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The market makers (MMs) were making a bold move by buying the 14-strike straddle on $LYFT today. This strategic options play indicates that they are anticipating a significant price movement in Lyft’s stock in the near future. Specifically, they may be expecting the end of an ABC correction pattern, a common technical analysis tool used to predict market trends.
In technical analysis, an ABC correction pattern is a three-wave corrective pattern that is used to predict the end of a trend. The pattern consists of three waves: Wave A, Wave B, and Wave C. In this case, the MMs are likely anticipating the end of Wave C at the 61.8% retracement of Wave 1. This level is significant as it often serves as a key support or resistance level in the market.
Additionally, the MMs may be looking at the 161.8% extension of the length of Wave A placed at the Wave B high. This Fibonacci extension level is another important technical indicator that could signal a potential reversal in the stock’s price movement. By buying the 14-strike straddle, the MMs are positioning themselves to profit from any significant price movement that may occur as the ABC correction pattern plays out.
For short sellers who have bet against Lyft’s stock, this news should serve as a warning. The MMs’ actions suggest that they are confident in their prediction of a price movement in Lyft’s stock. As the saying goes, “buckle up buttercups,” it may be a bumpy ride ahead for those who are short on Lyft.
As with any investment strategy, it is important to do your own research and consult with a financial advisor before making any trading decisions. The market can be unpredictable, and even the most experienced traders can be caught off guard by sudden price movements. By staying informed and being prepared, investors can better navigate the ups and downs of the market.
In conclusion, the MMs’ purchase of the 14-strike straddle on $LYFT indicates their anticipation of a significant price movement in the stock. As they predict the end of an ABC correction pattern, short sellers should take heed and prepare for a potentially volatile market ahead. Stay informed, stay cautious, and always do your own due diligence before making any investment decisions.