Meta Strategy Trading Portfolio – Probability Map Update.
Danger! OpEx Ahead
Last week showed that put options-driven rallies tend to be unsustainable, as the structural demand that is triggered by an initial positive catalyst acts like lighter fluid thrown into a fire – violent, but short lived.
As the short-term trend at the 20-day moving average stopped the advance like a brick wall, this was a strong indication that no genuine demand was supporting the rally attempt.
That puts us into a dangerous situation over the next two weeks.
A new negative catalyst (a low unemployment rate means “tighter for longer” after all) may prove to be more sustainable and lead us to new lows.
Such a dynamic would find its logical conclusion at monthly OpEx, when put options, which now drive an increasing negative gamma squeeze the further we fall, expire.