How I Saw This Tech Crash Coming - And How You Can See the Next

Over the last 6 sessions, many formerly high-flying stocks are down, massively. PLTR has lost over 31% during this period. SCMI shed almost the same. TSLA is down over 22%.

While many of these tickers may have good long-term reasons to be bullish, knowing when to take profits, when to protect the downside, and when to flip bearish is crucial.

There is no technical indicator or chart that is going to give you that information. Option dealers and market makers don't care about your support and resistance levels. They have to delta hedge regardless of whether your levels are breached.  And any horizontal levels you pick on your chart will rarely ever depict where and when volatility will increase and the chances for your ticker to go bearish jump.

What if you could know for any ticker you trade when it becomes more vulnerable? What if you could know at what price the option dealers and market makers are going to sell as it falls, not buy? How about knowing when volatility could expand and thus kick your stop losses or take on bigger moves?

There is a way to find this exact price.

Here at Benzinga, and particularly in the Benzinga Option School, we've built a proprietary indicator that does just this. We call it the BBP level, otherwise known as the Bull/Bear Pivot level.

While I'm not going to give away the keys to the kingdom, I can tell you this proprietary indicator is based upon two key principles (and a lot of quantitative data). First, it's based upon option positioning (all of it for each ticker). Second, it estimates exactly where the option dealer and market maker hedging shifts to where the dealers will have to sell if the market goes down, not buy.

If you buy a dip and the dealers are buying, the chances of your bullish trade working out increase dramatically. But if you buy a dip and the dealers are forced to sell, they are trading against you, and you're fighting against a much larger force that will severely impact your trade.

This is exactly what the BBP level provides our Benzinga Option School members, and it can give you a massive edge on knowing when to buy that dip, or to sell. When to hedge or keep your bullish exposure. When to reduce leverage or buy downside protection.

Let me give a few examples below of the BBP level in action:

TSLA & the BBP Level

The chart above shows many of our proprietary quantitative levels for Tesla option positioning, particularly examining a primary variable for the open interest.

You'll see pink bars on the left (puts) and blue bars on the right (calls).

On the top left, you'll see an orange flag which says "Pivot" on it. That is our BBP level, our Bull/Bear Pivot. Here, that ‘pivot' is lined up at $400.

The basic rules of thumb when using and trading with this is as follows:

1. When the stock trades below the BBP level, we take profits on our bullish positions + do not add any new bullish positions
2. If we get deeper into the pink territory (all depends upon the structure of the pink bars), we then consider hedging any long stock positions we want to keep.
3. If certain ‘changes' happen in our structure or levels, then we'll look for outright bearish positions.

If you look at the following chart below for Tesla TSLA, you can see that once we had our impulsive break and close below $400, it's been (for the most part) a one-way train, losing over 29% since and only weak/corrective bounces.

TSLA 1hr chart

Now I'd like you to think about what it would be like to have a level, that if you break below, you either a) trim your bullish positions, b) maybe sell some calls to lower your cost basis, c) start to hedge and protect your downside, or d) shift to outright bearish mode and make money as the stock goes down?

What would that do for your trading to have these levels every day?

How much money would it save you holding onto losing positions?

What would it do for your confidence to ‘know' when to start shifting from bullish to bearish with clarity?

By the way, let me let you in on a few other BBP levels:

• On February 19, our BBP level for Palantir PLTR was $115, and it closed at $112 on that day. Since then, it's lost 24%.
• On February 25, Super Micro Computer SMCI had its BBP level at $53. The next day, it fell below our BBP level and has dropped 15% since.
• NVDA had its BBP level at $130, as I'm writing this, which I  warned our Benzinga Option School members about ahead of time, saying:

"If NVDA can recapture 140, this means calls are completely in control, so should find more supportive flows above there. Meanwhile losing 130 would bring puts more into control, and thus a more vulnerable position for NVDA."

I told our members before the market opened that if NVDA fell below the 130 level (the BBP level), it would be vulnerable to losses as dealers would start selling as it fell.

NVDA closed today at $10 lower and $120.31. 

NVDA 5min chart

Our members were prepared ahead of time to reduce bullish positions and start looking for bearish plays.

Had you known about this today, you likely would have saved yourself a ton of money. Now imagine that but having the knowledge and level every day you trade. What would that do for your trading? How many big losses would be smaller? How many times would you be able to profit from a shift in bearish positioning?

That is the power of the BBP level.

If you'd like to learn more about the BBP level, or see me use trading live, you can become a member of the Benzinga Option School.

I look forward to working with you and teaching you how to use this BBP level for your trading.

Image via MidJourney AI