Stocks Trader

[00:00:15.01] - Speaker 1
Next we're going to move into another type of use case, which is stock trading, right? So stocks are where really most traders begin, but also where they can get stuck, right? So if you trade stocks, you probably faced some of these challenges. One is chasing price without context. So you see a breakout, you jump in and then the stock reverses, right?

[00:00:46.03] - Speaker 1
So you're getting chopped out. Then you obviously rely on headlines and hype. So you look at social media, you look at what's going on on Reddit, you look at news and then you're trying to get into stocks. But without really having a context, you're ignoring positioning and flows. So ultra stocks, they don't look at option data they think is not relevant.

[00:01:08.04] - Speaker 1
But stocks don't just move on fundamentals, they move because of option hedging, institutional flows and the change in volatility. So as a result you have a poor timing is in entries and exit. And that's where you're basically always buy at the high and always sell at the low, right? And also you are trading with emotions, so you are following emotions without having really a real context, right? So very, very important.

[00:01:38.02] - Speaker 1
So here is the reality. So most traders, they simply look at charts without context. Institutions on the other hand, they look at flow positioning and risk. And that's what we're trying to come in. We're trying to fill this gap, right?

[00:01:53.11] - Speaker 1
We're trying to give you access to the same institutional tools that big hedge fund managers or big asset management firms are using. So to succeed really in trading stocks, you need to have clarity on key levels. Where is the real support and resistance? Not based on lagging indicators, but based on actually positioning. Because option positioning can actually be a great sentiment to where the market is thinking the price would go.

[00:02:21.20] - Speaker 1
You have to be aware of risk, right? Are we in a calm environment, are we in a volatile environment? Or are we in a steady uptrend? And then of course, you need to understand how flows can affect the price. So where are big funds positions?

[00:02:38.02] - Speaker 1
Where is the market makers going, going to hedge and what's, what can happen if the levels, if the price approaches this level. So without understanding this, you're actually trading just by looking at price action without context. And that's one of the key, the key problem. So how can we provide you with an edge? So we provide access to option positionings and gamma levels.

[00:03:03.03] - Speaker 1
We have developed our Q score and we're going to show you some examples on successes that we had on how you can use it for trading stocks and other assets. We also now have swing trading levels which are high probability of support and resistance zones based on flows, not just charts. And we also have full backtesting results there. And then of course, we now release some really nice volatility models like our VRP volatility risk premium and others like skew term structure.

[00:03:35.12] - Speaker 1
All right, so now let's go through some real life scenario. Right, so you've all seen this before. Apple is reporting earnings today. The reports really is strong. All the headlines are bullish.

[00:03:47.10] - Speaker 1
Social media is buzzing everyone, everybody's screaming, okay, like you should buy Apple because it's going to be great for the future. Right? On your chart, the price is going up. Every technical indicator says that momentum is strong. And you're thinking, you know, this is really the opportunity I've been looking for.

[00:04:04.12] - Speaker 1
Right? But at the bottom, there's actually an invisible layer that you don't see on the chart. Right. For example, again, Mentor Q shows you a massive call resistance or call wall near the current price. That's not just a line that you see on the chart.

[00:04:21.00] - Speaker 1
That's actually dealer positioning that creates resistance. Implied volatility is overpriced. So calls are really expensive. So if you are chasing and if you're buying calls, you're actually overpaying and you're paying a higher price. And the Q score is shifting bearish, which means the risk is building under the surface.

[00:04:39.08] - Speaker 1
Right? So everything looks great on the outside, but actually the flows are actually telling you that this breakout could be fragile. So instead of buying the hype, you adjust. Maybe you size down, maybe you use a spread, or you just have to wait and confirm that we're actually breaking through that core resistance or core wall. So the goal really here is to tell you that you're not just looking at the headlines.

[00:05:01.12] - Speaker 1
You're not just following what everybody's thinking without having a context. You're actually using positioning to understand what's going on with the asset. Let's take another example. So again, Microsoft looks boring on the chart. We are seeing a tight range, low realized volatility.

[00:05:19.25] - Speaker 1
Everything looks calm. Right? And you might think nothing is really happening in here. I'll ignore it, right? But then you see the Mentor queue dashboard and you see that implied volatility is, is going higher even though realized volatility is very low.

