Mish, there are some things I don't understand about your analysis.
First, the max pain for June puts at 35 is not inconsistent with the turnips' call for a June 28th bloodbath, because options expire on the 21st in June, and a lot can happen in a week. Zeev's 1920 corresponds to roughly QQQ 37, so 35 by the 21st could represent the market's being part way down the selloff into the 28th.
Second, you haven't explained why QQQ 35 on June 21st implies weakness between now and then.
I'm not saying Zeev is right and you're wrong - I'm just trying to understand the differences in your reasoning.
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June Max Pain is actually 38 right now.
I do not believe we crash to a macro low (or bottom retest) with that number of puts. The volumes were HUGE already.
Jeev has late June BOTTOM but that simply is not in agreement with max pain that high. We are not crashing 600 points in a single week after June expiry (and even Zeev would agree with that I have to believe). Thus at this point, max pain and turnips are NOT aligned. The only other example I can give is the "retest theory" in Nov that never happened. It took me a while to figure out what happened but the big caps, CSCO INTC MSFT maxed out in Nov DEC and garbage ran. (Big caps did make a big move after Dec expiry but that was crushed by expiry). At any rate, going back to Nov, I decided that what had happened is that big cap equity calls were balanced with QQQ puts (there was huge QQQ short interest in Nov), so garbage ran and calls on the Big boys as well as PUTs on the QQQ's were taken out.
Things can change and if QQQ max pain drops in June (quite far away now), then I reserve the right to change my "radish forecast".
My reason for weakness between now and beginning of June is the powers that be have distributed here and need to accumulate "more stuff" at the bottom and/or because they did not get enough the first time as there was no retest. Also there is very little buying interest at these levels as consumers want better bargains, so careful distribution has taken place or is taking place right now.
Finally I select late April early May for this bottom accumulation since the number of options in May is very light (lightest option volume all year), and thus hedging short to tank us would require a minimum amt of capital compared to any other month so far this year. Few puts to worry about, and few calls to contend with on the way back up. All the profit would go to "da boys".
As the Church Lady would say: "How Conveeeeeenient!"
M |
