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How to not get ruined with Options - Part 3a of 4 - Simple Strategies

Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the Greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)
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Ok. So I lied. This post was getting way too long, so I had to split in two (3a and 3b)
In the previous posts 1 and 2, I explained how to buy and sell options, and how their price is calculated and evolves over time depending on the share price, volatility, and days to expiration.
In this post 3a (and the next 3b), I am going to explain in more detail how and when you can use multiple contracts together to create more profitable trades in various market conditions.
Just a reminder of the building blocks:
You expect that, by expiration, the stock price will …
... go up more than the premium you paid → Buy a call
… go down more than the premium you paid → Buy a put
... not go up more than the premium you got paid → Sell a call
... not go down more than the premium you got paid → Sell a put
Buying Straight Calls:
But why would you buy calls to begin with? Why not just buy the underlying shares? Conversely, why would you buy puts? Why not just short the underlying shares?
Let’s take long shares and long calls as an example, but this applies with puts as well.
If you were to buy 100 shares of the company ABC currently trading at $20. You would have to spend $2000. Now imagine that the share price goes up to $25, you would now have $2500 worth of shares. Or a 25% profit.
If you were convinced that the price would go up, you could instead buy call options ATM or OTM. For example, an ATM call with a strike of $20 might be worth $2 per share, so $200 per contract. You buy 10 contracts for $2000, so the same cost as buying 100 shares. Except that this time, if the share price hits $25 at expiration, each contract is now worth $500, and you now have $5000, for a $3000 gain, or a 150% profit. You could even have bought an OTM call with a strike of $22.50 for a lower premium and an even higher profit.
But it is fairly obvious that this method of buying calls is a good way to lose money quickly. When you own shares, the price goes up and down, but as long as the company does not get bankrupt or never recovers, you will always have your shares. Sometimes you just have to be very patient for the shares to come back (buying an index ETF increases your chances there). But by buying $2000 worth of calls, if you are wrong on the direction, the amplitude, or the time, those options become worthless, and it’s a 100% loss, which rarely happens when you buy shares.
Now, you could buy only one contract for $200. Except for the premium that you paid, you would have a similar profit curve as buying the shares outright. You have the advantage though that if the stock price dropped to $15, instead of losing $500 by owning the shares, you would only lose the $200 you paid for the premium. However, if you lose these $200 the first month, what about the next month? Are you going to bet $200 again, and again… You can see that buying calls outright is not scalable long term. You need a very strong conviction over a specific period of time.
How to buy cheaper shares? Sell Cash Covered Put.
Let’s continue on the example above with the company ABC trading at $20. You may think that it is a bit expensive, and you consider that $18 is a more acceptable price for you to own that company.
You could sell a put ATM with a $20 strike, for $2. Your break-even point would be $18, i.e. you would start losing money if the share price dropped below $18. But also remember that if you did buy the shares outright, you would have lost more money in case of a price drop, because you did not get a premium to offset that loss. If the price stays above $20, your return for the month will be 11% ($200 / $1800).
Note that in this example, we picked the ATM strike of $20, but you could have picked a lower strike for your short put, like an OTM strike of $17.50. Sure, the premium would be lower, maybe $1 per share, but your break-even point would drop from $18 to $16.50 (only 6% return then per month, not too shabby).
The option trade will usually be written like this:
SELL -1 ABC 100 17 JUL 20 17.5 PUT @ 1.00
This means we sold 1 PUT on ABC, 100 shares per contract, the expiration date is July 17, 2020, and the strike is $17.5, and we sold it for $1 per share (so $100 credit minus fees).
With your $20 short put, you will get assigned the shares if the price drops below $20 and you keep it until expiration, however, you will have paid them the equivalent of $18 each (we’ll actually talk more about the assignment later). If your short put expires worthless, you keep the premium, and you may decide to redo the same trade again. The share price may have gone up so much that the new ATM strike does not make you comfortable, and that’s fine as you were not willing to spend more than $18 per share, to begin with, anyway. You will have to wait for some better conditions.
This strategy is called a cash covered put. In a taxable account, depending on your broker, you can have it on margin with no cash needed (you will need to have some other positions to provide the buying power). Beware that if you don’t have the cash to cover the shares, it is adding some leverage to your overall position. Make sure you account for all your potential risks at all times. The nice thing about this position is that as long as you are not assigned, you don’t actually need to borrow some money, it won’t cost you anything. In an IRA account, you will need to have the cash available for the assignment (remember in this example, you only need $1800, plus trading fees).
Let’s roll!
Now one month later, the share price is between $18 and $22, there are few days of expiration left, and you don’t want to be assigned, but you want to continue the same process for next month. You could close the current position, and reopen a new short put, or you could in one single transaction buy back your current short put, and sell another put for next month. Doing one trade instead of two is usually cheaper because you reduce the slippage cost. The closing of the old position and re-opening of a new short position for the next expiration is called rolling the short option (from month to month, but you can also do this with weekly options).
The croll can be done a week or even a few days before expiration. Remember to avoid expiration days, and be careful being short an option on ex-dividend dates. When you roll month to month with the same strike, for most cases, you will get some money out of it. However, the farther your strike is from the current share price, the less additional premium you will get (due to the lower extrinsic value on the new option), and it can end up being close to $0. At that point, given the risk incurred, you may prefer to close the trade altogether or just be assigned. During the roll, depending on if the share price moved a bit, you can adjust the roll up or down. For example, you buy back your short put at $18, and you sell a new short put at $17 or $19, or whatever value makes the most sense.
Assignment
Now, let’s say that the share price finally dropped below $20, and you decided not to roll, or it dropped so much that the roll would not make sense. You ended up getting your shares assigned at a strike price of $18 per share. Note that the assigned share may have a current price much lower than $18 though. If that’s the case, remember that you earned more money than if you bought the shares outright at $20 (at least, you got to keep the $2 premium). And if you rolled multiple times, every premium that you got is additional money in your account.
Want to sell at a premium? Sell Covered Calls.
You could decide to hold onto the shares that you got at a discount, or you may decide that the stock price is going to go sideways, and you are fine collecting more theta. For example, you could sell a call at a strike of $20, for example for $1 (as it is OTM now given the stock price dropped).
SELL -1 ABC 100 17 JUL 20 20 CALL @ 1.00
When close to the expiration time, you can either roll your calls again, the same way that you rolled your puts, as much as you can, or just get assigned if the share price went up. As you get assigned, your shares are called away, and you receive $2000 from the 100 shares at $20 each. Except that you accumulated more money due to all the premiums you got along the way.
This sequence of the short put, roll, roll, roll, assignment, the short call, roll, roll, roll, is called the wheel.
It is a great strategy to use when the market is trading sideways and volatility is high (like currently). It is a low-risk trade provided that the share you pick is not a risky one (pick a market ETF to start) perfect to get create some income with options. There are two drawbacks though:
You will have to be patient for the share to go back up, but often you can end up with many shares at a loss if the market has been tanking. As a rule of thumb, if I get assigned, I never ever sell a call below my assignment strike minus the premium. In case the market jumps back up, I can get back to my original position, with an additional premium on the way. Market and shares can drop like a stone and bounce back up very quickly (you remember this March and April?), and you really don’t want to lock a loss.
Here is a very quick example of something to not do: Assigned at $18, current price is $15, sell a call at $16 for $1, share goes back up to $22. I get assigned at $16. In summary, I bought a share at $18, and sold it at $17 ($16 + $1 premium), I lost $1 between the two assignments. That’s bad.
You will have to find some other companies to do the wheel on. If it softens the blow a bit, your retirement account may be purely long, so you’ll not have totally missed the upside anyway.