[00:05:35.05] - Speaker 1
We are shifting into a negative gamma position, which is a sign that, you know, the market could actually amplify the moves. And the Q score is actually moving into kind of like a bearish target. Right? And this is kind of like the setup that trader miss, this is a quiet market that turns into a sharp move, right? So if you hold Microsoft and if you have that in your portfolio, whether it's a short term trade or a long term trade, again, you might not be able to react because you think everything is fine until you see a strong move to the downside or to the upside.

[00:06:10.18] - Speaker 1
So we can actually show you by looking at positioning, how you can actually look at fragile environment, how you can be reactive and be prepared instead of waiting for things to happen. Right.

[00:06:23.23] - Speaker 1
All right, now let's go and then I'm going to answer some more questions in a second. Guys, let me just give you, let me go into the dashboard again.

[00:06:47.14] - Speaker 1
Right, so now we're going to go through some example on how you can trade stocks with Mentor Q. So first we're going to use Alibaba as an example. There's been a strong price reaction over the past few weeks. The first thing you want to look for is the Q score, right? As you open up an asset, you know, Baba is an example.

[00:07:08.09] - Speaker 1
You want to see what's going on with the assets. So we know that we are very high on the option score. So the option is actually pricing an upside move. The momentum is strong and we see a neutral volatility. No signal coming from the seasonality at this point.

[00:07:25.12] - Speaker 1
But very, very important. You can also go and look at the positioning similar to what we did before with futures. You see that there's really no negative positioning piling up on Alibaba right now. You can also look at the matrix to see if we have positive or negative gamma coming in. And then you can, you can kind of see the historical data.

[00:07:47.02] - Speaker 1
So how did the Q score perform historically? So let's take an example. Right? So Baba has been trading at the around 100 level for four months. Like we were in a very consolidated phase until something happens about two months ago.

[00:08:02.05] - Speaker 1
So we went from a very negative position into a strong positive position. So we went from a score of 0 to a score of 5 and now we are at 4. So again this change, this delta could have been a great signal of something is shifting in the option positioning. And then again we saw this is like 30, 40% move from the past two months. So we went from 120 to now 160.

[00:08:27.04] - Speaker 1
And I don't know what the price is today. We can look at that. You can also use the same thing on momentum. So this is our momentum score was very bearish on Baba until a few weeks ago. A few months ago.

[00:08:37.23] - Speaker 1
Now we are at 5. And this change in momentum also signaled the start of this really massive uptrend. Right, let's go and do a couple of other examples. So for those who have followed the news Today, Lyft saw a 30 increase per market. I don't know what, what it is now, but we, we can look at the charts.

[00:08:59.09] - Speaker 1
So let's go into lift here. So there's a news they have a partnership with the Waymo. So very great headlines this morning. The stock basically open with a gap, went all the way to 23, 24 and now it's trading at about 13. Right.

[00:09:19.09] - Speaker 1
So you open high and I straight at 13%. So let's go back into our dashboard. So what, what can we get from here? So we are in a very, very high, strong option positioning. We are in a very strong momentum and volatility is neutral.

[00:09:32.03] - Speaker 1
No signal coming from seasonality. But let's actually go and see the history. Right, so again the headline, you cannot forecast these headlines but you can actually look at how the market could have positioned and could have given you some interesting signal. So here we were at the beginning at the end of June, very low option score. We move to a very strong five bullish score.

[00:09:57.12] - Speaker 1
And now we are very bullish here. So again, just look at this. This is kind of the start of a trend. We went then to a kind of downside move and then we, we are now all the way up to 23 or $24. So this would have also been a great, great example of how things could have changed to the downside.

[00:10:17.21] - Speaker 1
You know, for those who are following companies like Salesforce, they're not doing great recently. They had bad earnings and things are, you know, coming down a little bit. But here you can see that we're in a negative gamma conditions on Salesforce. Low momentum, low option activity, low volatility. So maybe something is shifting.

[00:10:38.21] - Speaker 1
So we can go back and look at the charts.

[00:10:44.20] - Speaker 1
Right here. We can see what's going on. So Salesforce, if we go back to the five minutes, was trading over 300 and they recently kind of dropped down right here.

