High Octane American Peso - Apr. 10, 2025

My Journal

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Weds. Apr. 9

Wednesday my morning chat was summarized as follows:

1. Entropy signal had paused - that’s good, we can take a breather

2. GEX was showing us an anomaly. Dealers refused to short more aggressively despite the index making lows. My guess GEX ends up higher again today - dealers would begin hedging by buying ES futures the other direction (up).

3. Index hadn’t made a lower low despite increased threats (that's comforting I guess?)

Could one argue we had edge on Wednesday? Sure. Maybe 51/49% we were right about going up but that’s not real conviction and nobody in their right mind would have guessed that we slam up as hard as we did, let’s not kid ourselves. As others in the chat said, markets were incredibly short and needed the slightest good news to trigger a short squeeze, that’s it. I stayed out as I did not feel enough edge for me and I didn’t want to recommend anything to others, despite what marginal edge I described above.

In good news, I took profit in the morning on half the index puts I had from Tuesday after SPX fell about 250 handles from when we took them. I wanted to keep the rest of the puts as I think we have more issues coming down the pipe.

I think Trump really came under pressure after he saw credit essentially collapsing overnight (HYG below) and Wednesday seemed like a good time to conveniently put at temporary floor on it.

In these markets, unless you have some decent edge it is best to stay on sidelines many days. We used to have 1-5 days lead time for positioning just a month ago, not anymore. Timelines are compressed, volatility is incredibly high, and there is a lot of noise. BUT you know how to look for edge with these tools. My reminder below, let market makers have a turn at making profit and sit back while short vol funds blow up :)

Thrs. Apr. 10

Thursday we retreated and just chopped for the day. There is not much to report. Here’s what I think is interesting now though. GEX (dealer gamma exposure) is near 0 which is where explosive movement can typically happen. Of course, this alone at the moment doesn’t tell us in which direction it happens but we can be sure near-term returns will be volatile when GEX is close to 0.

Source: https://squeezemetrics.com/monitor/dix

The other thing you’ll notice in the chat today is entropy has flatlined, again. Why is that significant? Because the other times this has happened we have usually gapped up or run up but after that it has not ended well. The signal catches up to the SP500 I like to say. I have remaining puts but would like to add more shorts at the right price.

What’s Next?