A short put is a bullish position. A short call is a bearish position. Alternating between the two gives you a strategy looking for a reversion to the mean. Both of these positions are positive theta, and negative vega (see part 2).
Now that I explained the advantage of the long calls and puts, and how to use short calls and puts, we can explore a combination of both.
Verticals
Most option beginners are going to use long calls (or even puts). They are going to gain some money here and there, but for most parts, they will lose money. It is worse if they profited a bit at the beginning, they became confident, bet a bigger amount, and ended up losing a lot. They either buy too much (50% of my account on this call trade that can’t fail), too high of a volatility (got to buy those NKLA calls or puts), or too short / too long of an expiration (I don’t want to lose theta, or I overspent on theta).
As we discussed earlier, a straight long call or put is one of the worst positions to be in. You are significantly negative theta and positive vega. But if you take a step back, you will realize that not accounting for the premium, buying a call gives you the upside of stock up to the infinity (and buying a put gives you the upside of the stock going to $0). But in reality, you rarely are betting that the stock will go to infinity (or to $0). You are often just betting that the stock will go up (or down) by X%. Although the stock could go up (or down) by more than X%, you intuitively understand that there is a smaller chance for this to happen. Options are giving you leverage already, you don’t need to target even more gain.
More importantly, you probably should not pay for a profit/risk profile that you don’t think is going to happen.
Enter verticals. It is a combination of long and short calls (or puts). Say, the company ABC trades at $20, you want to take a bullish position, and the ATM call is $2. You probably would be happy if the stock reaches $25, and you don’t think that it will go much higher than that.
You can buy a $20 call for $2, and sell a $25 call for $0.65. You will get the upside from $20 to $25, and you let someone else take the $25 to infinity range (highly improbable). The cost is $1.35 per share ($2.00 - $0.65).
BUY +1 VERTICAL ABC 100 17 JUL 20 20/25 CALL @ 1.35
This position is interesting for multiple reasons. First, you still get the most probable range for profitability ($20 to $25). Your cost is $1.35 so 33% cheaper than the long call, and your max profit is $5 - $1.35 = $3.65. So your max gain is 270% of the risked amount, and this is for only a 25% increase in the stock price. This is really good already. You reduced your dependency on theta and vega, because the short side of the vertical is reducing your long side’s. You let someone else pay for it.
Another advantage is that it limits your max profit, and it is not a bad thing. Why is it a good thing? Because it is too easy to be greedy and always wanting and hoping for more profit. The share reached $25. What about $30? It reached $30, what about $35? Dang it dropped back to $20, I should have sold everything at the top, now my call expires worthless. But with a vertical, you know the max gain, and you paid a premium for an exact profit/risk profile. As soon as you enter the vertical, you could enter a close order at 90% of the max value (buy at $1.35, sell at $4.50), good till to cancel, and you hope that the trade will eventually be executed. It can only hit 100% profit at expiration, so you have to target a bit less to get out as soon as you can once you have a good enough profit. This way you lock your profit, and you have no risk anymore in case the market drops afterwards.
These verticals (also called spreads) can be bullish or bearish and constructed as debit (you pay some money) or credit (you get paid some money). The debit or credit versions are equivalent, the credit version has a bit of a higher chance to get assigned sooner, but as long as you check the extrinsic value, ex-dividend date, and are not too deep ITM you will be fine. I personally prefer getting paid some money, I like having a bigger balance and never have to pay for margin. :)
Here are the 4 trades for a $20 share price:
CALL BUY 20 ATM / SELL 25 OTM - Bullish spread - Debit
CALL BUY 25 OTM / SELL 20 ATM - Bearish spread - Credit
PUT BUY 20 ATM / SELL 25 ITM - Bullish spread - Credit
PUT BUY 25 ITM / SELL 20 ATM - Bearish spread - Debit
Because both bullish trades are equivalent, you will notice that they both have the same profit/risk profile (despite having different debit and credit prices due to the OTM/ITM differences). Same for the bearish trades. Remember that the cost of an ITM option is greater than ATM, which in turn is greater than an OTM. And that relationship is what makes a vertical a credit or a debit.
I understand that it can be a lot to take in. Let’s take a step back here. I picked a $20/$25 vertical, but with the share price at $20, I could have a similar $5 spread with $15/$20 (with the same 4 constructs). Or instead of 1 vertical $20/$25, I could have bought 5 verticals $20/$21. This is a $5 range as well, except that it has a higher probability for the share to be above $21. However, it also means that the spread will be more expensive (you’ll have to play with your broker tool to understand this better), and it also increases the trading fees and potentially overall slippage, as you have 5 times more contracts. Or you could even decide to pick OTM $25/$30, which would be even cheaper. In this case, you don’t need the share to reach $30 to get a lot of profit. The contracts will be much cheaper (for example, like $0.40 per share), and if the share price goes up to $25 quickly long before expiration, the vertical could be worth $1.00, and you would have 150% of profit without the share having to reach $30.
If you decide to trade these verticals the first few times, look a lot at the numbers before you trade to make sure you are not making a mistake. With a debit vertical, the most you can lose per contract is the premium you paid. With a credit vertical, the most you can lose is the difference between your strikes, minus the premium you received.
One last but important note about verticals:
If your short side is too deep ITM, you may be assigned. It happens. If you bought some vertical with a high strike value, for example:
SELL +20 VERTICAL SPY 100 17 JUL 20 350/351 PUT @ 0.95
Here, not accounting for trading fees and slippage, you paid $0.95 per share for 20 contracts that will be worth $1 per share if SPY is less than $350 by mid-July, which is pretty certain. That’s a 5% return in 4 weeks (in reality, the trading fees are going to reduce most of that). Your actual risk on this trade is $1900 (20 contracts * 100 shares * $0.95) plus trading fees. That’s a small trade, however the underlying instrument you are controlling is much more than that.
Let’s see this in more detail: You enter the trade with a $1900 potential max loss, and you get assigned on the short put side (strike of $350) after a few weeks. Someone paid expensive puts and exercised 20 puts with a strike of $350 on their existing SPY shares (2000 of them, 20 contracts * 100 shares). You will suddenly receive 2000 shares on your account, that you paid $350 each. Thus your balance is going to show -$700,000 (you have 2000 shares to balance that).
If that happens to you: DON’T PANIC. BREATHE. YOU ARE FINE.
You owe $700k to your broker, but you have roughly the same amount in shares anyway. You are STILL protected by your long $351 puts. If the share price goes up by $1, you gain $2000 from the shares, but your long $351 put will lose $2000. Nothing changed. If the share price goes down by $1, you lose $2000 from the shares, but your long $350 put will gain $2000. Nothing changed. Just close your position nicely by selling your shares first, and just after selling your puts. Some brokers can do that in one single trade (put based covered stock). Don’t let the panic set in. Remember that you are hedged. Don’t forget about the slippage, don’t let the market makers take advantage of your panic. Worst case scenario, if you use a quality broker with good customer service, call them, and they will close your position for you, especially if this happens in an IRA.
The reason I am insisting so much on this is because of last week’s event. Yes, the RH platform may have shown incorrect numbers for a while, but before you trade options you need to understand the various edge cases. Again if this happens to you, don’t panic, breathe, and please be safe.
This concludes my post 3a. We talked about the trade-offs between buying shares, buying calls instead, selling puts to get some premium to buy some shares at a cheaper price, rolling your short puts, getting your puts assigned, selling calls to get some additional money in sideways markets, rolling your short calls, having your calls assigned too. We talked about the wheel, being this whole sequence spanning multiple months. After that, we discussed the concept of verticals, with bullish and bearish spreads that can be either built as a debit or a credit.
And if there is one thing you need to learn from this, avoid buying straight calls or puts but use verticals instead, especially if the volatility is very high. And do not ever sell naked calls, again use verticals.
The next post will explain more advanced and interesting option strategies.
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Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)
submitted by _WhatchaDoin_ to investing [link] [comments]

Let's talk about the mind tricks and psychological warfare being waged by cheaters, hackers, and RMT vendors in Tarkov, and what we can do about it. This is a long post, but Tarkov is worth it, and a TL;DR is provided at the top.

