I had an eventful day. I traded a little of this and a little of that for NET WIN.
Here was my haul.
(XAIR -24%) x4
SOXS +9%
FAZ +15%
OPK +23%
SPEX +21%
ENZ +14%
CBLI +11%
Early in the day I anticipated this tape, almost exactly how it ended. Base, Dip, and then surge. The doom was too thick. VIX his $54 and the 10yr was in a free fall. Reminder: The Fed is undefeated. Double Reminder: Exodus doesn’t lose.
I went long a pastiche of risk trades all pertaining to travel and industries most adversely affect by the virus. This bet isn’t that sizable, but big enough to put a dent in my pnl. Airlines are a buy. If they dip, buy more. This is where you buy. I do think we can retest the lows, so don’t go all in. Be smart about it. Panics are slow and fat and stupid. Smart people buy slowly and with purpose.
We were down 900, but staged a monster late day ripper for the ages.
That being said, one of my mini plague positions, COCP, just broke some news and is +50% in the AHs.
(Tips hat)
IMPORTANT NOTE:
I run a data platform that employs mean reversion algorithms. I've been doing it since 2008. Today's we posted the 2nd lowest numbers on record, 2nd to flash crash 2010. pic.twitter.com/Bso38hNEM0
— The_Real_Fly (@The_Real_Fly) March 6, 2020
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didn’t get my oil shorts covered before the close…not sure if I’m unhappy about that or not. guess I’ll find out.
Couldn’t disagree more. Unless this bug dies in warm weather …and it gets warm quickly, this is a hole new ballgame. Folks will be looking up at those recent lows and lamenting that they didn’t sell on the pop off those lows. Containment measures mean a new way of life for months, and failure to contain means the same. Yes, I’m aware that such verbiage only reinforces your thesis – as does this …”it’s different this time.” I’ll likely be buying back into China before betting on the US. The Chicoms have bitten the bullet to stop the spread …while I just now got an email from Trump boasting about a meeting he had today with Kim Kardashian.
Even if the virus disappeared today; shortages in all things from China have yet to hit imho in industries like construction. Carpenters can’t do much without nails, bolts and many other things. I don’t know but I imagine companies like Home Depot order just in time and maintain small inventories.
We’re gonna find out soon.
A relatively uneventful day in the crypto world – somewhat uncorrelated recently. If there is a huge selloff; I’m a buyer; otherwise dollar cost average +
Researching a seemingly asymmetric option strategy.
Nice to hear some crypto talk on here – I like BTC over $8500 and XTZ over $3 I ended up going long in size. Know shit about it but I’ve got a feeling!
Record highs
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I’m arrogant when I’m right, and I’m right a lot. However, it’s not as if I only came here to post my YTD gains or brag how rich I am.
I’ve been telling people to buy bonds on this blog for over a year. Significantly, I did more than make a suggestion, I tried to educate you people in more detail than you’ll get from your Financial Advisor on how and why bonds will do so well, almost a year ago.
https://ibankcoin.com/flyblog/2019/04/12/milquetoast-roaring-rally/#comment-560042
I warned about the various warning signs given by the bond market, currency markets, commodity markets, but as long as stocks kept (irrationally) going up, no one cared.
What many don’t seem to remember is that I didn’t think COVID-19 was going to be bad at first. Once more was known about it, that’s when i changed my tune, but again, not many cared as long as the market didn’t.
Instead of thanks, I just get insulted by fools.
Now, I’m sure my arrogance about being right doesn’t make me friends on this blog, either. However, I thought people came on this blog to learn about investing, not to make friends, but I guess I was wrong.
I’ll leave you guys with two more pieces of advice:
1) China is fucked for any number of reasons. Shorting their market is about as easy a move as buying bonds, just be patient and don’t overleverage yourself
2) Do your best to figure out the relationship between interest rate direction and asset prices. Then apply that hard-earned knowledge to try navigate the ZIRP recession we are heading into. Good luck
Lol, you are so awesome. You should start your own blog and just post over there! Show them how it’s done
A literal bond guru. On top of that, can turn into an overnight scientific advisor into the most epic situations self imagined with with which to manage your money, within days.
Feel free to use endorsement
Or I could just bash others and boast about my wins like some of the other parasites on this site.
I’ve thought about it before, and gave it a second thought.
Done deal
Ha ha ha ha you have been wrong on just about everything. The only reason your bond trade worked is you got lucky due to a black swan event.
If you had any reading comprehension skills, you’d realize that the bond play wasn’t supposed to beat the stock play until a recession. You are correct that I got lucky with the covid-19 play, but that just made my position profitable *before* we even had a recession. The whole point of my post was explaining that rates only had one way to go and would be a safer **long-term** play.
Without the Black Swan event, I would still be holding bonds and waiting for a recession. Since you’re an idiot, I’ll give you a handicap: let’s ignore the massive 15% Feb run-up in TLT and 8% drop in stocks and continue the clock. Then we’ll see if bonds still manage to close that 22% gap by time we hit the next recssion.
