CurryOption

I originally thought TSMC ($Taiwan Semiconductor(TSM.US)) could be as reassuring as in the past, so I haven't looked at TSMC for quite a while, even before the earnings report.........

I've found a better way of working: I use "5.6 sol ultra-high reasoning" only during planning, and use "5.6 Terra ultra-high reasoning" for regular work. I discuss and outline the architecture and workflow with 5.6 sol, and save the discussion results directly as a markdown file. Then I open 5.6 terra and ask it to follow that markdown to complete the coding and testing tasks specifically. If it's a long-term development project, you don't really need to set the speed to 1.5x acceleration. Because setting it to 1.5x acceleration will exhaust the 5-hour quota even for 5.6 terra. If the quota runs out and you're not going to immediately pull out a magic card to pay for more quota, but just wait idly, then it's pointless. Instead, it's better to set it to normal speed and let 5.6 Terra output steadily and continuously. After using it continuously for over 24 hours, I'm quite sure that with ultra-high reasoning enabled, 5.6 Terra's performance is significantly better than the previous generation's chatGPT 5.5. As for the previous generation GPT 5.5, I actually don't think it has any issues for work anymore; frankly speaking, it's already sufficient. For me, the significance of 5.6 is mainly during research and discussions; it's a more intelligent collaborator, and its spoken Chinese expression has also improved somewhat. In pure scientific discussions, it's a more reliable partner than 5.5.

$Oracle(ORCL.US) 's stock price is approaching the key support level of $136.

In the short term, over the next few days, the only way to save Oracle is: ChatGPT 5.6 releases today, achieves an overwhelming victory in crowdsourced model performance comparison tests, and maintains widespread usage among subscribers... In that case, OpenAI could win and reconsider its IPO plan for this year. Is this script too perfect?

I just noticed by chance that Microsoft had officially fallen below $356 before. It's currently rebounding. If it can break through $401 within the next few days and return to the boxed consolidation range from mid-April to late May, it will be relatively safer. The worst fear is that it just touches $401 and falls again. If this pattern emerges, I think it will be even harder to hold above $356 on the next drop. Enough said, I need to quickly check the options data for $Microsoft(MSFT.US). I'll post an analysis article in forty minutes.

It's been a long time since I last wrote the "Options Talk" series. Today, I came up with a topic. I haven't started researching it yet, but I'll share my idea with everyone first. Perhaps before I begin, the feedback from everyone can help me complete a more exciting mini-research project.

〖Is the implied volatility of options with 14 days to expiration consistent with the actual stock price volatility that occurs in the subsequent 14 days? Underestimated? Overestimated?〗

People involved in options trading have a preconception in their minds about the distribution of stock prices 14 days later. This preconception determines how they judge the price of that option.

If an options participant believes stock price volatility will be high, and there's a high probability of breaking through the strike price in 14 days, then they are willing to accept a high market price for the option.

If an options participant believes stock price volatility will be low, and the probability of the stock price breaking through the strike price in 14 days is very low, multiplying a small probability value by the breakthrough price results in a very small value, then they will price the option at a very low level.

Options traders' judgment on price often contains an emotional premium. This leads to the actual future 14-day stock price volatility perhaps always being lower than the implied volatility. The portion where the "implied volatility" is higher than the "actual future 14-day stock price volatility," the excess part, is the emotional premium investors themselves assign.

How much is this premium? Is it positive or negative?

Which stocks have particularly high emotional premiums? Which ones are particularly low?

When are emotional premiums particularly high? When are they particularly low?

#Volatility Risk Premium (VRP)

There's a piece of negative news about $Marvell Tech(MRVL.US) recently that I believe won't have any substantial impact. On 06/11, the company announced a CFO transition: the current CFO Willem Meintjes will step down. The latest update on 06/15: Meintjes filed Form 144, planning to sell approximately 207,000 shares (nearly 48% of his holdings), amounting to about $60.1M.Compared to $Marvell Tech(MRVL.US)'s daily trading volume of tens of millions of shares, 200,000 shares are truly insignificant. I don't think it will affect the stock price at all.The top-left chart shows the implied volatility trend over the past two years. After the last earnings report, the volatility returned to its baseline level, with only a very brief dip before immediately rising back to near the earnings report peak. However, it's not accurate to say it didn't fall back to the baseline, because since last December, the volatility baseline has significantly increased, especially after mid-March, where the baseline seems to have risen in a parabolic pattern, much like the stock price.Perhaps the current volatility has already returned to the baseline, but the baseline itself has now risen to a height of 100%.The top-right chart shows the Put/Call volatility spread over the past two years. Before the most recent earnings report, there was also a trend of aggressive bullish bets. Although after the earnings report, the volatility spread, along with the stock price's high-level fluctuations, has returned near the zero line, and the bullish momentum has largely dissipated.Looking at the bottom-left chart, which shows the short-term Put/Call volatility spread trend, from the aggressive bullish bets at the beginning of June, it once reversed to a rush for put options due to the sharp drop in stock price. Now it's gradually leaning back towards call options.The bottom-right chart shows the options position change. Recently, there has been an addition of over 20,000 call options, and for slightly longer-term options (dte=67 days), there has also been an addition of 3,000 in-the-money call option contracts. These new options are mainly driven by buying pressure, indicating active bullish sentiment among market participants.Summary: Volatility remains on a steeply rising parabolic trajectory, and market participants show clear bullish sentiment. Given this trading environment, I wouldn't be surprised if a sudden surge occurs later.