Edit: There's obviously big money at stake as I started receiving death threats the moment this post hit the front page on hot. Be careful with your personal info and probably best to avoid commenting here if you have doxxable details on your reddit account. Stay safe, it's just a game and not worth it.
TL;DR:
  1. Tarkov is a crazy wild game with a bunch of people running around trying to do weird things. Remember that bizarre outcomes are just as likely (if not more) to be happenstance than suspicious behavior. Don't let others gaslight you into thinking every encounter is a hacker or cheater.
  2. Cheat sellers, RMT vendors, and their customers, all want to push the narrative that rule-breaking is far more common than it actually is, and that the game developers are ruining the game so you may as well just hack/cheat yourself to level the playing field. It's great for business as a seller, and it helps rationalize malicious actions as a customer. Spreading paranoia, mass outrage, and undermining the developers are CIA-level tactics to sow chaos and anarchy that benefits bad actors at the cost of everyone else.
  3. The best thing we can do is silence attempts by bad actors and focus on productive, positive discussions in Tarkov and let BSG (who are the only people who can do anything) do their jobs. They spend 65% of their resources on crushing bad actors and their profit margins, so this isn't an issue that's flying under their radar. As a community, the best voice we have against malicious behavior is deafening silence to starve it of attention and free publicity, minimizing the chances that they can sow enough fear and angst to radicalize players to get more customers.
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First off, the point of this discussion is not to debate how prevalent cheating in Tarkov is. This sub already has more than enough speculation on that topic and as you read further along you'll see that letting fear and paranoia fester is exactly what bad faith agents in Tarkov want.
Wherever you have competition, you're going to have cheating. Whether it's Tarkov, Olympic sports, or the stock market. As long as there is competition, there will always be someone who looks to gain an unfair edge, and it doesn't even matter if it's something as mundane and trivial as online chess, there's always going to be that guy who runs their opponents moves into a grandmaster-level AI because their enjoyment comes from that win at any cost.
However, despite the fact that bad faith competition exists in nearly every facet of life, it seems like the Tarkov community is far more paralyzed by fear, anger, and suspicion than any other competitive forum. Why is this?

  1. The game design makes it exceedingly difficult to discern bad faith actions from legitimate play. A naked level 1 with a TT pistol can accidentally get a lucky hipfire shot that instantly kills a fully kitted veteran who is highly skilled in the game. The incredibly punishing nature of the game also makes it so that deaths are highly impactful, which makes it difficult to "let go" of trying to figure out what went wrong. All put together, it means that players are forced to simply accept highly punishing deaths without being given any insight or explanation on how they were killed. 20 headshots with an R99 SMG in Apex Legends is incredibly obvious aimbotting. But in Tarkov, the fight is over with just 1, which leaves a lot of unanswered questions with no satisfying answers.
  2. Because the shared raid map system that Tarkov uses, players have a wide variety of objectives that lead to very differing goals, resulting in bizarre interactions where the original intentions of other other players is unclear. Someone who's hiding in a raid to wait for the violence to die down could be stumbled upon by some other person who is completely lost trying to find a quest objective, or wandering around exploring an obscure area trying to find easter eggs. From the vantage point of the hider, it seems suspicious they were hunted down by someone who had no reason to legitimately to hunt in the location that they were. In other words, players will frequently run into other players acting in inexplicable ways that can be easily misattributed to malice when it was just as likely to be happenstance.
  3. The lack of SBMM (skills-based matchmaking) means that all players are drawn from the same pool when forming raids. This means a complete new player to FPS genre entirely could be running face first into the most skilled players in the entire game. When the competition spans the entirety of the skill curve, it's incredibly difficult to know what is going on because player actions are often contrary to expectations of others. Chaos makes it easy to be suspicious about bad faith play because nobody is acting "logically" from each perspective. Naive players may charge in aggressively in silly ways that end up working by sheer luck that more experienced players will assume would only be as a result of unfair information. A very high skill player can take fights that they win with superior mechanics that most would assume you would only engage because of unfair aim.
The point is, this game is designed to breed suspicion, paranoia, and fear. Which is great in one way, because it's what makes it so exciting and fun to play. However, when channeled in the wrong way, is a serious problem because it's exactly what bad faith actors want.
Let's think about various actors in Tarkov, and ask the question, "do they want people to believe that rule breaking is more or less prevalent than it actually is?"

CHEAT SELLERS: MORE

Because the narrative is, everyone is cheating, the game is unfair no matter what, every raid you load into has someone that is map-hacking, every fight you take is against someone who is aim-botting. Therefore, you should consider picking up some little helpers yourself to make it fair again, or be a naive idiot that willingly plays at a disadvantage while everyone else is using hacks.
The idea that literally cheaters and hackers are infesting every single raid is probably the best possible sales pitch a cheat seller could have. The few instances of cheating leads to fear and paranoia festering, prompting more people on the fringe to consider cheating themselves, leading to more cheating, more fear, more paranoia, more business.

RMT VENDORS: MORE

Because the narrative is, this game is filled with cheaters anyway, half the lobby is people who bought stuff with mom's credit card, and Nikita is setting out to personally reduce your happiness in life and the game is unrewarding and unplayable for a normal legitimate player that doesn't hack or make a full-time job out of Tarkov. Why bother doing all the pointless stupid grinds while you're dying 50 raids in a row to hackers or someone who bought all their gear with their credit card, when you can just buy a few little cheeki Roubles from the side and get to having fun in the game?
Negativity and toxicity toward both the existence of other bad faith players, as well as toward the game design itself, is inherently the best possible environment for a thriving RMT system. This is especially perfect for Tarkov because unlike other MMORPGs, it's much more likely that incremental changes will be more brutal rather than having power creep / loot creep / money creep, which fuels despair and more interest in RMT.

CHEAT/RMT USERS: MORE

This one is simple. If they can convince everyone that it's more common than it actually is, the more they can rationalize their own behavior. It's not that bad, everyone else is doing it anyway! Besides, it's not even that big of an advantage, some other cheaters cheat even harder! Some of you may have seen a recent thread where one individual texted "lmao I'm gonna turn off cheats for this group though, cuz these guys play legit."
As if playing legit was actually the minority situation for a massively mainstream FPS game.
Zzz.

THE AVERAGE PLAYER LIKE YOU AND ME: ?

