Good Morning!

So just a quick recap of the trade we were watching yesterday. ORCL was a potential trade under 155. However, the stock popped up at open and stayed that way until the afternoon. It started to fade and finished the day in the 154’s. It is still a potential play for me today if everything holds up.

If you want to see the entire trade breakdown, go checkout yesterday’s email.

First, there were no flows that I felt were worth sharing from yesterday. I don’t want to share bad flow with you so this is one that we will just leave empty from a flow perspective.

I do have a trade scenario for you.

Let’s take a look at the GEX Heatmap for META

If I were to trade this particular contract expiring today (March 18th) there are 3 potential trades to make. We could get the opportunity to make all 3, or we could get the opportunity for none of them. Let’s break them down:

1) META opens down and tests the 620 support where there is a large wall of positive gamma. At that point, dealers would step in and “buy the dip” so to speak in order to properly hedge. If we hold that range and begin to move upward I would buy $620C and try to sell them into the 625 range as it tests the positive gamma wall there.

2) META loses the 620 gamma wall and slips into the large pockets of negative gamma below. In this scenario, the META drawdown could accelerate. Negative gamma in a downtrend forces dealers to sell into weakness and it usually exacerbates the movement. If this scenario were to present itself 620P could play well here.

3) The final tradable scenario for me is if META tests 630 and sells off. 630 is the largest wall of positive gamma on tomorrow’s expiration. Dealers would be selling stock into that strength to dampen the move. With the negative gamma at 627.5, we could see it slide back down to 625 and range a bit. In this scenario I would buy 630P and try to sell into that 625 range.

A break above 630 into all of that positive gamma is a no trade for me. In this scenario, META cuts right up and over 630 and that makes it untradable for me. I’m simply looking to trade the ranges tomorrow set by strong positive gamma with some negative gamma cascading in between. I am happy to let it go if we don’t get that type of action tomorrow.

I’ll be watching both our ORCL & META setups tomorrow. Remember, we don’t have to force a trade. These are the 2 positions that I am prepped for and I will be ready to act if either one of them play out the way I want them to. If they don’t I am happy to not trade.

Having a plan is the most important aspect of a trader. Have a plan and control your emotions.

Let’s have a great Wednesday!

-Caleb