EXCLUSIVE: It’s About Volatility And Liquidity; Steve Place At Benzinga 2022 FinTwit Conference

This is not a bull or bear market, but rather volatility and liquidity. It was the message of Steve Squarefounder of Investing with options, during his presentation at the FinTwit 2022 conference on Saturday. The annual event is hosted by Benzinga and Lupton Capital at the ARIA Resort & Casino in Las Vegas.

Place told attendees that keeping a close eye on liquidity can give traders an edge in determining the underlying factors driving the markets.

“Bear market rallies tend to be the most vicious, not only because a lot of people are buying, but also because there just isn’t much liquidity to demand, and so prices move massively. on the upside, just as they do for the downside,” he said.

Place explained that when volatility drops, delta drops, forcing dealers to find a way to reduce their short market exposure, which can lead to “massive stock rallies.”

“When you have a VIX that goes from 36 to 20, you’re going to get a 10% rally in the markets,” he said.

However, the Investing in Options founder pointed out that “it’s really weird right now.”

“I’m talking about this week, the market has been trading at rock bottom, it’s coming, it looks like it’s about to fall off a cliff,” he said. Still, “the VIX hasn’t moved…I can’t explain it.”

“The VIX remained very suppressed,” Place added. “There is simply no panic in the Vol markets as this market continues to sell off.”

In terms of strategies, he mentioned a few that were “very aggressive”. Some of the approaches to options trading in this environment include a “Put Butterfly into Gamma Squeezes” on liquid names. Especially parabolic meme stocks.

Place also discussed neutral delta long calls (synthetic straddle), and said that long calls have better risk/reward than going long on stocks right now.

He mentioned the tail-wagging relationship in crypto, pointing to the drop in the UST causing the price to implose. Earth LUNA.

A key piece of advice from Place to FinTwit conference attendees: “If you have a good profitable trading system, don’t waste it.”

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