The Useless SPY Report : 10/13 to 10/17
...trading SPY with the mindset of a stoic & a passion for finance...
^ 1d chart , you don’t need me to tell you what happened ^
What’s up ! It’s your boy, The Useless Trader. Another week, another Useless SPY Report for the good people. Today, as I always do, we are going to run the bases, connect the dots, and get a feel for the new trading week.
I went for a more visual & image filled format this week - but still with a focus on “deep SPY thinking” made as easy as possible for all to digest… so put on your thinking cap and let’s get our finance freak-on !
For clarity, I do not want to pick a side. No side is the side. Like a monk I say, no angle is the best angle. To flow like water with the facts as a guide is the ideal methodology. Let’s follow the data and make our general SPY thesis for the week from quality information.
In preparation for trading on Monday, the paramount goal is to understand the forces at work in the market and how those forces will effect SPY -so we can trade it and bake cake$.
One thing I believe , on October 10th > what happened with SPY 0.00%↑ was a planned event - as the thieves (MMs) and rouges (Whales) live “[i]n a closed society where everybody’s guilty, the only crime is getting caught. In a world of thieves, the only final sin is stupidity.” (Hunter S. Thompson)
While I do not play BTC directly, but I do love IBIT & BTCI, it’s hard to believe the Whale who set up this crypto play did not have advanced knowledge of the “new Trump tariff announcement” :
What does Useless think? The insiders in the Trump administration knew the “tape bomb” would come via a Truth Social post. This particular news event saw Whales & MMs, who were well positioned in bearish mode for weeks and weeks in the SPY chain, take advantage of another tariff announcement.
Now, how savvy is The Useless Trader? This cat is always trying to have an edge, any edge big or little.
Every morning , at market open , before the flood of tickets, I try to get a quick screenshot of the SPY chain & check it in the evening. At the open, the put to call ratio will change fast and never be seen again. Sometimes I get a good image, and other times I miss it.
Definitely, a trader has to be very “quick on the buttons” to get this data.
So, the above image is The Useless Trader version of the shady crypto play.
What do you see? I can not recall a morning in the last 6+ months, since I started taking these “quickies” , that I have seen SPY open with a 27 to 1 put to call ratio ! Wow !!
For sure, two minutes into the open, the bearish stock market signals were there for all to see…. and then disappeared.
When noting this put/call ratio on my Discord, The Useless Trader 2.0, I was multitasking at my desk. It was hard, in that moment, to put all the puzzle pieces together as I was managing swing trades, snapping screenshots, and checking dark pool flow.
Put to call ratio explanation : Investopedia, Put to Call
^ 4hr chart , SPY ^
Ascending channel explanation : Investopedia, Ascending Channel
What do you see on the above chart? The support in the area we are trading right now is insane strong.
The number of shares “backing up” the support area is a massive quantity (532m shares) ; a previous magnet area (660 ish) is close by ; SPY was trading in resistance for days ; SPY has broken trend ; and, not seen on the chart > there is a SHIT TON of money stranded all over the board above the current price of 652.15
^ 1hr chart , SPY ^
Last week, without a doubt, I recall noting we have been trading in somewhat choppy conditions.
When you zoom out on the 1hr chart, and you get a clear picture of 5 trading days, you can see a bunch of sideways action…. and this “ranging behavior” eventually gives way to a hardcore bearish sell-off on 10/10.
We can see how RSI evolved over the week (solid grey line) and crosses below the signal line several times before Friday’s bear raid.
Check out how VIX, below, which was slow grinding in the 16s, responds to the Trump “tariff announcement”.
Please remember > there’s no political agenda , just trade talk ;-)
What do dark pool levels over 5 days tell us?
The first thing I notice, the many levels above the 652 area where we are trading on SPY at this moment. What do I mean? There is a titanic boatload of money that is suddenly stranded.
By quick calculation, the stranded money is in excess of $150 billion. No way that money is being left to sit, no way those positions are being closed for a loss.
659 to 661 levels, only a few weeks ago was an area 50m+ shares strong, and a very real magnet level at 660, have been seriously trimmed & sold for profit.
666, a (newer) magnet level, being used to attack & stack in the 670 area, is still very strongly loaded with over $13 billion in dark pool premium.
You can see how the big players stacked mad shares from 668 to 672.
And, for five days last week, the Whales & MMs added billions ($40+ billion easy) in premium at those 668 to 672 levels.
Let me say that again > in 5 days > big players spent over $40+ billion from 668 to 672. The “popular levels” with plenty of activity show us where the big players are likely to return for play in the future.
^ Dark pool prints at the close 10/10 ^ These are re-ordered by size ^
What do you see? I see a bunch of big dollar activity between 3pm - 5pm.
For sure, we can get a solid idea of how Monday morning might evolve.
I see plenty of dark pool print action on the bid side, there is a ton of money short, with the order at the very top super interesting > 4pm , 2.5 million shares on the short side , with a 653 spot.
One thing I never disregard… the LIT Market ticket(s).
