to tell you all about that. I'm going to tell you how we can then go and proofread the trades. And then there's a special treat for you at the end of that presentation."

"To watch it, all you have to do is go to the web page that pops up right after. This is Dan Passarelli. Trade Smart. Here it is."

To register for this webinar please sign up here!

Dan Passarelli, CEO - Market Taker Mentoring

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Crude had a pretty big day today. The crude futures, the October futures were up $3.41, bringing it to $93.77. It's a pretty big day for that. The reason for that is that the American Petroleum Institute that's the API reported that US. Inventories of crude fell by 5.6 million barrels last week. Gasoline supplies rose by 268,000 barrels. Now, that's pretty bullish for crude, but this is ahead of the official inventory data from the EIA tomorrow morning. That's the Energy Information Administration.

So we're going to be looking for what the difference is between the API and the EIA. And in all likelihood, what the market believes is happening is that there's a much tighter supply and that will be reflected in the EIA information tomorrow. Now, what else is also interesting is that I've been watching some of the bigger credit spreads trade lately. There was a big credit spread that traded in Schlumberger (symbol SLB). As you can see right here, there was a big put credit spread that traded a few days ago that hit my scanner.

And so that enabled traders who saw that to kind of jump on and trade what the big folks are trading. And today ended up being a really big day, up 6.61% in Schlumberger and a big solid jump on high volume above the 200 day moving average. That put credit spread worked out pretty darn well. And as I believe you know already, we will have a webinar this Thursday night at 07:00 p.m.. Eastern time.

That's 06:00 PM. Central time, Thursday evening. That's going to be all on credit spreads. I've got a whole brand new system that I'm super excited to share with you. This is a really big deal.

It's a complimentary webinar. I want you to go and register at the page that's going to pop up right after this. So don't close your video. Wait for that page, and make sure you register for this webinar. It's going to be a really great one. <<click here if no page pops up!

I hope that helps.