Interim Update – 9/23/2022

Sentiment indicators show extreme fear, including the Put/ Call ratio above 1.25. Further, the Founder’s Group would prefer not to hold ANY positions other than cash over the weekend. 

So the Founders’ Group will target the stops under 3639 as a potential place to cover our short positions, at least for the weekend. And we may pull the trigger sooner. Friday afternoons are famous for running buy stops to punish the shorts before the weekend, when the Put/Call ratio is at an extreme.

Ideally, we could hold the short positions all the way down to the huge JP Morgan Chase put collar expiring 9/30 at the 3580 strike price. The JPM put delta will start rapidly increasing, as will their hedging obligation to sell futures, as the price approaches the strike price. 

The way to look at this is that there is a lot of velocity down to 3600, and then Negative Gamma flattens out. So if we can lock in our profits as the stops go off under the June low at 3639, it would be ideal for today.

A lot of this is theoretical, and there are a lot of assumptions about the options market and how it is positioned. So factor that in to our comments.

This Interim Update will be our only public comment today, and we will notify subscribers by email or text IF we cover. 

Still, we hope this information is helpful to our non-subscriber community.

Our next public notes will be over the weekend.

A.F. Thornton