[00:10:57.21] - Speaker 1
So let's see if this opens up. But let's go back to the dashboard here and let's go and see how the option score could actually have been very predictive. So first strong move here and we see this kind of like small trends that could have given you some interesting returns. And then we see a shift from really positive 5 to 0. This was the beginning of the first move.

[00:11:26.16] - Speaker 1
And then we have a second shift and this was this massive downtrend right here. Then we see an upside move and then here we see the strong uptrend starting. Then we, we drop again and now we're back into like, kind of like a negative environment. So again the all these moves could have been leveraged by using the option score and, and the other scores that we provide. And again, very, very easy.

[00:11:50.03] - Speaker 1
Look at this momentum score. Goes negative start of a bearish trend. Goes negative start over bearish time. So this data very, very predictive. The next thing you want to do if we go back to our Bob example is you can look at our gamma exposure, so you can see how the market is positioning themselves for different expirations.

[00:12:14.06] - Speaker 1
You can look at our net GAM exposure, you can look at the matrix and you can see the gamma situation for the asset. Then we have our swing trading models. So we're not going to go into the details because we have a dedicated course and dedicated videos. But the idea of the swing trading model is to give you clarity on the levels that could be respected or could be targeted within the next five days. So in this case we are seeing a lower band.

[00:12:42.20] - Speaker 1
We are in a bullish bias for Baba and the lower level. So this could be a level that could signal a potential start of a downtrend, would be 150.88. Our target for the next five days is 173.54. Why is this important? Because let's imagine that you're playing this stock by longing or shorting.

[00:13:03.23] - Speaker 1
You also have some backtesting results here. So you know that over the past 120 days, which is four months of data, the lower band has been respected on 85% of the cases. So on 85% of the days, the price does not go low below the lower band five days in the future. Right. So you could use this as maybe a stop.

[00:13:26.19] - Speaker 1
And you could use that in different ways, whether you're trading directional or with option data. But also very important, the risk trigger. So the risk trigger has been respected on 80% of the days. So what does that mean? That let's say that you're long alibaba over the next five days, if the price approaches 173, there is a big chance that the price could be rejected.

[00:13:49.06] - Speaker 1
You see how this was respected? So it doesn't mean that the price cannot go higher. But again, you want to play with probability. You want to understand the levels that can give you a better probability of success. So again, if you did a really nice long here and you're hitting this level, are you going to keep, are you going to keep chasing the move?

[00:14:08.24] - Speaker 1
You're going to look for a home run or you're going to take profit and manage your risk and manage your profit? Right. So that's what this model is telling you. And we do this model on five days and 20 days. Right.

[00:14:20.10] - Speaker 1
So this is the levels for the next 20 days. Again 184 was respected on 79 of the days. So very, very important piece of information.

[00:14:33.09] - Speaker 1
The next thing we can do on stocks is looking at the sku. SKEW is a very important indicator is telling us the implied volatility of out of the money calls versus the implied volatility of out of the money puts. And the model is trying to look if we are in a call bias or a put bias environment. What this means is that if we are in a call bias environment, market is actually pricing higher implied volatility for out of the money calls. In particular 25 Delta calls.

[00:15:01.28] - Speaker 1
That means that they're willing to pay higher premiums to potentially position themselves on out of the money calls. So they might believe that the stock could actually have a stronger move compared to whether if we are in a put bias in this case. So the skew very, very important. It can help you really understand how you know the option market is pricing for an upside move or downside move. And then another very important model that we just released last week is the volatility risk premium.

[00:15:34.07] - Speaker 1
The volatility risk premium tells you the difference between implied volatility and historical volatility. But in an historical context. So Today VRP is minus 11.7%. That means that implied volatility is actually 11 cheaper than historical volatility. But what does that mean?

[00:15:55.07] - Speaker 1
Is this good, is this bad? And what does it mean? So historically you can see how the VRP has, has performed. So before we were the VRP was really high. Now the VRP is really, is really high to down.

[00:16:11.28] - Speaker 1
So, so historical. So implied volatility is really underpriced compared to historical volatility. What does that mean? That maybe like buying premium could be a better strategy because volatility is kind of really low compared to the history. Right.