I’m probably also right about you being a closet homosexual, sicne you can’t go a month without posts likes these investing gems.
https://ibankcoin.com/flyblog/2019/12/17/decade-central-bank-rigging-ending-rigging-come/#comment-565026
https://ibankcoin.com/flyblog/2020/01/06/u-s-informs-iraq-leaving/#comment-565276
https://ibankcoin.com/flyblog/2020/03/05/dont-hold-new-lows-will-established/#comment-566808
https://ibankcoin.com/flyblog/2020/01/02/first-trade-2020-sharp-jab-scrotum/#comment-565169
BTW, the reason I wrote 22% instead of 23% is because while SPY dropped 8%, but QQQ didn’t. SO if you think you need that extra 1%, doesn’t make a differnce to me
Read the prospectus Fly.
Let’s not forget the 500-600 point rally in the last 15 minutes last Friday. Market tanked on Monday.
Zero has what happened Friday afternoon.
It was NOT “organic”. Expect a continuation of market direction up until this interesting cataclysm (approx. 3:00 EST, Friday):
https://www.zerohedge.com/markets/someone-big-was-utterly-blown-fk-out-heres-reason-behind-todays-unprecedented-vix-move
Awsome story, thanks.
I’ll confess that I don’t understand the mechanism between rising VIX *driving* the S&P, but i do know that you can’t directly buy or sell “spot” VIX, although there may be algorithms tied to it. The VIX is calculated based on S&P index option prices. VIX futures are bought and sold based on bets of where that calcuatlion will end up at defined times in the future.
While the rise in **spot** VIX was dramatic, it was happening as the S&P futures approached and then *undercut* 2900 (2898.38) @3pm.
https://www.investing.com/indices/us-spx-500-futures-advanced-chart
That’s reason enoguh for investors to get anxious and load up on insurance Puts (index options are the input to the VIX calcualtion), so the sudden VIX *index* ramp up seems normal.
Also, VIX futures did not spike and still ended much higher than the previous day, which doesn’t jive with the *one trader driving the market* theory .
https://www.investing.com/indices/us-spx-vix-futures-advanced-chart
No heavy volume on next week’s VIX futures, either.
http://www.cboe.com/products/futures/vx-cboe-volatility-index-vix-futures
The story of the trader gettign margin called and elimanted by their firm sounds perfectly believable. How long had he been going short VIX and proven correct? No differnt than many overleveraged bullish traders that got blown up the past 2 weeks. I just don’t buy that trader had much to do with the drop or the rally afterwards.
It was a rapidly *falling* VIX that was concurrent with that remarkable, out of the blue, 700 point ramp in the last hour. That was not normal.
The trader was caught in what Tyler refers to as the “infamous gamma short squeeze” where your forced to buy even more as the price escalates.
The VIX->S&P mechanism I don’t get either.
Given that a short squeeze is when short sellers are froced to go long to cover losse that exceed their margins, any tarder caught in a VIX short squeeze woudl be buying VIX, causing it to go up.
The squeeze cause the spike, not sure waht would cause a rapid drop in the VIX other than unpredicatable bullish news or very heavy S&P Futures buying by deep-pocketed organizations.
A background note on gamma: let’s say that the underlyign aset is at $20, and you sell a call option with a strike price of 40. Becuase it is so far out of the money, then even though the option controls 100 shares, the delta (the ratio of option price change to the underlying price change is much less than 100pric) is less than $100, but the gamma (th reate of change of the delta( is high).
So if you sell 1 put with a $40 strike and the stock goes from $20 to $21, the price of the put you sold may go from $0.15 (per shares) to $0.20, so your loss is $0.05/sahre, or $5/contract for that $1 increase
Now if the asset spikes to $35, then that further $14 increase would cause an acclerating loss, much, much greater thatn 14*5.
VIX is at 20 and you sell a
The VIX-S&P correlation is at least somewhat connected to buy programs and quant formula trading.
“although there may be algorithms tied to it.”
They are not trying to contain the virus in WA state. They have given up and throw us under the fucking Trump re election bus:
https://www.evergreenhealth.com/community-message-3420
Isn’t there a good amount of default risk around airlines? They are all pretty heavily in debt. I see United has stopped hiring and executives have taken pay cuts. Does anyone know anything about the kinds of loans airlines have taken? It seems like they could end up struggling to service their loans with less demand for flights.
Tons of it. Terrible investments par excellance.
If they get a crash they are wiped out. Terrorism, design flaws, geopolitical, viruses, human error add risks. Economically super-sensitive, hugely competitive pricing, nutcases in the cabin right beside you.
However, considered an essential service to the economy and well-being they get plenty of backing and short-stopping from governments.
Yeah Fiscal Policy is already all over the airlines.