It is human nature to rationalize defeat. When you face down failure with no explanation on why like in Tarkov, it's tempting to blame cheaters, hackers, etc. Different games often have different ways of rationalizing defeat. In team games like Overwatch or League of Legends, teammate-blaming is common to offload the burden onto random strangers. In solo matchup games like Starcraft II, race balance is often used by players who are frustrated that they lost. What's even more, these other games do an excellent job of explaining where you could have done better, but players will still look for ways to blame someone other than themselves. It's no surprise that in Tarkov, fear and suspicion of bad faith gameplay exists.
The problem is, if we allow ourselves to be tempted to err toward the side of suspicion, to blame negative outcomes on the belief in rampant cheaters, hackers, etc., then we are aligning ourselves to the same narrative that bad faith actors like cheat sellers and RMT vendors want to push. We allow ourselves to be corrupted with the idea of "this game is bullshit, everyone else in the game is not playing fairly, why do I even bother trying?"
This is a dangerous mindset because it fuels a toxic narrative that "this game is never going to be fair to me, the devs don't care, the game is becoming less and less fun for me, I should just quit if I'm not going to cheat myself."
Let me be clear, I'm not saying that toxicity itself will convert an entire playerbase into cheaters. In fact, I think it has a minimal impact at a high level perspective because there just aren't that many people that are willing to traverse to the disreputable ends of the internet and take risks just to gain some internet points. However, even a 1% cheating rate to 3% cheating rate is a 300% proportional magnitude in the profitability of selling cheats or RMT vending. And more importantly, it significantly damages the enjoyment and integrity of the community at large.
You can see clear evidence of bad faith actors in this subreddit. There have been several threads in this subreddit just in the past few days that have reached the front page claiming 1) false bans are rampant, Nikita should just let RMT be 2) hello I am bob, I am hacker all day, you should hack too because literally it's everywhere you don't even KNOW, btw PM me for cheap hacks 3) xyz devs are ruining the game, why stop RMT/hacks, just let it go, you're DESTROYING THE GAME, STOP DOING THAT BSG!.
I'm not going to say any individual thread (even though many examples have been debunked) are complete bullshit. I'm just going to say that the narrative of these threads is completely aligned with individuals who are lobbying to protect their interests in making a profit out of bad faith play.

What can you do to stop this?

It starts with the self.
Encourage productive discussions, positive mentalities, and discourage DESTRUCTIVE SPECULATION and toxic attitudes.
BSG has shown an exemplary degree of interaction with this community. Always wait for an official response before jumping to conclusions.
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BSG spends 65% of its resources fighting cheaters and RMT and is a developer that has shown endless passion and commitment to its install base. As beta players that are trying to help them develop the best possible game, the best voice we have against bad faith actors in the Tarkov community is deafening silence. Starve them of attention, free marketing, free publicity. Demonstrate that just because they can infect one player, that will not tilt the hundreds of legitimate players into letting themselves surrender and be infected themselves.
submitted by aerodreamz to EscapefromTarkov [link] [comments]

DIX, GEX and VIX, an analysis by a degenerate

DIX, GEX and VIX, an analysis by a degenerate
Hello everyone, i just wanted to share my attempted at a semi informed DD.
The Dark Index (DIX) and Gamma Exposure (GEX) have been a subject of debate in the discussion room lately. So i thought that it would be a decent to inform and provide my personal opinion on their movements. If this has already been posted then I apologize.
Here is the squeeze metrics link. Here is also another great form of information, it is more helpful in my opinion. It highlights everything that you would need to know about dark pools.
I also want to note that we are in unprecedented times, the government is buying anything and everything trying to keep the market afloat. Trump is telling us that we will be reopened by two weeks ago. Oil is in complete free fall. Oh yeah and the pandemic. It turns out that the Brazilian president was wrong about his people being immune to the corona virus, which is scary because if it gets into the bat population in brazil it can mutate a lot faster. Any who, lets jump right in shall we?
The Dark Index (DIX)
The Dark Index is a dollar weighted measure of the dark pool indicator. It tracks the dark pool short volume for components of the S&P. It is interesting to note that short volume is actually investors buying the underlying stock. So a high percentage (over 45%) for DIX indicates that the market sentiment is stocks only go up and there is more short volume than non short. This is confusing yes but let me try to explain it.
I am the MM and I want to make money today so i tell my HFT algo to create a spread for SPCE. It looks at current market and says Bid: $16.95 and Ask: $17.07. The spread is $0.12. The MM is offering to sell at 17.07 and to buy at 16.95. An investor A puts in an order to buy a share of SPCE at 17.07 and investor B puts an order to sell at 16.95. The MM will place a SHORT sale at 17.07, sell the share of SPCE at 17.07 then instantly turn around and buy a share back at 16.95 from investor B to satisfy its short sale. That is why investors buying are considered short volume.
So as of right now the DIX is at 43.98%. This means that only 43.98% of daily volume is short volume, aka people buying. Historically a rising DIX (yes that is funny laugh it up) indicates market sentiment is bullish while visa versa means bearish. In this case we are looking to get to see a further deterioration of DIX into the 42% to 38% range to see a drastic pull down.
Here is the White Paper they provide for more info.
The DIX has been in a gradual decline ever since we had out totally normal totally legal run up 30% in the S&P. Now we can move on to GEX or the gamma exposure.
Gamma Exposure (GEX)
This has to do with MM delta hedging against calls and puts. This can introduce a put squeeze which is essentially a short squeeze.
If a MM sells you a SPY 240 5/1 (RIP) it will immediately calculate the delta of that option and hedge accordingly. So lets say your OTM SPY put that you were promised was going to print tendies only has a delta of .20 (20%) then the MM is going to go out and short 20 shares of SPY to hedge against the risk. The shorting of those 20 SPY shares pushes the price down further and what happens when it turns out you were wrong about your SPY 240 put? SPY sits at 283 and the delta of your put has gone down to .10 (10%) so the MM no longer needs to hold 20 shorted positions so it buys 10 to keep a delta neutral portfolio.
A low GEX means that the options market is more geared towards puts. Yes i said it all you gay bears, but it is still sitting at 1,264M. But only 6 days ago it was at 6,412M so this is a steep drop off over the past couple days. A high GEX implies that MMs are hedging with ITM or ATM options because they are expecting a change in the current price direction. A negative GEX, like we had starting on February 24th of -773M (aka the real start to the whole downtrend) implies a put squeeze of 773 million shares for every +1% movement in SPY. (The same idea applies to calls buy in the opposite fashion) This creates volatility in the market.
Volatility (VIX)
THIS IS NOT TA ON VIX, im not telling you to buy VIX calls every time it dips below 50 that is actually retarded, but.
It is not a coincidence that VIX jumped 46% the same day that GEX went negative. When GEX is high it insinuates low volatility, and when it is low is implies there will be. As a bearish outlook and put heaving options market drag SPY down it creates panic. There are also people buying share as it is falling thinking they are getting a sweet deal on SPY when it is at 275 because it is only a pandemic right? stocks only go up? All while this is going on MMs had been writing puts and delta hedging appropriately. So SPY go up intraday 2% that is about 1,546 million shares of SPY getting bought to adjust for delta changing on Feb 24th. Then we degenerates buy more puts because basically they are on sale and the cycle continues until the MM can manipulate the market enough to get their gamma exposure down to decrease volatility. Here is an article that explains why we were stuck in that 270 to 285 window for like two weeks.
On the day that VIX peaked at around 83, the GEX was at -2,170M and DIX was at 37.8%. I am not saying that a direct copy of those levels for GEX or DIX will duplicate a record high volatility day but it will help.
When VIX rose 20% from friday april 17th to tuesday april 21st, the most recent notable spike in volatility, DIX and GEX were both on the decline.
Why do I care about this information?
The DIX went from 51.2% to 44.9% in the days leading up to that volatility spike and decline in the S&P500. It seems that DIX is a precursor to what direction the S&P500 will move in the coming days. So it should be known that it is coming off two year record highs and the only time DIX reached those heights again was in admits the tiny crash in the beginning of 2016 and a fallout or correction in 2011.
On the other hand, GEX seems to mirror the S&P leading into down turns, it only leads the curve by a day or two. Please note that this part is just done by looking at the graph and seeing trends. But nonetheless, if you are a gay bear you want this index to keep falling.
Here are the GEX similarities between the last crash and now for the gay bears.
GEX trying to rise then getting swatted back down implying turbulent days are to come. Just from eye balling the day to day change in SPY and GEX it looks like GEX leads a little and SPY lags. So look for another big drop in GEX, hopefully even go negative.

