Managing Editor's Note: It’s official… The SpaceX IPO is set for June 12… And our colleague Jeff Brown believes it will unlock the single most explosive artificial intelligence opportunity of this decade. That’s why he’s having an urgent online strategy session this coming Wednesday, June 3, at 8 p.m. ET. There, he’s going to share details on THREE new recommendations that he believes have the potential to make up to 50 times more money than SpaceX. Click here now to automatically save your seat. What the Straddle Tells You About Market Moves By Larry Benedict, editor, Trading With Larry Benedict Most folks think trading is about trying to predict whether the market will go up or down. But professional traders take a different approach. The pros often aren’t trading direction at all. Instead, they’re trading expectations around market moves and whether moves are underpriced or overpriced. That’s where the “straddle” fits into the picture… An options straddle involves simultaneously buying a call and a put option with the same strike price and expiration. Instead of speculating on direction, the trader is simply anticipating a large move higher or lower. That’s why the pricing of a straddle can provide such valuable insight… Recommended Links Buy This: 50 Times More Upside than SpaceX? This coming Wednesday, June 3, at 8 p.m. ET, Jeff Brown will be reporting directly from SpaceX’s headquarters in Starbase, Texas. So please click here to save your seat for his special SpaceX broadcast… And he will share details on THREE new official recommendations… Including an early-stage company that’s tied to the growth of SpaceX… And that could return up to 50 times more money than the IPO.  (When you click the link, your email address will automatically be added to the guest list.) Do This Before Elon’s Next Tweet Jeff Brown believes Elon is about to make his latest invention available to the public. When he does, sales could go through the roof. And the stock price of one of his critical partners could soar. He expects Elon to make this announcement any day now. By the end of the month at the latest. But you never know with Elon… He could post it on X tomorrow. So, there’s very little time to act. Click here to find out the name of Elon’s critical partner… The company he can’t live without. Underpricing Market Risk The pricing of a straddle reflects how much movement the options market expects over a fixed period of time. Because option prices are constantly adjusting to changing conditions, straddles provide a real-time measure of fear, uncertainty, and risk expectations. That’s especially true in the S&P 500 (SPX). Professional traders watch SPX straddles because they provide insight into how much risk the market is pricing in around important events like Federal Reserve meetings and key economic releases. Right now, traders are tracking how markets are pricing the ongoing tensions in the Middle East and whether events could escalate further. A low straddle price – as we’re seeing now – tells us the market is complacent about how events in Iran could ultimately unfold. That level of complacency can provide enormously valuable information to a trader. Because when markets become overly complacent and start underpricing risk, it creates a disconnect between what investors expect to happen… and what might actually unfold. Tune in to Trading With Larry Live Each week, Market Wizard Larry Benedict goes live to share his thoughts on what’s impacting the markets. Whether you’re a novice or expert trader, you won’t want to miss Larry’s insights and analysis. Even better, it’s free to watch. Simply visit us on YouTube at 8:30 a.m. ET, Monday through Thursday, to catch the latest. A Volatility Mismatch Take the current level of complacency surrounding the Middle East. Despite hostilities leading to higher oil prices and fears of inflation, the CBOE Volatility Index (VIX) has recently been around its lowest level this year – well below where it was when hostilities broke out. So the market is currently pricing in less uncertainty and risk than before the war… That suggests even a small event could trigger a far larger move than investors are currently expecting. A trader who thinks that volatility is being underpriced might buy options (such as a straddle) to benefit when that volatility adjusts. Rising volatility leads to higher option premiums. On the other hand, if volatility is overpriced (investors are too fearful), it creates another opportunity. This time, a trader could sell options as volatility adjusts lower. In that case, they’d aim to buy those options back at a lower price. The key thing to understand here is that you don’t have to trade direction. Instead, try identifying mismatches between the current volatility pricing and the market’s real underlying risks. Once you get your head around this crucial concept, you’ll never look at markets the same way. And it will greatly improve your odds of trading options successfully. Happy Trading, Larry Benedict Editor, Trading With Larry Benedict Free Trading Resources Have you checked out Larry’s free trading resources on his website? It contains a full trading glossary to help kickstart your trading career – at zero cost to you. Just click here to check it out. The Opportunistic Trader 1125 N Charles St, Baltimore, MD 21201 www.opportunistictrader.com To ensure our emails continue reaching your inbox, please add our email address to your address book. 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