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The original was posted on /r/Superstonk by /u/Mojomaster5 on 2024-06-27 09:34:38+00:00.
Happy Thursday, Apes!
It’s a Pongo Tapanuliensis kind of day!
By strong popular feedback, I’m back today with another price action update! Yesterday’s options flows and price movements provided much to think about. I’m going to piece together my interpretation of the causal principles governing our price action on 6/26 as well as my thoughts on what we might expect given these pattern today and over the next few trading days. Plus, for those of you evaluating Biggy and Lenarius’s DFV T+35 cycle theses, I’m going to spend some time discussing some key technical indicators and options flows that suggest they might not be the only one’s setting up for bullish divergence over the next few weeks!
6/26 Price Action, Hedge Structure, and Week of 6/28 Context
I’ll start with a recap of some of the contextual principles I spoke about yesterday and elsewhere. If you need a more detailed overview of this situation, check out my post from yesterday here:
On Monday and Tuesday this week, we hung out around the $23 level and experienced three (3) tests of this key post-ATM offering floor. Max Pain still sits at $23 as of today and likely will not move off this point inside of the 6/28 OpEx.
On Monday and Tuesday our true Gamma Neutral Hedging point lay squarely between the $23 and $24 marks, around $23.75 more precisely. This actually took the form a hedging ‘canyon’ between these two points by EOD Tuesday as can be seen in the GEX data here:
GEX Data for GME as of 6/26 EOD
As we can see there are some gamma ‘valleys’ that have formed along the above OI points. Two Neutral Hedge Points formed by EOD Tuesday between $22 and 23.50. If somehow knocked below $22 (this was attempted twice on Tuesday) Put OI would force hedging down to about the $20 market before running out steam and signaling to traders to set up for a bullish reversal, likely back to the $22-$22.50 zone.
Without significant downward hedging pressure in the $22-23.50 range or significant upward hedging pressure north of $23.50, this forms a trading channel for the stock price to ‘ping-pong’ back and forth. This was the spirit of our price action on Tuesday.
Interestingly, however, the story is something entirely different around and above $24. There is a heavy disproportion of Call Gamma at these strikes, especially at $25. This means that upward pressure via near-term at-the-money call buying makes the price VERY sensitive to runs up to $25.50 where the momentum slows before picking up again at $26.00. We have seen this rapid and volatile upward kick along the $24-25.5 range, at three (3) distinct points so far:
As the top of this range was reached three times without sufficient momentum to kick things up into the $26 range, traders used the $25.50 level (perhaps not by coincidence corresponding to the VWAP Sigma + 1 Red Line marker above) as a signal to set up for bearish reversal to the top of the gamma valley at $24. This happened twice yesterday following the rapid bullish ‘pops’ to ~$25.50 above:
6/27 Prognosis
As we approach 6/28 OpEx, higher priced call-strikes and lower price put strikes will become increasing de-valued by charm/theta decay, meaning they will exert less hedge pressure as the probability of their ITM status becomes less and less likely. Thus, weekly options flows prioritizing ATM strikes ($23-$25 range) will exert the greatest influence on price action in the coming days. Barring any major outside news or unexpected whale flows (which MMs decide to hedge immediately), movements outside of the $25.5 high are unlikely as are dips below $23. Give the closing price at $24.20 atop the $24-25.5 gamma bracket, I could anticipate traders setting up long bets to run that range on 6/27, before placing bearish bets to capture an edge off a prospective charm-induced bearish move and its corresponding IV crush into 6/28 OpEx.
Forward-Looking Statements
Yesterday, I pointed to the confluence of two key swing-trade indicators, the 200 and 50 Simple Moving Averages on the 180-Day chart. Typically, the intercept of the these two lines is a signal for swing traders to set up for a dynamic movement on the 30-, 60-, and 90-day timeframes. This week, the gap between these two levels has been narrowing with the 200SMA acting as a support with a rising floor for our price action since April:
GME 180-day chart since April 1
Perhaps coincidentally, but perhaps not, these two levels yesterday mapped quite closely to the top and bottom of the $24-25.50 gamma range:
200SMA sits currently at 24.54, 50SMA at 25.44
These lines look like they will intercept on Friday 6/28, just in time for Monday’s price action to be free of all of the June 28 Gamma. For those of you following Biggy’s thesis, this will also be one day following the third T+13 and T+35 cycle of DFV’s projected options and share buying (if Biggy’s estimations are accurate).
Although I have not seen any whale flows on the order of DFV’s purchases come across the scanners, there has been a large amount of bullish near-the-money call buying for July 19 and July 26 - bets on the order of $150k, $250k, and $750k over the last 5 trading days - mapping to the trades which user Lenarius has been setting up for himself. This suggests to me that at least I am not the only one who sees the confluence of these factors and anticipates a more dynamic bullish upswing in the coming weeks. If this move is going to happen, today and tomorrow will likely be the last moments to build long call positions near-the-money at a discount, as IV is already creeping up (yesterday 138% versus Tuesday’s low of 129%, the lowest IV value on GME we’ve seen since the move past $11).
Conclusions
I’m expecting we stay in the $24-25.5 range into June 28 OpEx. Barring RC making some killer announcement out of nowhere, we will stay calm (total volume yesterday was the lowest it has been since April as well). While day traders are chasing alpha in our near-the-money gamma channels, most traders are stacking up positions anticipating the large technical confluence - and likely beginning of a bullish upswing - that will present itself next Monday, July 1.
As always, this is not financial advice or a call to action. I am a random internet dude, please do NOT take my analyses as trading or investment advice. If you find this type of analysis and discussion helpful and would like to see more, please upvote and leave me comment! Please be sure to share and leave any questions! I’ll be happy to answer.
Good luck with your trades!
Cheers