Aug. 5th, 2025 Option Outlook

Buy the dip?

Good Morning! A dip buying bonanza recovered almost all of Friday’s losses.

If you count the after hours ES movement, we have already satisfied the requirements of a vol event. That is, we have seen the close before the vol event occurred. The speed of the recovery is typically not a great sign for follow up bullishness. If memory served, 6380 can be touched, but the higher order vanna provides room down to 6200 for downside before we start to see a lot of support.

Market days like Friday can provide a ton of support with bought puts, but such a swift recovery without news doesn’t inspire a ton of confidence historically.