Good Morning!

Markets are looking bright red this morning as I type this. Yesterday we could see weakness coming into the market and preemptively bought puts based on inflows that we saw along with our GEX data. I will get into the details of all of that below.

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This META put from yesterday triggered the “Grenade Trade” alert. This is generally when large money comes in on a single high risk put. These are generally filtered to be directional and intentional. This particular META put came in with a ~$340K order on the ask during power hour. We will track this one today and take note how it plays out as today is expiration day. It looks like this whale could have a chance to make some good money here, though.

This one is interesting because a name like this generally sees very little action. Today, it got hammered with over a million dollar of call premiums. Many of these are directional sweep orders and are impactful. These are generally believed to be single legged directional bets and not part of a hedge or multi-leg strategy.

They are also positioned out until the end of summer which is interesting too. This one intrigues me a lot and as far as flow goes something to keep an eye on.

Yesterday, we saw some things coming through in the order flow that made us buy puts and I am very glad that we did. These particular puts made us great returns.

Now, let me hit you with a new indicator. I observed heavy bearish flows yesterday despite the market grinding higher through the first 2/3 of the trading day. Check this out:

Bearish flow was coming in like crazy. It was FAR outpacing the bullish flow of the market today. Money was pouring into puts despite the market grinding higher. This alone doesn’t tell me to buy puts instantly, but then volume started to dry up to the upside and get real shallow.

I then noticed the GEX heatmap beginning to move the upside resistance down strike by strike. What started as heavy resistance at $660, turned into all of that resistance shifting down to the $655 range. That’s when I knew the market was preparing to move down. The final nail in the coffin was that this happened on my top bolligner band on my daily chart. This is not something I’ve shown or discussed here, but It was another sign to go short on the market and prep for downside.

Now, let’s take a look at today’s Gamma Positioning and talk about what the market could do today.

We are back in a heavy pocket of negative gamma today. Remember, today is the last trading day of the week so expect volatility. The $645 node carries the most negative gamma at nearly 2 billion. With the heavy sell off pre market, don’t be surprised to see today’s open try to sweep that $640 number.

I’ve said it to you a dozen times already in this letter, but we are in a news driven market as much as I’ve ever seen. The market did not respond well to the lack of deescalation last night.

I am already still in puts from yesterday and plan to try to hold those and see if we sweep out some of the negative gamma pockets below. I think puts are the only play today. I wouldn’t hold anything over the weekend as it will technically be a 3 day weekend and so much can go on during that time. Whatever you do, close that contract out before the market closes today!

With the market closed tomorrow, you likely won’t hear from me again until Monday morning.

Happy Trading!

-Caleb Gregory