GEX similar patterns before down turns
Also another thing to note, like i said high GEX usually leaded to a pivot in the current direction of the market in the following time period. GEX was at 6,412M and below are times it has been above or at that in the past two years.
It will be very interesting to see what dark liquidity things of this earnings week for tech and basically half of the S&P500.

GEX similarities between crashes at heights
Similarities between DIX in the first crash and now for the gay gay bears.
  • It is at its lowest in the last 20 trading days
  • last time it was at 43.9% was march 11th aka that legendary -9.5% day
  • its called DIX
Thank you for listening, my aderall has worn off and I am going to take the dog out.
TLDR: If this trend continues then it is possible to have another leg down here soon. Be vigilant and check this index a few times a week just to see where the sentiment in dark pools is. Right now I am holding $SPY 6/19 and 9/18 puts.
Also this is not financial advice, I am just sharing my thinking behind my betting my money. If i missed anything or mis explained something then please let me know.
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I Can Make You Hot!: The Supermodel Diet (by Kelly Killoren Bensimon) -- Part One

NOTE: Although I was originally planning on posting this whole review at once, I was about a third of the way through the book when I realized that I was already quickly approaching the full length of my previous posts. So, in the interest of making this a pleasant experience for us all, I'm sharing the first half now, and will follow up with the second half in a few days. And honestly, KKB's writing reminds me of Inception in that it's almost certainly hazardous to spend too much time immersed in any single sitting. So fasten your seatbelts, and enjoy the ride!
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So, a lot of you guys have been asking about Kelly Killoren Bensimon's I Can Make You Hot! (wow, is this what it feels like to be an influencer?), and I am thrilled to report that my adventure through this book's 264 pages was even more confounding than I could have possibly anticipated. I have a feeling that I'll need every ounce of my strength if I want to have any shot at conveying to you all exactly how bonkers this purported self-help book is, so -- without further ado -- let's begin.
I Can Make You Hot!, subtitled The Supermodel Diet, has a fairly straightforward premise. Kelly, who "has done it all when it comes to nutrition and her body," will share her hard-earned wisdom with us, her humble readers. Or, as she says in her own words on the back cover:
In I Can Make You Hot! I'm going to clue you in to all the tricks I've learned from a variety of experts and that I now use to live my own life. I want you to be the best you -- happy, attractive, shapely, interested, interesting, and most of all, smokin' HOT!
The blurb promises that the experience of reading this book will be "like rooming with a supermodel and going on a diet together." Truly, only someone with Kelly Bensimon's tenuous grasp on reality would say this as if it were something exciting, rather than a scenario taken directly out of the third circle of hell.
But before we can truly learn what it means to be HOT!, we're treated to a foreword by none other than Russell Simmons. As he shares with us:
Kelly is a great mother and is constantly instilling strong principals [sic] in her daughters. In my opinion, that's the essence of being HOT. Kelly is smokin'.
And just like that, I Can Make You Hot! is knocked out of the running for First-Book-I've-Read-By-A-Bravolebrity-That-Is-Also-Free-From-Glaring-Typographical-Errors. Better luck next time, champ!
In case you were at all hesitant about Kelly's suitability for the job of helping the less fortunate among us reach their maximum potential, Russell clarifies:
Her beauty truly comes from within, and her clear internal compass and well-balanced lifestyle is what makes her an arbiter for what's hot. She has always had her own individual road map and is one of those people who beats to their own drum. Many are amazed by her leaps of faith and courage, which are products of her sustainable soul. And back to that energy! I used to think: If we could only package it. And now Kelly has!
I would kill to be a fly on the wall during a conversation between Russell Simmons and Kelly Bensimon. But all of these endorsements are making me impatient to dig into Kelly's advice, so I skim over the next few pages and arrive at the introduction: "What's HOT and What's Not." Almost immediately, Kelly reassures us that she was not always the gorgeous, talented socialite she is today -- "No. Let's just say that I was never one of those tiny, cute blonde girls who guys named their hamsters after." Excuse you what? I literally just walked away from my laptop to go talk to my boyfriend and make sure I'm not just ignorant of some otherwise well-known traditional male courtship ritual in which young men adopt rodents and christen them after the women they love. That doesn't seem to be the case, although please reach out if you can shed any additional light on this situation.
Reasonably enough, before we can learn how to be hot, we have to know what hot is. Fortunately, Kelly wastes no time in getting us up to speed:
When I was trying to come up with a title for this book, I kept asking myself how I would define what I love. "HOT" is the word that best describes what I love, and it's not a word I throw around lightly. "HOT" is attractive, unique, and first-rate -- never mediocre. Avril Lavigne made a video called "HOT." There are "HOT" issues of all my favorite magazines. Hotmail.com was given that name to indicate that it was the best e-mail service, and www.urbandictionary.com, whose definitions are created by their readers, defines "hot" as (among other things) attractive, the best, and someone who makes you wish you had a pause button when they walk by because you don't want that moment to end. (I want you to feel like that "someone.") Health, wellness, and fitness are always hot topics. "HOT" may be a buzzword but it's also how I describe the best there is and the best you can be. I've used the words "smokin' hot" for everything from a killer chicken wing red sauce to a coveted couture gown.
There is…a lot to unpack here. My leading hypothesis is that Kelly must have accidentally exposed her internal circuitry to water and started shorting out while writing this passage, causing her to string together a rambling parade of incoherent sentences with no relationship to one another, save a tangential association with the amorphous concept of hotness. Also, it's factually inaccurate. A cursory Google search reveals that Hotmail.com was not "given that name to indicate that it was the best e-mail service." Rather, the service's name was selected as a reference to the use of HTML to create webpages, as is more apparent from the original stylization, HoTMaiL. I know from her savvy allusion to "www.urbandictionary.com" that Kelly is capable of navigating the Internet, so I'm disappointed that she's made such a careless oversight within the first three pages of the book proper.
Kelly next takes us through a few scenes from her past to illustrate how she has come to understand the true meaning of "HOT." Here are just a few of the assorted pearls of wisdom that Kelly is gracious enough to share with us:
Is skinny hot? Naturally skinny is hot. Starving yourself in order to change your natural body type in order to get skinny is not hot.

For me, the ultimate HOT girl is the nineteenth-century Gibson girl.