$Intel(INTC.US) taught me an important lesson this year.

After the January earnings report, the implied volatility of $Intel(INTC.US) did not drop back to its previous benchmark (~40%). At the time, I didn't fully understand it and only warned in my analysis that the trading heat was still maintained. This unusual behavior caught my attention, but I couldn't just assume that the stock price would subsequently surge.

The implied volatility has been oscillating at a significantly higher new level since the January earnings report, maintaining this state for over a month. During this month, the stock price remained in a flat, range-bound oscillation. As you all know, what happened later was that the stock price sharply rose from around $50 to touch $120.

The most recent earnings report was on 04/23. After this report, the volatility simply did not decline; there was no benchmark value to speak of. The volatility after the 04/23 report has been oscillating near the peak level of the earnings report.

Therefore, absolutely do not short it! I would even suggest that if you have a large position in the underlying stock and you're itching to sell covered calls, that's certainly possible given the exceptionally high volatility. However, keep the size of the position you sell small, and make good use of the high volatility by selling short-term, deep out-of-the-money options.

The current observation is that $Intel(INTC.US)'s stock performance has been quite good over the past week, but the oscillation of volatility remains within a normal range, which is a good thing.

The top-right chart shows the Put/Call volatility spread over the past two years. This chart reveals that $Intel(INTC.US)'s volatility spread has often stayed below the zero line over the past two years; this is its fundamental characteristic. So, unless the volatility spread adjusts to below -20, we should not view it as "long crowding," as historical data from the past two years shows that $Intel(INTC.US) participants just like to crowd in and join the excitement.

The current volatility spread is even in a relatively conservative state, hovering near the zero line.

The bottom-left chart is an analysis of the correlation coefficient between stock price returns and volatility. This chart made my pupils dilate!

Since May, $Intel(INTC.US)'s stock price has been consolidating at high levels, once briefly dipping below $100 for a very short period. However, just this level of price correction has already driven the correlation coefficient downward, with the red line (Put) falling even lower. Even though $Intel(INTC.US)'s stock price has risen significantly over the past week, it hasn't immediately pushed the correlation coefficient back up to its peak. If this week's trading causes $Intel(INTC.US)'s correlation coefficient to continue downward and touch -0.5, it will complete a very healthy consolidation pattern. This is quite remarkable: to cool down and even reverse trading sentiment while the stock price decline is limited, creating the background conditions for the next price increase once such a pattern is completed.

The bottom-right chart shows the intraday options position change chart. Call option building has been more active, and because $Intel(INTC.US)'s basic stock nature involves the habit of chasing prices to buy calls, a certain level of new call option positions is maintained even without special news.

Summary: $Intel(INTC.US) is close to completing a high-level consolidation where the price decline is limited, but trading sentiment has reversed. Whether it can be completed will be revealed in this week's trading. Once $Intel(INTC.US)'s stock price completes its consolidation at high levels, it creates favorable conditions for the next rise.

$AST SpaceMobile(ASTS.US) Since the Blue Origin rocket explosion incident, stocks in the space industry have been acting strangely. $AST SpaceMobile(ASTS.US) stock price has been highly volatile, and in the short term, it has also been affected by the SpaceX (SPCX) IPO, showing a clear phenomenon of "capital rotation + sell the news." The stock price fell 15.53% last Friday, and the current price is $82.41.The most clear positive catalyst recently is that AST SpaceMobile has confirmed that BlueBird 8, 9, and 10 will be launched on June 17th aboard a SpaceX Falcon 9 from Cape Canaveral.These are next-generation satellites with larger communication arrays and expected peak speeds nearly doubling. In the direct-to-cell market, $AST SpaceMobile(ASTS.US) has patent protection on the technical side and has already signed contracts with telecom operators. Currently, I believe it has the technical capability to share the market with SpaceX in the direct-to-cell service field.However, whether a company operates well is not solely dependent on technical capability.The stock price differs greatly from current revenue, and subsequent investors must see a steep revenue growth curve; otherwise, it is insufficient to support the current stock price.The top-left chart shows the implied volatility over the past two years. In this chart, we can clearly see the significantly declining stock price while volatility remains high. This is something relatively positive I see in today's data, but how positive this is must rely on the Put/Call volatility spread for judgment.The top-right chart shows the recent volatility spread trend. This chart looks quite unfavorable because, despite such a significant drop in stock price, the main trading pattern is still chasing to buy call options. The volatility spread has been in a deeply negative state most of the time. Very few market participants are buying Puts to hedge against the stock price decline; everyone is still in a strong speculative atmosphere of buying on every dip.For the stock price to rise significantly, it naturally needs a speculative frenzy to boost it. However, during the process of the stock price retracing and consolidating, if it does not trigger panic and spur a frenzy of chasing to buy put options, it is very unfavorable for the stock price's retracement and consolidation. In plain terms: the deleveraging of the long positions has not yet been completed.Only after removing the long positions can favorable conditions for the next big rally be brewed.Looking at the bottom-right chart, the correlation coefficient analysis between stock price returns and volatility, as expected, the current correlation coefficient still maintains a significantly positive correlation. The stock price has fallen so much, but compared to February and April of this year, we still cannot determine that the stock price correction is complete based on the existing data.The bottom-left chart shows the change in option positions during last Friday's trading. The increase in call option positions is still more obvious, but put option positions have also started to increase, which is a good sign. I think the stock price should not rush to rebound next; it would be a better state if it could consolidate weakly and let the bullish trading sentiment cool down.Summary: The stock price has already fallen so much, but surprisingly, the analysis data suggests "it hasn't fallen enough yet."

