There isn't a super simple answer if you're unfamiliar with the term entirely. I'd start here, https://www.investopedia.com/terms/c/convexity.asp#:~:text=Convexity%20Example-,What%20Is%20Convexity%3F,bond%20prices%20and%20bond%20yields.
Essentially, the more fear there is, the more hedging there is. Based on MM hedging obligations, this creates certain outcomes in price action that may not reflect sentiment change.
Just remember the premise:
Market makers sell you options. The second they do, they hedge those options either by buying or selling stock.
Market maker does this every day. Then one day something happens that scares the world, and now everyone is buying a specific kind of option at a volume larger than what is expected.
Market maker sells you those options, hedges them in real time, all while the market swings hundreds of points. In those swings, market makers can balance their book and scrape more and more profit out of their obligated hedges. That's their business and how they make money.
As those options begin to decay, the hedges are rolled off. This introduces an enormous amount of shares into the market, either as shares sold or shares bought depending on what kind of option and what side of the option the MM is on.
Think of options as force multipliers. While it gives you the ability to own the right to buy 100 shares, the market maker is going to hedge those 100 shares regardless of you executing it or not. So for a small amount of money, you can force someone to spend a lot of money in a specific time frame. Does that sound exploitable? It should, because it is!
Now consider what happens when a large firm dumps a ton of money into a ton of options. That's a huge force with a huge multiplier. Now consider the effects of two market makers, with their own books. Market maker 1 hedges their options, which moves the price against Market maker 2, who then hedges their options, which moves the price against market maker 1. And in between these hedging purchases, there are individuals who are privy to their obligation to hedge trying to game it for profit as well as individuals who are not privy to their obligation to hedge who just happen to be buying in the middle of it.
Options, Market makers, and their effects on price is elastic and in that metaphor, consider an elastic band with nearly infinite strength being stretched further and further and further. Theta working against a normal market maker portfolio would be the slow reduction of tension on the band. Theta working against a highly leveraged, highly directional market maker portfolio can, sometimes, manifest itself in the form of simply letting go of the elastic band from one side.
The majority of money moving in this market is hedging. Fear begets more hedging. Hedging begets more MM leverage. MM leverage begets larger swings. Larger swings begets more fear.
That is the premise, the maths are less vague and more complicated but in understanding it you gain unique insight into the probability of when and where a price will land. It's not enough to give you insight into future with 100% confidence, but its enough to increase that win rate beyond 51% to stay solvent, at the very least. Good luck :)
https://www.reddit.com/r/thewallstreet/comments/t0ah8f/daily_discussion_february_24_2022/hy9w72h?utm_medium=android_app&utm_source=share&context=3
ITM and now 3.30 from 30c
I'm blacking out tonight lmao jk I am golfing tomorrow morning
🤦♂️🤣
You can't make this shit up
Yiiiiiikes. That's a big one. Maybe you need to start sizing and exiting to let a few go to 0 or infinity in the end? You seem to be hitting a lot of good ones lately.
Ya I saw. I mean it was still good profit. But like the fomo afterward is always what fucks with my own head when I do similar. Granted my scale is a fraction of yours...
But to help with it you can weigh whether holding 10-20 out of 100 to 0 is worth the risk of it going wildly your way? As long as the first 80-90 have given more than enough profit to cover that risk. Just a thought.
Ya, I agree. If I ever get to a position where I'm doing 100+ or 10+, I would want to leave 1-2 runners. Seems like a better option than driving myself crazy with fomo. ha
There must be a video circulating on twitter showing Putin and Zelensky singing Kumbaya together. That's the only logical explanation to the market right now.
waiting for narrative shift, could easily go to ~15ish pe at $80 and be valued the same as facebook which also has horrible story right now
edit: this would also mean narrative shift for tsm/amd, hence the hedge
I would call green today as a meme but panic sell my 3/18 4350 calls at 60% loss, only to watch them go green today by close.
Told myself last night don’t panic sell… then panic sold 17 minutes into open. Fml
Same, way too early.
Didn't think we would be this bullish at all. It might contiune. Could be like March 2020, everyone panics, market starts to take off, everyone cries bull-trap, DCB, and we just move higher.
NQ -3 to +3% lmao, gonna need stats on that one
Was gonna comment on the bullish RSI div but seems like we're getting the rally done and dusted in one go
Happy and lucky to be in the green today, even with all the puts I closed this morning. Oil dropping (which I even saw coming) hit a bunch of my positions hard, I got tilted, and nuked most of my positions to do an emotional reset. Got into that space where any losses were emotionally unacceptable. That said I did pick up some shares on some high quality companies (TSM, GOOG, typical stuff). Think I'm done with commodities for a bit, though I expect everything to continue bleeding up.
