Transcription
All right, hello everybody. Welcome, welcome to the Wednesday post FOMC Q&A. Got a little bit of something for you guys. Well, today we have on the agenda FOMC. Obviously, that was a big, big event today. The market made some crazy moves. Crazy moves. We made some predictions though. Like we had an idea that price was going to end today outside of one standard deviation, right? Which it did. I just thought it was going to be to the outside. Um, price also pivoted off the one SD, uh, early in the day. Uh, and we also had just like wild amounts of opportunity today. Uh, [clears throat] pretty good. And volatility was also, uh, bit of an enemy today.
So, some of the trades we took on, for those guys that participated in the live stream, I'll just recap it really quick. Uh, first of all, from the open, we started a put debit spread. Uh, reason for that was to get away from volatility, get away from theta. So, I thought maybe a put debit spread would be okay. Took that put debit spread to 60% on SPX. Uh, and then we decided at that point, when we hit one SD around 7343, that the market should correct itself, should turn around. And we were bullish going into the presser event. So, despite all of the downside that we saw, despite all of this drop in the market, uh, we did think that right at the press event, right when the news drops, that the market was going to shoot up.
Now, I did reference a lot about last FOMC. So, if anyone remembers last FOMC, um, I'll just bring it up on Twitter really, really quick. So, last FOMC, this happened. Right? It was just >> [clears throat] >> very telling. Right, what we see here is 30 million in puts out of the money directional buys versus only 2 million. And so this was very obvious. This was super clear as day that whatever happens at the market is probably going to tank it, and we did, right? We dropped 100 points from that point. That was last time. This time, a little bit different. Like we did have both calls and puts climb together, but we did obviously see calls surpass puts by a large margin. I think just before the presser, we were seeing like 15 to, yeah, 16.77 million in divergence, and then that told us that, hey, like there's got to be a reason why there's all of these out of the money calls coming into the market.
I did stress in the morning that during these catalyst events, right? So anytime you guys trade a catalyst, catalyst event like FOMC, OPEC, anything that where Trump is even speaking, right? Generally, unless the deltas are super, super strong, which is like a 2 and 1/2 billion, very easy for the market to flip, right? The market makers are not going to be too fussed about having to flip these short deltas, for example. So these short deltas we see, 7450, it's only like 900 million. It's not even a billion. And then 7500, well, that's too far from where price is. There was very unlikely that we're going to get to 7500. So this is kind of already like ignored. But all these short deltas we see, if the market wanted to flip [snorts] it around just for the press event, yeah, they'll do it. It's not that hard for them to do it. And on days like FOMC, they're actually inclined to do so because we hold so much weight in the words of the Fed chair, Mr. Mr. Kevin Warsh, there, right? Who shows up to every press event saying, "Good day." Which I just, I still think it's funny that that's what he says. Not good afternoon or nothing. Just "Good day." And here we go. Let's Let's Let's do some do some damage in this market. Um, but that gave us the clue, right? Your job as a trader is to look for the clues. That makes sense. Most [clears throat] likely scenarios for price.
In my mind, for a day like FOMC, it always remains the same. We're not so much focused on the Greek profile, deltas and gammas. We're more so focused on where the risk is. Who's risk on and on what direction? Okay, so that was our first like great trade. We saw our calls rip 129%. Um, I know I closed them out at 91, but that was because I, uh, you know, I saw profit. I was like, "You know what? I'm going to I'm going to take it before we really just come all the way down here." And I didn't expect another rip right back up. Um, but if you're afraid of trading FOMC and you experienced, uh, you know, not not such a great time today, um, I suggest, you know, going back on today, uh, going back on just being, you know, recognizing what you're doing for FOMC. It's It's a much slower process. I told you that it's probably going to be really boring up until the presser. Uh, not always is it going to be like this where we actually did have a lot of range, like a a solid pivot. Um, usually, it's going to be like this, right? Where we get a whole lot of nothing up until the event. Uh, maybe the narrative is that, uh, you know, we we don't know what he's going to say. It's his first time. But now that it's his second time, and maybe a little bit more fluctuations in price is acceptable. Uh, but that's what happened. And [clears throat] obviously, we didn't hold it though, right? So, all these out of the money calls, um, you know, they probably got rinsed afterwards if they held them. We don't We don't know if they sold or not, but we we do know that if you were thinking about, oh, how you could have caught this this pivot down. Um, a really good idea for FOMC days is actually start to look at the rest of the week.
