What can I say that hasn’t already been said?
Today was a Tale of Two Cities, maybe 3. I started out bullish, buying OLED. Then the market crashed lower by nearly 500, so I got bearish and played myself into a TZA position. Then the market reversed and when it was +60, I bought some OSTK — because I was bullish again. The only problem with my recent ‘feelings’ is they didn’t accompany me selling out of my hedges — because MUH ‘just in case’ syndrome hit me.
By day’s end, the market short covered into the fucking sky — but oil was still in the gutter — like losers. I got my dick cut off clean in SOXS, FAZ, and TZA, while licking my wounds and making some coin in OLED, OSTK, and short bonds TMV.
Over in my non-emotional quant portfolio, it didn’t give a shit about the intra-day patterns and didn’t talk shit all day on Twitter, ending up the day +2.6%.
I can’t say this fast tape is a surprise to me — since I’ve seen this action before. Instead of guessing where the market will go next, I’ll reserve my hyperbolic statements — since it’s late and bid you farewell.
NOTE: We’re doing Exodus trials now thu Valentine’s Day. Hit me up at Flybroker at gmail.com for access.
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Fly…thanks for the play by play commentary. I have Gartman to thank for medium term calls that I do the opposite of…and now I have you to thank for the short-term contra indicator. Keep up the good work.
Dried up some powder at the end of trading. plenty o’ cash for the Monday plunge everybody’s predicting (so probably won’t happen)
I was buying into the down move all afternoon, with the intention of holding overnight. With bonds making new lows and such a big rip up in indices, I decided against it and sold most thing at close. Path of maximum frustration would be if we gap up 500 on Monday.
I think it’s safe to say that most people are at the deer-in-the-headlights phase of fear, not the sky-is-falling mode. Therefore, maximum pain would be breaking this week’s lows with another -1000pt Monday, but I don’t think that is in the cards either.
Where is the usual cast of characters, Mr. Fly? Shouldn’t Mark Faber be making an appearance about now?
I’m just waiting for Showtime to tell me how to position my portfolio.
Look at these assholes who made money on the XIV blow up.
https://www.bloomberg.com/news/articles/2018-02-09/vix-surge-hands-8-600-profit-to-a-tiny-hedge-fund-in-colorado
My thought process on Monday:
4:00 – I gotta start raising cash for the inevitable time to short vol
4:20 – HOLLY SHIT IT’S REALLY GONNA HAPPEN!!!
5:00 – …….wtf…….I knew about the 80%……I knew it would eventually happen……why don’t I own 90% out of the money puts?
5:01 – *sigh*
There’s a big leap from knowing what will happen to structuring the perfect trade.
Looks like these guys made the leap. Now they can pull the Paulson, raise a couple billion and slowly lose it over the next decade.
Any time VIX breaks 10, go 1 or 2 years out and buy nickel puts on $SVXY.
Gonna have to see how those are priced going forward.
“On Jan. 2, the managers put down $200,000 on what looked like a lottery ticket, with each SVXY put costing 34 cents. On Feb. 6, they sold the 6,300 contracts at about $28 each, leaving them with $17.5 million.”
They were lucky, palin and simple. If they had an actual plan, then they would have been buying puts for at least a year if not more, in which case they must have had many 100% losses along the way.
Even if you know a collapse is coming, it is actually quite difficult to make big money on it because usually you have drawdowns. Also, the magnitude of the profit on this trade was juiced by the whole AH hours thing. If they sold at $28, then that implies the Strike was around 33. This means that they would onyl break even with a 70% drop in XIV. Without the AH action, even with the drop, their puts might still not have been in the money.
This is a terrible story, becuase it only encourages retail investors to throw $1000 of dolalrs to Wall Street, $0.34 at a time.
Absolutely. Every crisis has a dumb luck major winner. As big as the numbers are, if they were truly betting on extinction they’re percent gain would’ve been way higher than what they achieved.
I just think in this particular case there was an asymmetrical payoff that i could’ve identified in advance. I just didn’t put the pieces together. A couple $100 on puts every now and then when the VIX curve gets SUPER flat every year or so. Might have taken a decade to payoff, but you’d eventually have gotten a 10,000%+ gain.
tonka,
while you seem to understand what you are doing, I think this line of reasoning is dangerously misleading to the new investor.
Just for starters, it’s impossible to get the returns you are talking unless you buy deep out-of-the-money options and with a short time frame (usually 1 month out at the longest). This means you have to buy at least every month.
1 decade x 12 months * $100 = $12,000. $100*10,000% = $10,000
So congratualtions on your jackpot trade and its real -17% loss.
Watch “The Big Short.” These guys were pros with solid knowledge (an edge) about the housing market and deep pockets. Eventually they got paid off, but many of their investors (also deep pocketed) left before the finish line. When it comes to retail investors, most will be forced out of the race because of lakc of funds.
Note that the strategy was a $200k bet (probably lots of them) of a hedge fund with $350M in assets. I’m guessing they had a couple of losing bets, so they probably put at least $3.6M, 12 months into this strategy, but it was still a small amount at risk.
Yes. We all know how this ends. Just like the big short. They use their short term luck to raise billions and then subsequently lose it…that’s the other story that is never told. All one hit wonders.
Two ways to get paid in this industry. Consistent returns over decades. Or be a one hit wonder. I just sometimes get bored having worked on the slow and consistent side of things for so long.
agree with you there but getting bored for me generally equates to getting reckless and has resulted in some of my worst losers over the years. When I get bored now I generally take a few days / weeks off from trading. It seems a lot of Fly’s crazy shit over this past year was the result of the same bored to reckless problem.
It only a roller coaster if you stare at a screen all day long.
For the rest of us it’s just another +1.5% day.
Hey Fly – ever think of getting back into $FIZZ?
oops – didn’t see your comment in Exodous
Fly- you rock
Carl Swenlin (who has some reputation to lose) is thinking out loud about the pending Trump bear market. Hard to argue that no one knows how to fuck things up better than Trump. Not even George W. Bush. #ETTD
*Everything Trump Touches Dies
I see the markets going higher but with idiots in charge The Big Bust is just a question of time. Our best hope is President Pence ASAP.
What is Le Fly watching these days when not running a blog, banking coin, and poring over whitepapers, amongst other endeavours? Kind of digging la casa de papel on netflix myself.
He’s watching his brokerage account bleed out
don’t see why your non-quant portfolio is ‘emotional.’ All trading should be completely non-emotional, no?
Hey jb2, you dabble in crypto?
i do dabble in anything that has a ticker – incl crypto related – that can be traded. but those are all day trades. i don’t own any crypto currency.