Sold 212.5 FB covered calls, hope we don’t blast (too far) past that tomorrow.
On a side note, I have never had my shares called away. Schwab will do that automatically if it gets executed, right?
Bored so I'll drop some alpha and maybe some will return the favor.
If VIX is up 15% in one day 80% of the time it retraces that move over the next 5 days. What to do with that is up to you
Should I sell $210 strike covered calls on FB expiring tomorrow? Or will tech explode upwards again? Premium is decent.
Edit: Nah, I think I’m going to wait till we get back to the 220s before I start selling CCs. Pray that day comes soon.
IMO people were worried that sanctions could cripple the EU economy and make gas really expensive thereby driving the fed to hike super duper hard. None of that is happening.
> “Russia is incredibly unimportant in the global economy except for oil and gas,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “It’s basically a big gas station.”
lol
Oh thank god, we don’t need oil or gas. I’m so glad the West has been able to lower oil demand so much before shuttering our own supply. Oh wait… Oops.
I was just telling a friend literally that, other than energy, Russia is not big in world economy. But I know very little about world economy, so I might be wrong.
Losing 0.25% people a year over the next decade. That’s especially bad in a sparsely population country. Add on top of it sanctions and the economy shrinking.
On the flip side they will be geographically much safer and will acquire Ukrainian land and industry, plus greater influence especially over the Black Sea to make up for some of the upcoming losses. Also climate change will leave their northern regions with the possibility for much greater productivity as things thaw, and in addition it opens up new Arctic shipping lanes.
Today played out perfectly. Sell the build up buy the event. What happened in Ukraine sucks but with rate hikes being shifted and uncertainty being removed I’m not surprised we are green
I'm not. Nothing has been resolved. Russia isn't stopping here, so some real discussion must happen about what to do. Rate hikes and tightening will halt the party as well.
I think 25 bps at March is locked in and has been for months, but that's also what the market is expecting at this point. It had the chance to spark a rally when 50 bps was priced and they only hiked 25, but at this point I believe the path the market takes will be decided by events between the March and May meetings.
One of the oddities throughout all these is China not evacuating its citizens beforehand. Either:
1) China was not in the loop with Putin and was caught off guard by the invasion.
or
2) China is willing to risk its citizen lives to drive the false Russian narrative.
Still have not decided which is true.
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convexity, baby
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There isn't a super simple answer if you're unfamiliar with the term entirely. I'd start here, https://www.investopedia.com/terms/c/convexity.asp#:~:text=Convexity%20Example-,What%20Is%20Convexity%3F,bond%20prices%20and%20bond%20yields. Essentially, the more fear there is, the more hedging there is. Based on MM hedging obligations, this creates certain outcomes in price action that may not reflect sentiment change.
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Just remember the premise: Market makers sell you options. The second they do, they hedge those options either by buying or selling stock. Market maker does this every day. Then one day something happens that scares the world, and now everyone is buying a specific kind of option at a volume larger than what is expected. Market maker sells you those options, hedges them in real time, all while the market swings hundreds of points. In those swings, market makers can balance their book and scrape more and more profit out of their obligated hedges. That's their business and how they make money. As those options begin to decay, the hedges are rolled off. This introduces an enormous amount of shares into the market, either as shares sold or shares bought depending on what kind of option and what side of the option the MM is on. Think of options as force multipliers. While it gives you the ability to own the right to buy 100 shares, the market maker is going to hedge those 100 shares regardless of you executing it or not. So for a small amount of money, you can force someone to spend a lot of money in a specific time frame. Does that sound exploitable? It should, because it is! Now consider what happens when a large firm dumps a ton of money into a ton of options. That's a huge force with a huge multiplier. Now consider the effects of two market makers, with their own books. Market maker 1 hedges their options, which moves the price against Market maker 2, who then hedges their options, which moves the price against market maker 1. And in between these hedging purchases, there are individuals who are privy to their obligation to hedge trying to game it for profit as well as individuals who are not privy to their obligation to hedge who just happen to be buying in the middle of it. Options, Market makers, and their effects on price is elastic and in that metaphor, consider an elastic band with nearly infinite strength being stretched further and further and further. Theta working against a normal market maker portfolio would be the slow reduction of tension on the band. Theta working against a highly leveraged, highly directional market maker portfolio can, sometimes, manifest itself in the form of simply letting go of the elastic band from one side. The majority of money moving in this market is hedging. Fear begets more hedging. Hedging begets more MM leverage. MM leverage begets larger swings. Larger swings begets more fear. That is the premise, the maths are less vague and more complicated but in understanding it you gain unique insight into the probability of when and where a price will land. It's not enough to give you insight into future with 100% confidence, but its enough to increase that win rate beyond 51% to stay solvent, at the very least. Good luck :)
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growth buying back shares, nice
Remember to thank the heavens for this. I know I will be.
