An update on NFLX and BP

I’ve been advising a short position in NFLX since the day before its disastrous earnings a few weeks back in which NFLX saw subscriber churn go through the roof. Today, NFLX trades above my entry due to a deal between it and EPIX, which will expand Netflix’s library.

I’m not concerned about the deal as a short. I think it’s a deal that costs too much for too little. However, I am worried about the reentry of momentum traders into NFLX. Half the premise of my short position was that momentum traders had been beat. Now, it’s hard to make the argument that momentum has left. With such a large short interest in the stock anything could happen. I’m still short, but I’ve let a gain turn into a loss and thus much more cautious and may ditch the position at any moment. Essentially:

I’ve also been advising shorting BP. Po Pimp has implicitly threatened my life for this position. I covered below 40 for about 2%.

BTW, I’m now up a lot on my SPY calls because this market is a whore begging for a beating.

Can you feel the floor move beneath you? You’ve just removed all your hedges, you’re 75% long and now that market is going to crash. I told you, they we’re just waiting for you to get on the dumbass truck.

While I will not support any financial programme, especially such a spruced-up moron-friendly idea, being aware of the “tail-risk hedging” indoctrination that’s going on is a good way to make sure you don’t get sucked in. In this post you will learn what it is, where it has happened, who is exploiting whom, and why you should ignore anyone that tries to impress you with such a brain-numbing idea.

First, recognize that this tail-risk hedging is nothing new, it’s just become a popular (thus fucktarded) method of impressing your boss and clients. The idea is simple:
What if we move 3 standard deviations out? Are you prepared? You should buy some protective puts and protective calls. That’s it. Behold “Tail-Risk Hedging”.

Recently, you probably saw some whale buy 2 month-year out puts down in the 650-950 range. While this excited the zerohedgers, I knew that this was nothing but some dumbfuck that got talked into tail risk hedging. This was certainly not a speculative bet. No one in their mind would engage in such a strategy if they were speculating. It was a hedge. If you read FT, you probably read El-Fucktardo’s why “tail-risk hedging is the future” piece. (http://www.ft.com/cms/s/0/3ff03d10-9e53-11df-a5a4-00144feab49a.html) Hmmmm…. is this all too obvious? Wall street wants to sell you shit. It’s unbelievable to me. They want you to buy protection up to 4,5,6 deviations out. This is why I make fun of premium buyers all the time. If you need protection that much, you need to get out. This is a game of selling risk as much as you’ve been taught to buy it…

As expected, boredom ensued, essentially a punt until tomorrow around 2:15. I expect markets to be slightly up in the morning, boring throughout the day, but probably will see little red until realize Ben says the codeword for deflation in his remarks. Then homohammering will commence.

Today’s action was a sure sign from the homohammerer that without further positive news/dumbasses convention, that we are topping. 1135 on ES is the top of that ascending wedge that everyone is watching and if we break the little homohammerer at 1121-1125, then I’m fairly certain that 1135 will cause resistance. I’m not looking for upside, I’m looking ranges that I know I can be safe shorting.

Now, let’s talk about tomorrows most important economic news; Ben fucking you in the ass. Of late, FOMC days are generally dead in the morning, pops in the wrong direction, and then against the the trend for the day just to be reversed in full the next day. Sure there are occasions that have not followed this scenario, but this is exactly what is NOT going to happen tomorrow. I think we are going to open at highs and close at lows. It should be quite easy to trade.

And now for my typical failblog pic:

Look at ABK. Get bullish. I dare you.

Soothsayer Turd Say: AMERICA IS STRONG LIKE BULL. King Dollar to make other fiat coin its bitch. Beware of King Dollar return. So sayeth the TURD.

They can’t even bank coin trading every day anymore. What a bunch of idiots. Short the fuck out of those hacks.