Frame 1 Frame 2
Frame 3 Frame 4
11/14/11 - My OI/Max Pain works to the T during a non-volatile market. When you have events or something that causes abnormalities, it loses its way. That's why AAPL will go on 3 month flatlines (max-pain) or drop off a cliff like now (headline driven). Above is a quick visual: “something” will break AAPL on the put side (a rumor this time) So let it go. The options market will help you find that $50 run on the upside.
This is how the story goes:
There are so many calls on AAPL it will keep going down. You need to see the call OI walk down until the put OI stops, this will cause a point where a break must be made.
This article still applies http://seekingalpha.com/article/275730-apple-options-it-doesn-t-have-to-hurt
Enter “Frame 2” Same ol’ thing. People love their calls on AAPL and are shooting for the fences. There is nowhere near enough puts to stop 99% sell volume in AAPL.
Enter “Frame 3” The calls will keep walking down but one major change will occur. The puts will finally find a backstop. Fundamentals, positive rumor, news may cause this. People will still love their calls during this week. All of a sudden we have a stall.
Enter “Frame 4” Call buyers finally gave all their money to call writers (Wall St). They are tired of the stock moving down. Yet; put buyer are ecstatic. The bid on puts is quoted in “how many you got?” This all of a sudden flips the script. Who do you think is writing “high risk” puts in this environment? All of a sudden Wall St thinks AAPL should be higher, right at the moment more puts are bot than calls.
Enter “New High 5’s ” This is where the $50 run comes from. Weekly options just ruined the monthlies plans. The options market isn’t set-up to control AAPL -- and off it goes. This is made possible as there were no calls or for some reason the stock made it over the calls and nothing can stop it now.
Overview -- I used “Frames” as examples to make it easy. This may happen on a fast track or not. Overall this is what it will look like visually. (Note 11/15/11 pm I changed the titles from weeks to frames as weeks is inappropriate.
"Purple Bubble" = Stock Price
Jason Schwarz has his “slingshot” theory. (Guess not a theory when it’s factual)