[00:16:26.07] - Speaker 1
And of course you know that volatility tends to be a mean reverting me reverting indicators. So again the VRP would tell you if we are in an undervalued IV situation or in an overvalued IV situation. If IV is undervalued, you have more chances of success by buying premium than selling premium. Because you don't want to sell premium when volatility is low. If implied volatility is overvalued, then maybe we you have a better chance of success in selling options rather than buying.

[00:16:58.22] - Speaker 1
But we're going to talk about that in a second. And then the next thing again, once we do our analysis and we want to go and trade, we can actually go and open up our level. So let's do a couple of example. We have one good one on Tesla from today.

[00:17:30.03] - Speaker 1
All right, so this is a good example on Tesla. So first of all we now have blind spots level on Max seven companies. So you can now actually use our blind spot level indicator on Max seven. We're going to do a couple of example. This is really is really good because now Tesla broke through the put support zero it is and you didn't have any gamma levels behind that so there was no other levels.

[00:17:59.05] - Speaker 1
Again, how can you use data to potentially understand where the price could reverse? Again we're using a blind spot. Blind spots two was exactly the point of when the law for the day and now we are reversing there. So very, very important. You can now use gamma levels on on Max seven companies.

[00:18:16.29] - Speaker 1
Let's do another example on Apple.

[00:18:37.16] - Speaker 1
All right, so again, take a look at this. Right, so we are now fighting around this core resistance level. Right? Right. This is a very, very big level that is very.

[00:18:46.18] - Speaker 1
It's been hard to break for the whole duration of the day. So again, once you know that and we are retested many, many times, this could have been a good example to the downside. We had this blind spot 5 level here. Very interesting. This could be a strong support area.

[00:19:04.07] - Speaker 1
But now we are really fighting around this level here.

[00:19:11.24] - Speaker 1
All right, we can also then look at intraday gamma models. But I think I want to spend time in going through our screeners. So how can you as a stock trader find trade ideas for your preparation? So we have a section of the dashboard which is our screeners. We have different types of screeners.

[00:19:29.24] - Speaker 1
So for example, let's say that you like trading our gamma levels. You can actually run our core resistance. I will level put support screeners. These are end of days, so they're calculated at the end of the day. So this tells you the stocks that as of close off yesterday they are coming close to a gamma level.

[00:19:49.08] - Speaker 1
So we have match.com, we have XLE. I'm going to show you something that is really interesting that it's available on Transpider. So for those who are actually using the platform you can actually do now intraday real time scanning. So I could actually come here and I could say, okay, I want to see all the stocks that are now approaching your hival level and IVO level 0T. I can quickly scan.

[00:20:12.25] - Speaker 1
This is all integrated API so you have access to all our coverage, all our data. And now I can quickly go through each of the stocks that are 0.5% away from the hival level here. And I can see immediately on the chart how the price could react. So for example, if I'm looking into Intuit and I would love to basically trade off this level, I now have an intraday real time scanner that can give you that you can do the same thing for put support, one day max, one day minimum or any of the other levels. So in this case I'm looking at companies approaching my put support.

[00:20:50.08] - Speaker 1
So now you have, Boeing has been trading around this area. So again, real time scanning through our data using the transpider application. Now we have CRM again, we are approaching put supports again. Look at how the price bounce back and forth through the level. Very, very easy to do that with the platform.

[00:21:11.10] - Speaker 1
This is one type of screener that we have. We also have open interest, volatility and volume. But I think the most interesting one would be looking at the Q score. So again with the Q score I can look at, we've seen like how predictive the different scores can be. I could actually look at different types of analysis.

[00:21:30.07] - Speaker 1
I could look at the highest option score here. So here is telling me what asset have the highest score score of five. So you see lift here, you see IBIT, et cetera. But again, if I go back, the other very big one is the change in score. So you want to see an increase or a decrease of the score.

[00:21:52.21] - Speaker 1
So if we are looking at the decrease, we want to see what are the assets that are seeing a big outflow of option activity from the previous day. So we've seen that, we've seen it here. We can filter out by highest option score. So you can see that Russell has seen a decrease in option score, Costco has seen a decrease in option score, CRM, Nvidia, Microsoft, et cetera. So this can give you some really interesting idea for the day.

[00:22:21.22] - Speaker 1
And they're all available right here. So we have multiple screens.