Note the time on the ticket… and no matter what, when I see these pop up during the day, in the morning, or before 8pm, right away I think > sense of urgency > as these orders are made by big players from a (public facing) trading floor.
If you ask this cat, the trader who made the above LIT order > this person knows “something bearish” about Monday’s trading environment & (in some respect) got his order in at the last second.
^ The dark pool levels traded on 10/10 ^
This shows me that the big players were active all over the board… at all kinds of levels they bought shares… but you can see some areas (660-662) (671-672) are more popular than others.
There is no way big players spent $5+ billion at 671 to 672 & that money is lost to the ages. If we apply our favorite “follow the money” logic to the above dark pool level data, I would say the the 670 area is going to see a return to action no matter the news or politics.
We needed a pullback now to run the bulls later (so to speak).
We can’t forget, rate cuts are on the way…. more “cheap money” is sure to encourage the Street to take on another bullish run.
In many respects, I do not see what changes the bearish big picture… we have trade with China issues, we have many macro issues, we have political issues, etc… the “rare earth card” from current administration is no more potent than blowing up boats sailing out of Venezuela, sending troops to cities, manipulating critical financial data, or expanding the current government shutdown.
^ Overall market flow at the close 10/10 ^
Notice : put/call ratio is close to parity, call flow is very solid, and money flow is bullish : all of this on a blood red market day.
^ SPY order flow at the close 10/10 ^
Very different from the overall market, right? Put to call ratio, put flow, and money flow are all bearish… at 2 to 1 put/call ratio you can bet the bears are both writing & buying puts.
For Monday, and the early part of this week > given how bearish 10/17 OPEX looks, given MM exposure, given dark pool prints, Useless is leaning bearish.
I can see fake breakouts on the table; I believe if the 652.50 ish level can be breached on the 15m chart in a bearish way (closed candle) we could see a bearish trip to the 640 to 645 levels.
I know that bears are in control right now ; I know the news cycle is bearish; I know that China isn’t going to let Trump have his way; I am certain there will be more bearish fin-drama this week with government firings, shutdown bullshit, and tariff news.
^ Never forget OPEX is Friday & the bears are quite stacked ^
This week, I am going to give you Spot Gamma’s (10/12 , Sunday evening) take on 0TDE …his commentary has a strong correlation to the above OI Change data :
^ Always like to pull something off the internet that’s free & something we all can find easily. I love Barchart. Facts.
As we can see, GEX is negative, the ocean current running under SPY’s price is bearish, the 650 put walls are acting like a buffer for support. There is so little positive Gamma Exposure that there is a strong potential for a Gamma Squeeze (we will discuss a little later) when short sellers become buyers to take profit, when MMs re-hedge & this behavior acts like an accelerator, and when overall MM exposure changes as retail (and the power of OTDEs) comes to the market Monday morning.
The classic V shape rally is on the table… but don’t think we can’t go down to the 640 low (ish) area (quick or slow ride down) before this rally takes place.
Bait & switch is the bread & butter of the MMs & Whales, so we do not want to make a prediction as much as we want to be aware of what the big players need to do given their exposure(s).
Useless is a relentless searcher of financial info & trade data… I want you to see what “put walls” do & how they come into being & how they hold up the price.
^ Market Maker Exposures ^
The combination of these exposures suggests the trading week will start with a volatile, very momentum driven, SPY trading environment.
There will be a consistent undercurrent of “bearish facilitation” from Theta decay; there will be the potential for sharp amplified rallies (which you know can be violent with SPY) if the market moves higher.
Here is a breakdown of how each type of exposure influences SPY :
1. Negative GEX ::
A) High volatility & momentum chasing.
B) Negative Gamma Exposure (GEX-) means Market Makers are net short Gamma. In this regime, MMs must hedge “pro-cyclically” > they buy into strength and sell into weakness.
C) SPY price movements are amplified. The trading environment will be prone to sharper swings and stronger trends in both directions as dealer hedging to compensate for GEX- acts more like an accelerator than a stabilizer.
2. Positive DEX ::
A) SPY will be susceptible to Short Squeezes.
B) Positive Delta Exposure (DEX+) means that MMs are net long Delta on their option books > which they typically hedge by being “net short the underlying” (SPY).
C) If SPY price starts to rise, MMs must buy back their short hedges to remain Delta Neutral. This buying pressure, which is amplified by a GEX- environment, can lead to a sharp, accelerated, rally (SPY Short Squeeze dynamic).
3. Positive Charm ::
A) Bearish facilitation… trading this week will be effected by a “bearish headwind”.
B) Charm measures how Delta changes with the passage of time. Positive Charm generally means that as time passes (Theta decay) the aggregate Delta of the MMs option books increases > forcing them to sell the underlying (SPY) to re-hedge.
C) Charm+ creates consistent selling pressure (or bearish drift, or bearish facilitation) on SPY as a function of time decay (Theta).
4. Negative Vanna ::
A) Selling pressure on IV drops ; buying pressure on IV spikes.
