The Options Hunter Weekly Summary January 10, 2025

Jan 13, 2025

Weekly Market Summary: 

January 10, 2025

 

This week, the market presented exciting opportunities, with the Russell 2000 emerging as the top-performing index. Let’s dive into the trends, trades, and lessons to optimize your strategies for the coming weeks.

Key Highlights

• Volatility Insights: Early session spikes indicated downside potential, while late-session declines offered strong call option setups. The market showed triple-divergence patterns across daily, 30-minute, and 5-minute charts that led to explosive trading returns.

• Quick Turnarounds: Call options on QQQ and SPY surged from $0.10 to $0.80, delivering 8x-40x returns within hours, powered by volatility-driven movements.

• Divergence Matters: Upside divergences in the Russell 2000 and QQQ provided actionable insights for disciplined traders, while Russell 2000 showed consistent upside potential, outperforming other indices.

Market Trends

Volatility: The week's volatility was marked by consistent divergences across various timeframes. These signs led to profitable reversals in the latter half of the sessions, with predictable market movements, especially in SPY and QQQ.

Performance: Russell 2000 was the star performer, followed by SPY and QQQ, which saw sharp momentum shifts during mid-day reversals. While SPY presented fewer trades, it still offered solid returns during volatility bursts.

Best Trades of the Week

• QQQ Calls: Far out-of-the-money options priced at $0.10 surged to $0.80 (~8x returns). In some cases, the return skyrocketed even further to 14x as volatility picked up.

• SPY Calls: Options moved from $0.08 to $1.50, yielding ~20x returns during midday reversals driven by volatility.

• Russell 2000: Call options on this index showed 5x-9x returns as upside divergences were confirmed, with the market remaining bullish despite potential volatility threats.

Trading Philosophy

• Patience is Key: Consistent profits came from waiting for clear divergences and trading on high-confidence setups. Diversifying strategies across various timeframes helped lock in significant returns.

• Trust the Patterns: Clear divergences across multiple timeframes remain the most reliable signal for profitable trades. Traders focused on major indices like SPY, QQQ, and Russell 2000 for the best results.

• Focus on Liquidity: High-liquidity indices and stocks offered predictable results. Avoid chasing individual stocks and stick to liquid options for maximum success.

Looking Ahead

Moving into the next week, traders should continue to focus on QQQ, Russell 2000, and SPY, prioritizing setups that feature clear divergences. Pay close attention to volatility shifts and aim for both call and put options as the market fluctuates. As always, trust your patterns and practice patience to maximize profits.

P.S. Consistently compounding your profits through disciplined strategy is the best way to ensure long-term trading success!

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