…Bethany Hamilton, the young surfer who lost an arm in a shark attack and didn’t let it stop her from pursuing a sport she loves. She's smokin' HOT.

pregnancy is smokin' HOT
I'm distracted from my diligent note-taking by a line that truly makes me laugh out loud.
I don't want to pretend that I'm "just like you." To do that would be disingenuous, and you wouldn't believe me anyway. But I may be more like you than you think. My hair may be ready for Victoria's Secret, but my values are still Midwestern.
I appreciate the honesty! As I continue reading, I am pleased to learn that I am, in fact, already consuming this piece of literature in the appropriate way. As Kelly says:
I urge you to make notes as you go along, either in the book itself or, if writing in a book is anathema to you, in a little notebook to use as your own personal guide. Jotting down ideas as they pop into your head is the best way to process them and be sure that they don't leave again before you've had a chance to commit them to long-term memory. Then, if you've made a mistake, when you go back and see it there on paper, you'll remind yourself not to do it again. Or, as I like to say, you'll avoid getting bitten by the same food dog twice!
Bitten…by the same….food...dog? Never change, KKB. (As an aside, what's the oveunder on Kelly having even the slightest idea what the word 'anathema' means?) If I'm being totally honest, this book is making me feel a little superfluous. What more can I add when the source material is so impenetrable to begin with? How does one parse the unparseable? Newly humbled, I suppose I'll have to be content with just gaping in confusion alongside the rest of you. And now that I think about it, what better book to build me up from these insecurities and encourage me to be my best? In the words of Kelly herself:
After all, why wouldn't you want to be HOT? What's the alternative? Being "not so hot"?
The book is organized into seven chapters, one for each day of the week, focusing on seven distinct facets of hotness. We start our journey on "Monday: Make a List -- Plan and Prepare!" and are immediately blessed with another one of Kelly's philosophical ramblings:
To me, living well is the only option. What, after all, is the only alternative? Living badly? Who aspires to live badly? I want you to live well, and that's going to take some planning.
Eager to improve myself, I read on:
What are your goals for yourself? If you're going to make changes in your life, you need to have a plan, you need to prepare, and you need to take the time to get it right -- so that you don't wind up wasting your time. This is my plan, and from now on it's going to be yours. Monday is going to be the day you make a HOT plan and prepare for the rest of your week. Let's get started together!
I can't help but feel like this is one of those answers that beauty pageant contestants give when they don't actually know how to respond to a question. Or like a motivational speech written by a rudimentary AI. I can't quite articulate exactly what it is that makes Kelly's writing seem so utterly devoid of logical coherence, but it truly falls into the literary equivalent of the Uncanny Valley.
Reminding us that "this isn't just about budgeting your food; it's about budgeting your life," Kelly peppers us with even more helpful tips -- "You don't want to be that person who is snacking while you're shopping. That's not hot -- period." and shares a stream-of-consciousness-style list of "Staples I keep in my house." Which may possibly be some kind of freeform postmodern poetry. Judge for yourself.
Kelly advises the reader to "get out your calendar or PDA" to get a sense of your schedule. "Then use your PDA to find the closest well-stocked market and go there. Making life easy for yourself is what it's all about." Now is as good a time as any to clarify that this book was published in 2012. I'd be lying if I said reading so many consecutive Housewives memoirs hasn't made my grasp on sanity a bit shaky, but I am fairly positive that 2012 was not a banner year for the Personal Digital Assistant.
Kelly has taken the time to pluck out a few particularly incisive pearls of wisdom throughout the book to highlight as "Kelly's Cardinal Rules." I would love to help clarify exactly what this one means, but I'm afraid I'm utterly clueless. One thing I do know for certain, however, as the chapter comes to a close, is that "human contact is HOT; texting is not!"
The week continues with "Tuesday: A Little Ohm and a Little Oh Yeah! -- It's All About Balance." It is imperative that you work out, says Kelly, adding, "I've never met a smokin' hot couch potato and I bet you haven't either." Her personal exercise routine, as she shares, combines aerobics and yoga "because life is all about balance." As she quips, "I'm sure even Gandhi cracked a smile from time to time." A panel titled "HOT Tip" admonishes the reader: "Don't call it working out because exercise shouldn't be work!"
If you'd like to spend a morning in the style of Kelly Bensimon, it's as easy as eating "a couple of oranges" and drinking coffee -- "I love coffee; I would probably marry coffee if it proposed." She also lets us in on some of her secret, highly advanced workout routines designed to maximize your time in the gym and propel you towards your full potential. Such as the "Happy Twenty," in which you run for 18 minutes and then do 2 minutes of squats.
We get further instruction on the hottest ways to run on the following page, where a two-page spread advertises "a few of my HOT tips for having a fun run." To ensure that you're able to start your journey to HOT as quickly as possible, I've taken the liberty of transcribing one of her most valuable nuggets below:
Run in the street instead of on the sidewalk. I took a lot of flack for this when they filmed me on Season 2 of the Real Housewives of New York City. The thing is, I think that people walking down the street while texting are a lot more dangerous than a car. Drivers will go out of their way to avoid you (accidents are too much paperwork, and they really mess up a day), but strolling texters will walk right into you without even seeing you. You could also get smacked by a shopping bag, a stroller, or even an oversized purse. Sidewalks are really obstacle courses. Beware!
Kelly shares some standout tracks from her workout playlist ("It's much more fun exercising to music!"), including the perennial pump-up-the-jam classic, "Skinny Love" by Bon Iver. With no regard for thematic continuity or overarching structure, the next page is dominated by the header "Get Leggier Legs."
An April 10, 2009, article about me in Harper's Bazaar captioned one of the photos "She's got legs." I was born blessed with long lean legs, but I work very hard to keep them looking the way they do. I'm tall, but I could just as easily have long, large legs. And long and large is not hot. Unfortunately I can't give you my legs. But I can help you to be the best you can be.
Truly inspirational. I think.
We continue on with Kelly's advice for "how to avoid the 'freshman fifteen," accompanied by a list of what she refers to as "Kelly rules." These run the gamut from near-sinister
Get rid of any negative thoughts. Negative-town isn't Fun-town.
to nonsensical
For every cheeseburger and fries, you owe me 12 cartwheels on the quad with your friends.
to bizarrely specific and also racially insensitive.
If you starve yourself for a day because you want to lose weight for Homecoming, you owe me 5 minutes of sitting Indian style in a corner and meditating on why you thought that was a good option.
Upon further reflection, I think I would actually be extremely motivated to stick to a diet if the alternative was being reprimanded by Kelly and forced to think about my poor life choices.
As a scientist myself, I was ecstatic to see that Kelly has drawn from a diverse array of scientific disciplines to develop her HOT tips and tricks. Physics, for example:
From Isaac Newton's First Law of Motion
A body in motion stays in motion. The velocity of a body remains constant unless the body is acted upon by an external force. So if you want to step up your exercise routine, try running in sand instead of on the pavement, or bike through gravel. That way your body will have to work harder in order to stay in motion.
Even biology has something to teach us about how to be HOT:
You are a living organism; life is an organic process. You need to be up and active, ready to enjoy the process. Be open and available and ready to do fun stuff. Participating in what you love is HOT.
I'm truly impressed by Kelly Bensimon's unparalleled ability to reframe the most basic common sense as divinely inspired wisdom. We see this in lines like
If you're feeling a bit frazzled and you need to calm down, you might want to take a yoga class.
or, as we read in another "HOT Tip" panel
Don't be afraid to drink water while working out.
I refuse to believe that this is a problem any person has ever faced. Even Aviva Drescher is not afraid of drinking water while working out (although, for the record, she is afraid of aluminum foil). Kelly closes out this chapter by encouraging the reader to "do one thing every day that takes you out of your comfort zone." If you find yourself lacking inspiration, she provides helpful suggestions, such as "try a fruit you've never eaten" and "try tap dancing." As she asserts, "there's nothing more foolish than sitting on your butt when you could be moving your body and having fun."
I turn the page, and the clock rolls over to Wednesday -- "Diet = 'DIE with a T.'" Cute. I bet Kelly would find that Tumblr post that's like "she believed" to be unbearably clever. She wastes no time in letting us know:
I don't believe in diets; diets are for people who want to get skinny. I want you to be happy. If you feel good about yourself, you'll make good choices. If you starve yourself to be skinny, you'll be undermining your sense of self-worth and you'll be unhappy every day. Eating well -- a variety of high-quality, fresh, unprocessed foods -- is for people who want to be happy -- and if you're not happy you won't be hot! Happy is always better than skinny.
This is starting to feel like some sort of word problem from Algebra II. If happy is better than skinny, but hot is equal to happy, diet = die + t??? Kelly tells us that all women fall into two categories: overachievers and underachievers. Being an overachiever is good, and being an underachiever is bad. Here are some things you can do to become an overachiever:
Make good choices.