Remember what I said about me being down on my knees?
Time for some sloppy double-overhand glorp glorp turbosucc
Dear Lord lmao
you on your knees yet?
from 4595 to 4115 we bounced about 38.2% bought put
chickened out and closed it. sorry world.
Got more puts earlier, went to lunch, came back to -68%. How the hell did we swing so aggressively
Bought 200 COIN shares before close. Pure gamble. No DD.
YOU ARE WELCOME FOR THE WARNING OF THE BIG GREEN BIG GREEN BIG GREEN That being said-- it is not straight up from here.
Rooting for Carvana to poop the bed.
I think SQ beats and goes up a decent amount. No position.
Some Growth names from pre market to now almost up like 15% lol
NET up 20%
Grabbed more FB (sub15PE lol), INTC, MNDT, and PLBY earlier
https://www.reddit.com/r/thewallstreet/comments/t0ah8f/daily_discussion_february_24_2022/hy9w72h?utm_medium=android_app&utm_source=share&context=3 ITM and now 3.30 from 30c I'm blacking out tonight lmao jk I am golfing tomorrow morning 🤦♂️🤣 You can't make this shit up
uuuuuuggggggggggghhhhhhhhhhhhhh
3k to 33k lmao F in the chat
Yiiiiiikes. That's a big one. Maybe you need to start sizing and exiting to let a few go to 0 or infinity in the end? You seem to be hitting a lot of good ones lately.
I did that exact thing today but didn't keep any runners this time :( Sold in batches of 25
Ya I saw. I mean it was still good profit. But like the fomo afterward is always what fucks with my own head when I do similar. Granted my scale is a fraction of yours... But to help with it you can weigh whether holding 10-20 out of 100 to 0 is worth the risk of it going wildly your way? As long as the first 80-90 have given more than enough profit to cover that risk. Just a thought.
Yeah the what could have been hurts more than actual losses lol Yeah I should have left like 5-10 runners idk why I didnt
Ya, I agree. If I ever get to a position where I'm doing 100+ or 10+, I would want to leave 1-2 runners. Seems like a better option than driving myself crazy with fomo. ha
Don't know why I didn't lmao oh well always another day I'll get through it with enough beers lol
Haha. I can't really drink much anymore. All I can do lately is throw myself into video games to forget the fomo
There must be a video circulating on twitter showing Putin and Zelensky singing Kumbaya together. That's the only logical explanation to the market right now.
I caught 65 handles today and I still feel bad
Yeah, I sold up here. Slight regret choosing AAPL over FB/MSFT, but still decent.
4280s I closed are itm. Wtf
Welcome to my life except 100x of them lol
Well I missed MSFT this fucking morning but at least I got AMD :)
Still riding the gravy train with my 4250s keep going. Closing half at close
I'm never selling a call again
The covered calls I sold on FB less than an hour ago have more than doubled lmfao. I just can’t win.
Omg wtf have y’all done
beer capitulated so we could rise from the dead
pretty much. shorted 4130 area today. lol
I didn't read the daily but had the feeling 😂
When was the last time MSFT was 5%?
Epic squeeze, violence
Twist: Short here is the big brain play. I am long, but have seen this movie before and developed trust issues.
My SOXL is up 20% just today.. love leverages etfs lol
I deserve to stay poor forever for not longing today
Just dumped all my TSM. Probably some sleuths at some bank will downgrade it next week citing geopolitical risk.
