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Fading Bullish Moves with Verticals

Market Measures

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What is the best tool to fade bullish moves in the market, credit spreads or debit spreads? Tune in to see Tom and Tony break down the results!

When we have a recent run up in price, as contrarians, we may look to take the other side of the move or fade it. There are a number of different ways to fade this move, but is there a strategy that tends to be more effective than others?

  • For the study, we categorized a bullish move as a stock being up x% over the course of 2 weeks.

  • This amounted to a 10%+ move in AAPL, 5%+ in Gold, and 4%+ in SPY.

  • The data is from 2005 to present.

Historically, our risk in 20 delta verticals has been less in debit spreads compared to credit spreads. But does this equate to profits?

Be sure to tune in to see Tom and Tony run through the results!

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