When in doubt, have fun.

Keep smiling.
Kelly's motivational-phrasebook app apparently starts to glitch out right about here, but she continues on:
Stay positive and move forward. This is your last try at today. Yesterday may not have been great, but, today is better -- you just need to see it that way. The choice is up to you.
The idea of someone being in such a dark psychological place that they are able to find inspiration in those words is so deeply sad to me that I can hardly bear to consider it. Thankfully, Kelly has already taken a hard left turn into what I think is some sort of extended metaphor:
I've already said that you need to treat your body like a Ferrari, but maybe you prefer a Maserati, an Aston Martin, a Corvette, or even a Bentley. Whatever your luxury car of choice, if you treat it well, it will increase in value; if you treat it like a bargain rental car, it's just going to wear out -- and being worn out is not hot!
Ah, yes, I'd momentarily forgotten that cars almost always increase in value after they're purchased, and don't have a culturally ubiquitous reputation for losing most of their resale value immediately. Solid analogy. Apropos of nothing, we get a "HOT Tip" list of "model diet secrets that DON'T work." I'm extremely glad that Kelly encouraged us to take notes while reading -- I'd be devastated if any of these pointers had escaped my attention.
Eating Kleenex to make yourself feel full does not work.

The Graham cracker diet does not work.

Drugs do not work.
Well, I suppose this clears up some Scary Island confusion. Had Kelly indeed been doing meth (as the reported cat-pee smell might suggest), she would be fully aware that many drugs are, in fact, extremely effective ways to lose weight. But lest you start to lose faith in the expertise of our fearless leader, read on: "when it comes to food choices, I've probably made every mistake in the book." By which she means that she ate Chinese chicken soup before giving birth to her first daughter and it made her sick, so she ate a turkey sandwich before giving birth to her second daughter and she didn’t get sick. To be perfectly honest, I'm struggling to find a way to apply this wisdom to my own life, but I'm sure it will become clear in no time!
Kelly is relatable for the first time so far in the following passage:
When I was accused of being a "bitch" on national television, I was really upset. My response was to find comfort in Mexican food and margaritas for lunch and dinner three days straight.
But we promptly return to form on the next page as she recounts her daily diet of "2 green juices," "a KKBfit lunch," and "a KKBfit dinner." I'd like to take a moment to appreciate how generous it is of Kelly to share her wisdom -- earned through a lifetime of catastrophic missteps -- so freely. It certainly didn’t come without a cost, as the following anecdote illustrates:
On the last day of my juice fast, I took my older daughter to a Yankees game where we gorged on sushi. (Yes, they have sushi at Yankee Stadium) As a result, I was stuffed and blinded by carbs when A-Rod came up to bat and hit a home run. Was I able to savor that A-Rod moment with my daughter? Absolutely not. I was in a food coma. Will I ever let myself be thrown into a food frenzy again? No! Lesson learned: I made another stupid food choice, and because of that choice I missed that home run moment with my daughter. From now on, when I go to a Yankees game I'll have a small hot dog instead….I want you to do the same.
Verily! Heed her words of wisdom, lest ye not also lose the precious chance for thine own A-Rod moment.
But don’t think this caution means that you have to get caught up in the minutia of your day-to-day. On the contrary, appropriate planning means "you can stop obsessing about your carrot intake and concentrate on what it is that's going to make you a great person in life." To help illustrate this point, Kelly introduces us to the "Kelly pie." Otherwise known as a pie chart. This is a helpful way to really visualize how much time you'll have now that you can cut that pesky carrot-pondering out of your day! Kelly even offers some thoughtful "hints" to divide your pie:
  1. Celebrate your own health. We take health for granted.
  2. Get up in the morning and say, "I'm so grateful to be where I am and look the way I do," no matter what your size is.
  3. Tell yourself you look HOT, because you do.
  4. Believe in your ability to make good choices today and every day.
  5. Be mindful of what you eat. If I have to be mindful of what I eat, so do you. We're in this together.
Ooh, sorry Brad, I won't be able to make it to this afternoon's meeting -- it actually conflicts with my daily session of believing in my ability to make good choices today and every day. No, I understand how that could seem like an abstract sentiment rather than something that actually takes up time within your daily schedule, but if Kelly has to do it, so do I! And to be honest, my day is packed enough as it is -- it takes at least a second or two for me to tell myself I look HOT (because I do!), and I'm just worried that if I try to squeeze anything else in, it will cut into my mid-morning health celebration. Wish I could help!
In a strangely threatening aside, Kelly commands: "Write down what you ate for the last two days. Don't lie. We can start fresh tomorrow, one bite at a time."
In a section titled, "What I Eat Every Day," Kelly enumerates her "three go-to breakfasts": "two oranges or a plate of mixed berries if I'm not going to be very active, all-bran cereal or some other high-fiber cereal with almond milk or unsweetened coconut milk if I'm going on a long run, riding, or doing something else that requires extra energy, and on weekends, I love making pancakes to eat with my girls." As should be apparent, this is far more than three breakfasts. I am irrationally angry, in the same way I was when a Bachelor contestant said their favorite food was a charcuterie platter. That's cheating. (And yes, I do strongly identify with my Virgo moon, thanks for asking.)
Kelly inexplicably (apologies if I've used that word for the zillionth time already) tells us that "a plastic cup that says 'Forced Family Fun' from www.themonogramshops.com makes the smoothie go down with a giggle." Also, "sitting alone in front of the TV eating ice cream is not hot!" We are then introduced to one of Kelly's more advanced strategies, which she calls "Energy Economics." This means that you might need to eat more on days when you are busy and/or exercising, and less on days when you're relaxing. So many innovative ideas, this book has really packed a punch for its < $5 price tag!
Another ingenious idea? "Stuff cabbage, sweet peppers, tomatoes, or even onions with ground meat, chicken or turkey seasoned with salt and pepper. Bake until the meat is cooked through and the vegetable is softened." Granted, I have been a pescatarian for almost a decade at this point. But disemboweling an onion, jamming it full of hamburger meat, and cooking it for some indeterminate amount of time at an unspecified temperature seems…wrong.
Circling back to her theory of Energy Economics, Kelly explains,
If I don't eat [well], I'm violating my own laws of energy economics and my body goes either into inflation mode (too much energy when I don't need it) or recession mode (not enough energy in the bank for me to draw from). The key is to create economic equilibrium: eating well so that I feel good, which allows me to be happy.
I am begging someone to start a GoFundMe where we raise money to pay Kelly to explain how the economy works. The next page introduces us to "The KKB 3-Day Supermodel Diet," which is less of a diet and more a random assortment of miscellaneous health-related sentiments that reek of the 2009 pro-ana tumblrsphere:
Chew your food 8 times instead of 3 or 4.