B) Vanna measures how Delta changes with Implied Volatility (IV). Negative Vanna implies that if IV drops MMs must sell the underlying to hedge…. or in the same (Vanna-) environment if IV spikes, MMs must buy the underlying.
C) If IV is falling, this will add to the bearish selling pressure from positive Charm. If volatility spikes (let’s say during a sell-off), the Vanna- exposure will act as supportive buying pressure potentially muting any decline.
The SPY trading environment for Monday will be characterized by :
High Realized Volatility : expect larger, faster, moves due to negative GEX.
Bearish Facilitation : a steady, time based, selling pressure from positive Charm.
Squeeze Potential : a strong potential for sharp, amplified, rallies if SPY price moves up …as “positive DEX dealer short-covering” is amplified by negative GEX.
IV Driven Swings : price action will be highly sensitive to changes in implied volatility (IV) , with a drop in IV adding to the selling pressure (Vanna-).
Here ^ I pulled order flow from 10/10 , I re-order by premium, and check the biggest bearish tickets…
FYI > I do not recommend this order flow service (and will rarely even say the name of the provider) > as you can see The Useless Trader’s posts have been slowly shifting to Unusual Whales.
For the future, around the 11th of November, I will be using a far superior service in Unusual Whales on the regular.
So by pulling some big $ tickets, I am trying to get a feel for how bears are stacking their positions & setting up for 10/17 OPEX.
Here ^ bears are taking profit, holding, and lightly adding ^ OI is strong & the strike/expiry gives us a look at a good (Theta protected) position.
Bears are looking motivated & engaged on the above ticket.
For this ticket ^ bears looking very motivated.
OI is insane ! Volume is robust but not excessive.
Essentially, I see profit being lightly taken… and the massive OI signifies bearish greedy behavior with a strong emphasis at this strike/expiry on holding & waiting & patience.
^ The above ticket tells a tale of profit & urgency.
The bears are holding, adding, and taking profit on a ticket that expires this week. Greed is the order of the day on this ticket with plenty of volume. OI is still strong suggesting bears are holding & adding.
Considering I am pulling only a few tickets, Useless definitely has a bearish inclination for the week… but I am still guided by the “when they short they long” option philosophy I bring to the table each week.
It’s hard to ride with the bulls when most of the SPY 0.00%↑ option chain is bearish, the Exposure Greeks are bearish, the news is bearish, and retail is scared & selling off all those close expiry (otde, 1d, 2d, 3d type) plays.
Flip side > I love to play the contrarian, I love to try and research my way to the bottom to catch the falling knife, I am holding 12 calls at 673s with 10/20 expiry over the weekend (when they short, they long).
Emotionless always, Useless has no problem closing his long play for a loss & flipping to puts after a few minutes of trading on Monday morning.
If you become a paid subscriber, access to the Discord is granted same day. The Discord has options data, dark pool prints, trade ideas, and of course chat… in chat during the trading day, you guys can watch me do the entire thought process in real time… you can literally watch me think & take trades with proof of process.
Also on my Discord , there is real , up to date , 24hr fin news, a channel for trading tool discussion, trading videos, & more… and for just $10 per month you get quality over shit posting all day every day.
Never forget, The Useless Trader is a cultivator of “free thinking” traders & not cornball parrots. We need you to think, read, study, and act like you really want to win.
You want no mortgage like me? This is how it’s done : follow the right people (plural) , pay for the right tools, read finance all the time, & watch the market like a hawk. So easy.
Let me say, if you play options & do not pay for order flow, this is why my Discord (at $10 per month) is so good. I’ll peep order flow for you, check dark pool prints for you… and post the potential trade in your DM or for all to see. If you do not want to pay for the tools, like order flow, how can you trade with an edge?
#eatcake #theuselesstrader #catluvisthebestluv #theSPYwhisperer
SPY plays :
SPY, Octbr 17th, 669s, 3 puts, $5.07 entry, $4.38 exit (loss)
SPY, Octbr 31st exp, 669s, 2 calls, $8.26 entry, $11.22 exit (win)
SPY, Octbr 17th exp, 672s, 8 calls, $4.64 entry, $5.65 exit (win)
SPY, Octbr 13 exp, 673 exp, 3 calls, $2.80 entry, $2.91 exit (win)
SPY, Octbr 17th exp, 670s, 5 puts, $3.74 entry, $4.46 exit (win)
SPY, Octbr 14th exp, 671s, 5 puts, $2.77 entry, $3.08 exit (win)
SPY, Octbr 20th exp, 673s, 12 calls, $2.41 entry (hold, can close, or roll too)
Swings in my rotation :
NIO, Jan 16th exp, 8s, 10 calls, $0.88 entry (hold)
IBIT, Nov 21st exp, 69s, 6 calls, $4.43 entry (hold)
IAU, Jan 16th exp, 77s, 10 calls, $2.85 entry (hold)
BABA, Nov 28th exp, 190s, 20 calls, $5.78 entry (hold)
SLV, Jan 16th exp, 45s, 5 calls, $2.73 entry (hold)
LAC, Jan 16th exp, 10s, 10 calls, $1.40 entry (hold)