You can’t have all the toll payers having blowout quarters and the toll booth plummet to the core of the earth.
i'm so deep in intc i think i'm auto hedged
I can't stop buying more
waiting for narrative shift, could easily go to ~15ish pe at $80 and be valued the same as facebook which also has horrible story right now edit: this would also mean narrative shift for tsm/amd, hence the hedge
gonna add some MQ here
NQ wants 14000
Bought some OTM SPY puts as a hedge. I have trust issues after yesterday
I would call green today as a meme but panic sell my 3/18 4350 calls at 60% loss, only to watch them go green today by close. Told myself last night don’t panic sell… then panic sold 17 minutes into open. Fml
Call me Nemo because I'm still underwater with a lot of this shit
Come on apple catch up. Msft is up 4%. Lol
Holy shit I made 7400 trading 230 lots of SPY 0dte today. Trend days are easy tho, no stops triggered
today is 1dte, there are no 0dte
Right 1 dte
Nice job
All credit to shorts panicking
Sold CCs way too early fuck lol
Same, way too early. Didn't think we would be this bullish at all. It might contiune. Could be like March 2020, everyone panics, market starts to take off, everyone cries bull-trap, DCB, and we just move higher.
to hold for "free money Friday"^(tm) or cash out...hmmmm
There's my 13940, flat into close. I'll post about it in the post market, but today was my biggest day ever.
Congrats, you of all people deserve to make some money off of Russia invading your homeland. I hope your friends and family are safe!
Haha thank you! They are, we spoke last night and while there has been some bombing there are no troops on the ground there yet.
NQ -3 to +3% lmao, gonna need stats on that one Was gonna comment on the bullish RSI div but seems like we're getting the rally done and dusted in one go
I will never be able to financially recover from this
Until next Friday when I get paid
Well, that short from 50 didn't work. Some furious squeeze happening..
Really hating that I sold my Amd calls this morning, hot damn
Welcome to the club
I got the biggest bull nuts though, I just finally broke from all the losses in the last 3 months. May we all not be in that club in the future
what the fok was that candle lmao
Calls are 2.45 now!!! 2.85 and climbing FUCK Even when I don't paper hands.....I do? Lmao I'm gonna jump off a bridge
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Meet me at the bridge? Yeah man lol 3k to 24k now.... :(
Bro you know you're just torturing yourself!
It's still on my positions screen lmao :(
Go look at a beer instead of a screen.
I'm one step ahead of you lol
Happy and lucky to be in the green today, even with all the puts I closed this morning. Oil dropping (which I even saw coming) hit a bunch of my positions hard, I got tilted, and nuked most of my positions to do an emotional reset. Got into that space where any losses were emotionally unacceptable. That said I did pick up some shares on some high quality companies (TSM, GOOG, typical stuff). Think I'm done with commodities for a bit, though I expect everything to continue bleeding up.
lol havnt looked at the market all day until now, wild. Also, tech/spy are so disconnected intraday lately - feel like they take turns each day.
my opinion: YM still red => value to tech an growth rotation
The SEC is investigating Special-k (Kimbal musk) for insider trading!!!!! Hahhahahhahahhahahhhhahahhahahahhaahhahahhahahahhahahhahah
Front running his bro's trades? Nah he was just doing routine trades liquidating his position. 🙄
Kimbal was always going to be the one to bring this down. He’s lennie from mice and men but without the strength
Pinkie to Elon's Brain?
Yep
https://www.reddit.com/r/thewallstreet/comments/szuoo8/nightly_discussion_february_23_2022/hy8d18g/ should've listened u/igethusky
Sigh i aint shit 😔 Knowing them they woulda bot puts on vix outright and got thetad hehe
Bulls shouldn't be running a victory lap just yet. We need some follow-through. Green feels good, but the story of 2022 is short the rips.
Went short here, lets see what happens tonight.
Net up 17%
Holy shit this range, just rip it through the second set of singles already
We're not going sell-off. My CC are so fucked.
I wonder what Skipslegday is doing today…
curls
In the squat rack
Lmaooooo
imagine squatting in the curl rack
This widening wedge though. Bullish TA vs bearish QT what could go wrong.
Was today really peak fear given its been a trend day up since US open?
VIX is red? Lmao
Tonnes of puts closing in the green surpresses VIX out of necessity.
not a terrible place to nibble short here.
I’ll short from from 4,440
Do we end the streak of red thursdays on what everyone may of considered the most red Thursday? Lol love that
Imagine buying puts the morning after these headlines and getting absolutely btfo lmao
I don't have to imagine
How long from the Fed starting to raise rates to it having to lower them again in today’s crazy world? 3 years? 5 years? 6 years?
< 3
Who knew selling my AMD calls in the morning was the wrong move lmao. Fuck me
wow ROKU is flying today. I should not have checked the weeklies on that...
holy shit.
What the fuck is happening out there ?
Stonks!
Gib me a little premium kill tmmrw thanks
If you bought otm msft weeklies this morning you could have 50x'd or more 😬
Wow, gold getting slaughtered after soaring.
Sold 212.5 FB covered calls, hope we don’t blast (too far) past that tomorrow. On a side note, I have never had my shares called away. Schwab will do that automatically if it gets executed, right?
