BB at its support at $10

I think $BB has lost its support established at $10 and may be headed to $9 at best, or $8 if the price follows historical precedence.  To start, a quick over-view of the metric that I use, VoEx: VoEx measures price-directing forces in a stock. It is then represented as a graph overlaid on the price with VoEx-daily being magenta, VoEx-trend being tan, and the price being blue. If VoEx is above the top horizontal bar (the inhibition line), the stock is unstable "on the upside"; this translates to off-sides price-directing forces that are increasingly off-sides with price increases. If VoEx is below the bottom horizontal line (the propagation line), then the price-directing agents are off-sides with the current price trend. If VoEx is between those two lines, it is considered stable. Now on to $BB - some back story, as I've been following $BB for awhile now. Starting around 3 months ago, $BB started its decline towards $10 from its recent spike of $15+, where VoEx was describing the following story: So overall, I think $10-$15 iron condors would still be quite the good bet (additional caveat: iron condors do best with declining IV; so I'll be keeping that in mind), but there are growing indications of a bullish force building. The only caveat is the (for now) neutral ITM call wall at $10. If the price drops significantly, or IV significantly enough such that delta is now longer 1 on those options, some interesting things might happen. In such an event, I'd be keeping an eye on BB, especially if the price continues to decline towards $10. One month later, in July, BB entered the $10 range, and I predicted continued price-action around $10: My prudent prediction is a price hovering around $10 still - but personally I will watch VoEx Mon/Tues to see what it does: if it continues moving south, I'll plan for downside to $8. If it starts to hover around the healthy zone, I'll re-enter my $10 calendar spreads about 1mo out. I've continued the 1-month calendar spreads at $10 since then, but there is pause for caution here that the support previously found at $10 is dwindling. The first exhibit is VoEx: https://i.imgur.com/uYGPzp6.png There are several distinct features with this VoEx graph: VoEx-trend (tan line), is heading quickly towards the propagation line (bottom horizontal line), Today's recent increase in price was met with a drastic increase in VoEx, VoEx never "found a home" with BB at $10 The third point is interesting in its own right: when a stock finds a new price point, VoEx will typically adjust itself over time and migrate causually back into the stability zone - this never occured with BB. So VoEx seems to be indicating increased instability with any price appreciation, which implies increased stability with price depreciation. Is there any supporting evidence? Rewinding time to September 23rd, let's look at some snapshots of the calls, puts, and net delta values on $BB: https://i.imgur.com/7tjdRE3.png So recently, a large flux of calls have been migrating towards $BB along with the increase net delta suggesting these calls are dealer long calls and the puts being removed are dealer short. Combined, this is around 38,000 positive delta, leaving only around 5,000 delta unaccounted for, but is most likely due to the changing price and its effects on the underlying delta values currently present. Why is this particularly significant for $BB? The largest strike of call increase and put decrease is: $10. https://i.imgur.com/yq32Smu.png What had been holding $BB at $10? An almost equal distribution of calls and puts at $10. Here are the options from July 14th: https://i.imgur.com/ZD7EWny.png So in sum, I think $BB will continue to decline due to: The put-floor for $BB at $10 is diminishing and those puts seem to be dealer short (retail investors are cashing out or the puts are expiring), The volume at calls at $10 is increasing, The calls added to $BB seem to be predominately dealer long, VoEx is heading towards propagation zone, and Recent VoEx-spikes with even minor price increases. Something to keep an eye out for! It is worth noting that the last time $BB had a rather stable VoEx for more than 1-month, the price was at $8. Currently, below $10, there are no dealer short puts

back

BB at its support at $10

bearish

I think $BB has lost its support established at $10 and may be headed to $9 at best, or $8 if the price follows historical precedence. 

To start, a quick over-view of the metric that I use, VoEx:

VoEx measures price-directing forces in a stock. It is then represented as a graph overlaid on the price with VoEx-daily being magenta, VoEx-trend being tan, and the price being blue. If VoEx is above the top horizontal bar (the inhibition line), the stock is unstable "on the upside"; this translates to off-sides price-directing forces that are increasingly off-sides with price increases. If VoEx is below the bottom horizontal line (the propagation line), then the price-directing agents are off-sides with the current price trend. If VoEx is between those two lines, it is considered stable.

Now on to $BB - some back story, as I've been following $BB for awhile now.

Starting around 3 months ago, $BB started its decline towards $10 from its recent spike of $15+, where VoEx was describing the following story:

So overall, I think $10-$15 iron condors would still be quite the good bet (additional caveat: iron condors do best with declining IV; so I'll be keeping that in mind), but there are growing indications of a bullish force building. The only caveat is the (for now) neutral ITM call wall at $10. If the price drops significantly, or IV significantly enough such that delta is now longer 1 on those options, some interesting things might happen. In such an event, I'd be keeping an eye on BB, especially if the price continues to decline towards $10.

One month later, in July, BB entered the $10 range, and I predicted continued price-action around $10:

My prudent prediction is a price hovering around $10 still - but personally I will watch VoEx Mon/Tues to see what it does: if it continues moving south, I'll plan for downside to $8. If it starts to hover around the healthy zone, I'll re-enter my $10 calendar spreads about 1mo out.

I've continued the 1-month calendar spreads at $10 since then, but there is pause for caution here that the support previously found at $10 is dwindling.

The first exhibit is VoEx:



There are several distinct features with this VoEx graph:

  1. VoEx-trend (tan line), is heading quickly towards the propagation line (bottom horizontal line),
  2. Today's recent increase in price was met with a drastic increase in VoEx,
  3. VoEx never "found a home" with BB at $10

The third point is interesting in its own right: when a stock finds a new price point, VoEx will typically adjust itself over time and migrate causually back into the stability zone - this never occured with BB.

So VoEx seems to be indicating increased instability with any price appreciation, which implies increased stability with price depreciation. Is there any supporting evidence?

Rewinding time to September 23rd, let's look at some snapshots of the calls, puts, and net delta values on $BB:



So recently, a large flux of calls have been migrating towards $BB along with the increase net delta suggesting these calls are dealer long calls and the puts being removed are dealer short. Combined, this is around 38,000 positive delta, leaving only around 5,000 delta unaccounted for, but is most likely due to the changing price and its effects on the underlying delta values currently present.

Why is this particularly significant for $BB? The largest strike of call increase and put decrease is: $10.



What had been holding $BB at $10? An almost equal distribution of calls and puts at $10. Here are the options from July 14th:



So in sum, I think $BB will continue to decline due to:

  1. The put-floor for $BB at $10 is diminishing and those puts seem to be dealer short (retail investors are cashing out or the puts are expiring),
  2. The volume at calls at $10 is increasing,
  3. The calls added to $BB seem to be predominately dealer long,
  4. VoEx is heading towards propagation zone, and
  5. Recent VoEx-spikes with even minor price increases.

Something to keep an eye out for!

It is worth noting that the last time $BB had a rather stable VoEx for more than 1-month, the price was at $8. Currently, below $10, there are no dealer short puts

Comments

Write your comment....

Sign in to comment

read-time
3 min

9.12

Target Price

8/ 10

Confidence

2-4 Weeks

Timeframe
Share
catalyst icon
Earnings Release
catalyst icon
News
catalyst icon
SEC Filing
catalyst icon
Sentiment
catalyst icon
Other Catalyst

BB Channel

Start new chat
aiodd-ad
next