So, I actually want to bring this one to attention to everyone's attention. So, you can see right here for tomorrow, with just one DTE, um, before the presser, they actually bought a bunch of out of the money puts. Right? Actually like right this one right here. So, what do we see? We see like a lot of money flowing in on a bunch of 72, uh, 7,300, uh, 7,285, 7,270 one DTE puts, uh, just like it was like a 20 minutes before the presser. But think about the the difference there, right? So, we have zero DTE calls, those expire today. People are buying long there, but then tomorrow they're betting on the downside, right? So, that, you know, a little bit of a divergence, the imbalance of today versus tomorrow. That would have given us a really good idea that this probably doesn't hold. Now, I normally don't look, uh, I don't have it on a separate screen, uh, for myself. You know, we made enough. Um, I did kind of hold, uh, 7,310 put credit spreads into the close, and they did expire. Uh, I was a little bit concerned that maybe we do close further than that, but data didn't suggest that we close beyond 7,325 at that time. So, I know some of you guys are, So, a lot of you guys messaged me like, "Oh, wait. ABG, why did you hold that through?" I believe, you know, I doubled down on it already. I thought that if anything did happen, I could have the possibility of rolling it forward, or I would just take the scratch. Um, today we closed with 1,600 anyway, so I'm pretty happy about that nonetheless.
But, um, if you're looking at these contracts, right? So, I just want to bring up the one that had the most hits. So, it was the 7,300. So, go on Quant data and then we wanted to see like the what their their pricing kind of looks like there. So, SPX, we're going to do expiration tomorrow. We'll do the put there. So, 7300 put. Right? So, take take a look at that. Uh, I I won't do this. I'll do 5 minutes. A little bit easier to see. So, take take a look at that. So, they picked them up, uh, 20 minutes before, right? So, like this spike right here, the 135, like that's the them, that's them. So, they picked it up at 16, and right now they're holding it through. It's worth 23 now. So, that's that's just kind of an idea, right? If you see like a big order like this, you want to speculate it, like what could they possibly be doing? That's not a small amount of money, right? This this was quite a significant sum. Not only is it just this one order, but the rest of these orders too. A lot of 7300 hits. And so, I'm going to be very interested in that strike. Tomorrow, I'm going to be I'm seeing if we actually dip it below that. Below 7300, um, I think we can probably see this finally, the 72. Uh, maybe we get a chance to get a little bit of a bounce there. But, that's kind of like my forward look.
Um, but, all in all, for today, what I really wanted to get across is FOMC. Uh, we traded very slow and generally, if you're just looking for clues, uh, this is the clue that gives us most bias. You're going to put most of your attention on net drift. Let me show you exposure by strike real quick. Um, what I mean when I say that the market is very easy, like the very easy to flip bias. So, this is like a minute before the presser. Right? And then 11:05. Run it through. Uh, 11. So, this is a Oh, no, sorry. I'm on East Coast time. So, there you go. There is your pressure right after flipping through. And then we see crazy amounts of green at around the 2:30 mark. That's when things really start to go. Where's all the green? There you go. 2:45, you see? Market very easy to flip things through, but notice how the 75 continued to kind of hold through. And I I also want you guys to pay attention to the 70 at 450. >> [clears throat] >> Cuz that strike started to see a little bit more positive. All the call, all the put delta went away, but they quickly came back from what I recall. Let me zoom it forward a little bit more. Oh, no, they did not come back. Around this area. Last hour. Oh, man, yeah, this would have been a tough trade for sure. >> [clears throat] >> Just look at all those deltas just deplete right after. And then we see that big strike at 74 with 2.1. You can kind of use these deltas to forward look at that time. Uh, that's like the last 50 minutes of the day. And then, yeah, just mayhem right after that.
So, going into tomorrow, um, really paying attention to that 73 strike. I really want to see if we hold that one. It's just another psychological level that we like to use as an over and under. Uh, yeah, that's kind of how we want to go through today. FOMC not always coming through, but if you still struggle with that, I would suggest paper trading it. Just to kind of see if you can, you know, have your get your get your emotions out out of the whole trade factor of the market. I think the more you practice and the more you just study up on the data, uh, go you get a little bit more confidence in it. Uh, but that's it. I'm going to post this up on YouTube. Uh, a little bit casual. I'm not going to edit it. Doesn't bother me. I will answer some questions now, I guess. Uh, so, yeah, I'm going to close this up and I thank you for watching.