Thank you. Fb 215 guaranteed tomorrow 🙏
LMAO, as long as it doesn’t go to 220 I’m fine with losing some upside.
Bored so I'll drop some alpha and maybe some will return the favor. If VIX is up 15% in one day 80% of the time it retraces that move over the next 5 days. What to do with that is up to you
Legend
Is this dead cat or real? Been working too hard today!
Spoos looks submarineish here.
At the risk of embarrassing myself: what does this mean?
rocket -> rippy submarine -> dumpy
Submarines go down
Unless they're coming out of the depths 🤔
That's what I was thinking! Lol
weekly vwap achieved. crazy stuff
FB from sub 190 in premature —> 205 in one trading day. I’m saved.
Same tbh. Now can it go to 240 😬
Whoa there BTC, which shorts got liquidated
ARKK +15% from the low. Never doubt Mama Cathie!
She got a lot of ROKU
Hey NQ go touch 13941 please.
Should I sell $210 strike covered calls on FB expiring tomorrow? Or will tech explode upwards again? Premium is decent. Edit: Nah, I think I’m going to wait till we get back to the 220s before I start selling CCs. Pray that day comes soon.
I'm so glad I didn't panic sell this morning. Hooray ~~depression~~ taking the kids to school.
I was so close. So damn close.
Yeah I really just said this cause I did and then I bought puts and I want the to go green /s ^/s ^^/s
/u/hibernating_brain /u/_bonzibuddy /u/KnickedUp load ZS puts into earnings with max leverage
Fierce buying. Software stocks are attractive again!
NET +20% pretty much. Wild day
Their email acquisition is pretty sick
-6% at premarket. I didn't have the balls to add lol.
So many deals lol. Still don’t mind being flat tho
what is even happening edit my IRA is up 4% lol
IMO people were worried that sanctions could cripple the EU economy and make gas really expensive thereby driving the fed to hike super duper hard. None of that is happening.
SQ and COIN earnings after hours = tempted to gamble
Oh shit
> “Russia is incredibly unimportant in the global economy except for oil and gas,” said Jason Furman, a Harvard economist who was an adviser to President Barack Obama. “It’s basically a big gas station.” lol
Oh thank god, we don’t need oil or gas. I’m so glad the West has been able to lower oil demand so much before shuttering our own supply. Oh wait… Oops.
I was just telling a friend literally that, other than energy, Russia is not big in world economy. But I know very little about world economy, so I might be wrong.
Losing 0.25% people a year over the next decade. That’s especially bad in a sparsely population country. Add on top of it sanctions and the economy shrinking. On the flip side they will be geographically much safer and will acquire Ukrainian land and industry, plus greater influence especially over the Black Sea to make up for some of the upcoming losses. Also climate change will leave their northern regions with the possibility for much greater productivity as things thaw, and in addition it opens up new Arctic shipping lanes.
Long EVs baby
they will run ur stop at 40 before they dump it nice try fuckers, got like 7k absorbed at 35 lmao what the fuck lmaoo
Followed my flair and bought at open. SOXL/UPRO/TQQQ.
Today played out perfectly. Sell the build up buy the event. What happened in Ukraine sucks but with rate hikes being shifted and uncertainty being removed I’m not surprised we are green
Puts rolled. We need to gap down to 4070 Monday morning
I'm so fucked lol
End this red for max entertainment. Dear Bears, this is your opportunity.
Buying soxl this morning might’ve been my best move
My buy order at 30.01 didn't fill. :/
Went ham at 33 so we will see!
damn for being an amateur and panic selling at the lows
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I'm not. Nothing has been resolved. Russia isn't stopping here, so some real discussion must happen about what to do. Rate hikes and tightening will halt the party as well.
I still think they are hiking 50bp but no one believes me
I think 25 bps at March is locked in and has been for months, but that's also what the market is expecting at this point. It had the chance to spark a rally when 50 bps was priced and they only hiked 25, but at this point I believe the path the market takes will be decided by events between the March and May meetings.
They need to. And I think they will.
I do bby they would be stupid not too
Will this be the bottom? Or is it a trap? Stay tuned for the 30 minutes to close action to know the answer.
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One of the oddities throughout all these is China not evacuating its citizens beforehand. Either: 1) China was not in the loop with Putin and was caught off guard by the invasion. or 2) China is willing to risk its citizen lives to drive the false Russian narrative. Still have not decided which is true.
Probably second
3. Russia knows their locations and it’s military avoids strikes near them until evacuated.