tastylive: What's Your Assumption?

Hosts Nick and Tony navigated a difficult What's Your Assumption session where liquidity issues dominated, forcing passes on 4 of 10 viewer suggestions due to excessively wide markets. The executed trades included a UPS November-December 80/82 put diagonal for $4.50 (stock at five-year lows ahead of October 28th earnings), VST November 165 puts at $5 (stock down from 220 to 185 on six-day slide), and an SLV 43-40 1x3 put ratio spread at 24-cent credit capitalizing on 69 IV rank after Nick had closed a prior 42-47 strangle yesterday. The session featured extensive discussion about market quality, with CME showing $2.65 bid/$5.10 ask spreads deemed "untradeable" and GH (despite viewer Ron's pre-IPO success) having $4-wide markets. They advised viewer Joe against his zero-day SPX scalping strategy involving flipping between put and call spreads, calling it "eat like a bird, poop like an elephant" and suggesting micro E-mini futures instead. The Intel diagonal trade was postponed until after tomorrow's earnings, with Nick emphasizing the importance of longer duration (November 21st vs November 7th) to avoid getting "vaporized" by non-moves when volatility contracts.

Hosts Nick and Tony conducted a lively What's Your Assumption session responding to viewer trade ideas from around the globe, starting with Liz and Jenny's I-Bit bullish play where they recommended selling November 60 puts for $2+ given 62 IV rank. The standout trade was a GDX December 80 call/November 85 1x2 ratio for 80-cent debit - a "crab trade" giving Nick long gold exposure after admitting he "never got back to even in GDX." The Hood trade featured a 1-1-2 structure buying 130-120 put spread and selling two 105 puts at $1.14, with discussion of using those naked puts to later sell calls as an adjustment. Session highlights included advice for Ben in Bermuda who's up 25% on 50 Tesla 500 calls purchased at $4.80 (now $5.80), and a nostalgic "Slimmy" appearance maintaining his bearish Bitcoin-to-zero stance. The session ended with debate over managing their SPX zero-day put spread as markets rallied 50 points, with Nick ultimately closing the position against Tony's advice about rolling.

Hosts Nick and Tom conducted a live trading session on the first day of the government shutdown, executing seven viewer-suggested trades despite modest market weakness. The standout trades included an eBay November-December diagonal spread at $2.38 (utilizing 3-point vol differential), a BE October 85-100 call ratio spread Tom had entered yesterday for $0.65 credit (now worth $1.30), and an Oakland "bat wings" trade doing 10-point wide put ratio and 30-point wide call ratio for $1.65 credit. Additional fills included Snowflake iron condor for market neutrality, ETHA covered call capitalizing on significant call skew, and Oracle 20-point wide November iron condor at $5.17. The session emphasized identifying high implied volatility opportunities and using ratio spreads to exploit call skew in momentum stocks, while passing on trades with poor liquidity (RSI) or after significant intraday moves (MRNA up 6.5%). Nick demonstrated solid execution getting fills at or near mid-market prices across multiple complex multi-leg structures.

Hosts Nick and Tom analyzed historical government shutdown data showing mixed short-term performance but consistent longer-term rebounds. Past shutdowns delayed economic reports, affected federal workers (numbers ranging from 380,000 to 800,000+ employees), and created business disruptions through contract and permitting delays. However, market performance data from four major shutdowns (2013, 2018-19, and prior) revealed a "flop and pop" pattern - initial bearish moves followed by recovery after 3-4 weeks and strong gains once government reopens. The current shutdown's first day showed E-mini S&P down 28 points with VIX barely moving, suggesting markets view this as a buying opportunity rather than major crisis. Tom emphasized the pattern shows this is historically a "buy the dip" scenario, noting bonds at 117 and minimal volatility indicate markets aren't pricing significant disruption despite potential $7 billion weekly economic impact.

CoreWeave continues its aggressive funding streak, securing a $4.2 billion cloud infrastructure deal with Meta. The company, which rents out NVIDIA-equipped data centers, previously inked deals with OpenAI ($6.5B) and Oracle, positioning itself as a key infrastructure player in the AI boom. The August JOLTS report came in slightly higher than expected at 7.2 million job openings, providing limited support for rate cut expectations. Markets remained quiet as traders await the non-farm payroll report, which may not be released if the government shuts down. DraftKings (DKNG) shares weakened on emerging competition from Robinhood's prediction markets. Despite near-term pressure, the sports betting platform may represent a buying opportunity given the temporary nature of these competitive concerns.

In today's From Theory to Practice, Jim Schultz analyzes market conditions as gold reaches new highs, suggesting a potential reversal. He executes a downside butterfly spread on gold futures (GC) with strikes at 3855/3820/3785 for a $5 debit, positioning for a possible pullback. Despite gold's strong uptrend, Dr. Jim points to morning price action showing a $50 dip as a potential "chink in the armor." He also restructures an existing GDX position by rolling a put from the 62 to 70 strike, creating a straddle and collecting $1.39 additional credit. For earnings, he places a bearish ATM Vertical Spread on Nike (NKE) ahead of after-hours results tonight, buying the 71 put and selling the 67 put for $2.13.

The S&P 500 remained relatively flat, with analysts noting historically positive market performance during government shutdowns. According to data presented, during the 35-day shutdown in 2018-2019, the S&P actually gained about 9%. Silver historically outperforms during government shutdowns, prompting several traders to enter short put spreads at the $45-45.25 level on the day's 1% dip. Gold also tends to perform well during shutdowns, though typically not as strongly as silver. Without economic data releases during a shutdown, markets may experience sideways trading, potentially benefiting iron condor strategies. Rate cut probabilities increased despite the looming shutdown, with markets now pricing a 96.7% chance of an October cut and 76% for December. Agricultural commodities continue facing pressure from record yields and limited Chinese purchasing, with corn, soybeans and wheat all down over 1%.

In this episode of the Liz and Jenny Show, Jenny Andrews and Liz Dierking discuss several trading ideas and strategies while navigating a busy trading floor atmosphere. They highlight active trades, including SPX put spreads and a potential trade on DraftKings (DKNG) following a decline. The conversation includes insights on upcoming earnings for Nike (NKE) and strategies like Jade Lizards and synthetic covered strangles. Additionally, they touch on active market conditions and volatility trends, providing viewers with a clear view of current market dynamics.

This OJ examining SPY strangles from 2013 to present reveals the paradox of high-probability trades. While lower delta options (10 delta and below) offer win rates up to 84%, they come with significant hidden risks that traders often overlook. The key finding: extremely low delta trades (5 delta, 2 delta) can experience buying power expansion up to 3.4x during market stress versus just 2x for 50 delta positions. This margin expansion risk has bankrupted even successful traders during events like the 1987 crash. Research suggests the optimal strike range is between 16-30 delta, balancing probability of profit with manageable risk. Higher delta strategies yield better P&L per contract but with greater volatility, while lower delta trades offer steadier P&L but catastrophic tail risk.