I'm on a flight back to Taiwan.
On the way there, I didn't drink at all because I had to drive as soon as I landed. On the way back, I'm taking a car to Hsinchu, so I'm drinking freely and without worry on the plane.
I'm feeling quite relaxed, after all, I've completed a mission, traveling all around the northernmost part of Japan's main island alone with my parents.

We are so deeply involved in trading and investing because of love.
We hope to reach a state of living in complete freedom. If you understand yourself deeply enough, you'll likely find that you don't want to make money because you love money. Fundamentally, you want to make money because you love yourself. Making money is just a means, not an end.
You hope to avoid being wronged, to live the life you want, so you desire to earn enough money.
You, we, make money because of love.

At the same time, we hope our family can also enter this state. We hope the people we love can also live as they wish.
So, we invest our energy, we dare to endure.

First $Broadcom(AVGO.US) then $Oracle(ORCL.US), this wave of pullback probably won't end early.
All things that are particularly meaningful are never easy. I understand your difficulty, and I'm sure this difficulty will accompany us for life.
But it's okay, because with love, whether it's love for ourselves or for our family, we can withstand disappointment time and again.
By the time you read this message, I'll already be back in Taiwan. I've returned to the team, let's fight side by side together again!

$AMD(AMD.US) (Advanced Micro Devices) suddenly dropped 10.86% last Friday. Did such a sharp single-day decline produce any special patterns in the options trading data? I'll state my conclusion first: the existing structure remains unchanged. The top-left chart shows the two-year overall implied volatility. This chart reveals that after the last earnings report, the benchmark level of implied volatility was raised a notch, and volatility did not fall back to the pre-earnings benchmark. After the earnings, the trading atmosphere entered a new mood (or narrative). After last Friday's sharp decline, the current volatility level is still within the fluctuation range of the new benchmark. The top-right chart shows the recent Put/Call volatility spread. After last Friday's sharp decline, the volatility spread jumped upwards, but the magnitude of the jump is not large, still within the normal fluctuation range. After Friday's sharp decline, neither volatility nor the volatility spread has shown a new pattern. It seems that the current stock price volatility is still considered by market participants as a normal release of energy for $AMD(AMD.US). The bottom-left chart is the single-day position change chart. It shows some long positions closing out, but more significantly, put options being opened across a fairly wide range of strike prices. These trades can't be clearly attributed to who is exiting or entering, as under these general position changes, the volatility spread didn't change much, only shifting slightly towards puts, with no clear directional bias observed. The bottom-right chart shows the correlation coefficient between stock price returns and volatility. Last Friday's decline also caused the correlation coefficient to plummet from above 0.5 (positive correlation). If it could touch zero, it would be more reassuring, because after May, there was a local stock price low point, which was accompanied by the correlation coefficient briefly touching zero. If it doesn't even touch zero, it doesn't look like a complete stock price pullback pattern. Summary: While $AMD(AMD.US)'s stock price is pulling back, volatility hasn't changed much. Position changes show increased buying interest in Puts and some call options closing out, but these are minor. The structure presented by the options trading data is the same as before the sharp stock price decline. According to correlation analysis, we are indeed in the consolidation phase of a stock price pullback. If the subsequent correlation coefficient can drop to negative or at least touch zero, then we can start watching for the emergence of a local bottom in the stock price.

$Marvell Tech(MRVL.US)'s stock price surged after 06/02. Although it experienced a significant pullback in the most recent trading day, its volatility remains at historically high levels. The current short-term volatility exceeds 120%, which will undoubtedly attract a significant number of option traders to sell options.

$Micron Tech(MU.US) Micron is the data pattern I've seen in the past two days that is relatively reassuring.

After a full trading day following $Broadcom(AVGO.US)'s earnings report, we are now trying to analyze the current situation from options trading data.