The biggest options market in the world inverted yesterday. I want to walk you through what that means, because almost nobody outside the professional side is catching it, and it is going to matter to you whether you trade options or not. Start with the word skew. Skew is how calls are priced against puts, and how far-out options are priced against near ones. Under normal conditions, the further out of the money a call gets, the cheaper its implied volatility becomes, because demand thins out the further you go from the current price. Implied volatility is just what the market is charging for uncertainty. Higher vol, higher price. Puts almost always carry higher implied vol than calls. People pay up for protection, and they have paid up for it my entire career. Here is what is on my screen right now Look at the August 7th expiration. The at-the-money

Spectacular is not enough when everybody already expects spectacular. Traders relearn this one every quarter. A company beats every number on the page and gets sold anyway, because the price already had the beat in it. The move comes from the distance between the result and the expectation, and the options market prices that distance before anybody reports anything. So read the bar before you read the company. How to know when to sit down Pull up the front expiration and find the implied move. If that number runs 9% or 10% of the underlying, the market is telling you it has no idea what happens either. That is a crap-filled wonderland in there. Wide markets, high volatility, and a price that already contains every good outcome you were planning to bet on. Could I catch a butterfly around something like that? Probably. Do I want any part of it?

A perfect advance decline line is not always good news. This morning the market opened and the breadth was stellar. Holy crap, 85 advancers in the S&P 100. Full-blown correlation to the upside. Every sector was bid. Retail was up because it’s retail, materials hell yeah, healthcare back on that pony. Even the home builders had a bid under them, which is the one that kills me. Financials gapped a full percent for doing nothing at all. Turns out you don’t have to be good. You just have to show up. That is the kind of tape that makes people feel safe. It should not. Everything was up except one group. The semiconductors were getting smoked. Micron down almost 6% at the bell, AMD off 3.5%, and Nvidia and Broadcom getting sucked in with them. The semiconductors have been driving this bus all year. They are the leadership. So what

Asymmetry is what makes me trade. I wake up in the morning and I look for asymmetry in the marketplace all day long, and it has nothing to do with knowing where a stock is going. Friday morning Amazon had a $16 expected move. The stock moved 32 bucks. The expected move is the range the options market is pricing, and price stays inside it about two-thirds of the time. Double it and you’re sitting at two standard deviations. So I shorted 100 shares. Now hear me, because this is the part people skip. I’m not saying that Amazon is definitely going to be down. I don’t know if we sell off, and I don’t have a problem saying that. The stock was already up 32 bucks. It already had a 13% rally and the news was out. Do we have upside? Yeah, but not that much. Maybe it gets