Brush your teeth and chew mint gum as soon as you finished eating. When your mouth is fresh and minty, you'll be less tempted to eat again.
The final tip ("nurture yourself") includes a reminder to "blush your checks [sic]." Which may be a typo, but could also very well just be some strange Kelly saying that no one else has ever used in the history of the English language. On the next page, we're introduced to "Kelly's Food Plate." Which other, less sophisticated people typically refer to as the food pyramid. Kelly also takes a brief aside (in a feature box labeled "hot button issue") to expound upon her favorite delicacy, the humble jelly bean:
If you're a fan of the Real Housewives of New York City you probably remember that on Season 3 I took a lot of flack for eating jelly beans and talking about processed and unprocessed foods. I was actually making light of that food snob moment. Who stops at a gas station and asks for carrots? Did you bring your organic food cooler with you on this road trip? The important part is not to be a food snob; but when in doubt choose the best option. Sometimes it's better to be happy than it is to be right. Was I able to make my point? Clearly it wasn’t in the cards at that moment.
This is a truly stunning synthesis of her experience. Underestimate Kelly at your own peril -- this girl has been playing 4D chess for longer than we know.
The chapter continues with some tips from Kelly on how to make the most of your meal planning and shopping experience. And no -- you have no excuses:
There's absolutely no reason why you, wherever you live, can't eat "colorful" foods. All over the country there are "gi-normous" supermarkets where fruit and vegetable aisles are bursting with every color of the rainbow.
I am starting to get a "gi-normous" headache trying to make sense of this chaos. Kelly's advice that we can "mix and match what's there to make a FrenAsian or an ItaloGreek meal" is not helping. We also get some tips for how to grocery shop responsibly:
  1. Always go with a list and never buy more than two items you planned on taking home.
This is incoherent, right? I know I need to wrap up Part 1 of this write-up pretty soon, because I've read this sentence at least two dozen times trying to make some sense of it, and am still at an utter loss. I assume she's left out a negative somewhere, but at this point, I realize I've already thought about this tip for approximately ten times longer than Kelly ever has, so I'll move on.
For the third or fourth time so far this book, Kelly segues into a literal grocery list. To be fair, this is a very effective strategy to take up several pages with minimal text. And what could be more compelling than
Shitake/oyster mushroom combination packs

Dog treats

Lavender pepper
Truly the voice of a generation! Decades from now, English teachers will be teaching their students about a fabled wordsmith who once uttered those eternal words, "shitake/oyster mushroom combination packs." Because this book has absolutely no respect for logical cohesion, we are hurled immediately into a diatribe about how expensive it can be to buy organic -- "I recently walked out of an organic market having paid $400 for just three bags of groceries." As I read on, however, it becomes quickly apparent that Kelly has no idea what the concept of 'organic' even means:
"Organic," in any case, seems like something of a misnomer to me. I know the Food and Drug Administration has regulations for certifying foods organic, but to me, for foods to be truly and totally organic, they would have to be grown in a test tube or a greenhouse with no exposure to the natural elements.
Well, sure Kelly. If that's what you would like to use the word "organic" to mean, be my guest. She tosses us another crumb of helpful guidance, but it only serves to make me feel exceptionally sorry for Kelly's daughters and everything they have to endure:
Plate your food as if it were being served to you in a fine restaurant. Use a fancy foreign accent as you invite everyone to come to the table. Or try saying it in French. My girls love it when I announce, "Le dîner est servi!"
We learn in yet another "HOT tip" that "fast food doesn't have to be fat food," and Kelly tells us for the eighth time that she eats two oranges every morning. In what has already become a recurring theme for me in this book, the following passage makes me desperately curious to know how Kelly thinks science works:
One question people frequently ask me is whether I believe in taking vitamins or supplements, and the answer is "yes, I do," because, even though I know my diet is healthy, I can't be sure that I'm getting all the nutrients I need. All the vitamins and minerals we need can be found naturally in foods, but how do we know, even if we're eating a healthy diet, that we're getting everything we need?
I flip back two pages to confirm that Kelly told us quite recently how important it is to read nutrition labels to know what is in the food we eat (to make sure we avoid foods "whose labels are full of words you can't pronounce"). Exactly how she is reading these nutrition labels yet still manages to have no inkling how anyone could possibly begin to assess their vitamin and mineral intake eludes me. She continues:
I don't want to take that chance. I think of the food I eat as fuel and vitamins as my oil -- my body's engine needs both. Vitamins and supplements are not food replacements, but we're exposed to so many environmental toxins on a daily basis that I believe we need to supplement our diets to counteract all the harm those substances can cause.
I can certainly think of something that is causing harm to my psychological stability at this particular moment, which I should probably take as a sign to wrap things up for today and go read some incredibly dense Victorian prose or something to remind myself what a properly constructed sentence looks like. Promise I won't leave you waiting for long!!
submitted by efa___ to BravoRealHousewives [link] [comments]

DD: Covid cases are spiking...but buy these instead of SPY puts!

DD: Covid cases are spiking...but buy these instead of SPY puts!
Hello fellow Autists! Longtime reader, first DD post for me. Like the rest of you, I see the writing on the wall with the spiking cases in Florida, Arizona, California, Texas (I am in Houston), etc. and want to profit from the next market move. I believe many of these states will be slow to respond with effective quarantine measures, and anecdotally I have seen very limited compliance with social distancing and mask guidelines. Due to the long incubation period of SARS-CoV-2, the case count spike we are seeing is most likely from exposure 2-3 weeks ago, and opportunities for spread have only increased since then. Additionally, a large percentage of the population is unable to interpret widely available public data and believes the increased case count is a fabrication because "we are testing more". However, a linear regression of the data for Texas shows the percent of tests that come back positive has increased from an average of ~4% 30 days ago to ~12% now, while the average number of tests have only increased by 10-20%. It is very clear from the data that we are seeing community spread at an exponential rate. Many will not come to this realization and alter their behavior until one of their loved ones becomes very sick. This will allow several more weeks of community spread to go on before R0 is brought back below 1. If the death count gets high enough, fear will take over and many will shelter in place again, either voluntarily or by mandate. The V-shaped recovery thesis becomes much harder to defend at this point, to say the least.
For those of you still reading, you are probably thinking "I know all of this, how do I make those sweet, sweet tendies, fuckface?". Most of you are banking on SPY puts, but I think you might have better odds at a roulette table. The Fed has killed price discovery, and can severely restrict the risk/reward ratio of bearish positions with literally an infinite arsenal. The retail investors know this and will buy any dips, and any new shelter-in-place orders gives Jerome a fantastic excuse to fire up the digital printer again. Don't fight the Fed, and don't bet against a retail-mania driven bubble. However, the Fed is not interested in propping up the price of oil (gasp!).

Chart with colors and lines and shit so you know I is tarded
West Texas Crude dropped from a pre-COVID high of $65/bbl to futures at negative $37/bbl as a result of the demand destruction from worldwide quarantines. During this same period, an ETF that inversely tracks crude at a 2x clip, SCO, went from $12 to an intra-day peak of $67. SCO spiked twice more in the following days as crude underwent wild price swings. Fast-forward to today. Crude just formed a double-top chart pattern $40.50, exactly at the 61.8% Fibonacci Retracement level from it's January 2020 peak to it's April 20th low. This all-time low occurred an entire month after SPY bottomed on March 23rd, and this is because crude prices are actually driven by...wait for it...supply and demand. In other words, crude is still driven by fundamentals, while the stock market is (currently) not. In fact, government bailouts of the struggling US shale oil companies would only allow them to continue to flood the market, further driving down the price of oil.
The US Energy Information Administration has forecasted 2H 2020 crude prices to average $37/bbl based on a V-shaped recovery (https://www.eia.gov/outlooks/steo/report/global_oil.php). We are currently at $40/ bbl based on OPEC+ compliance and recovery optimism, and we aren't even into Q3. There are too many variables for me to accurately predict actual crude demand in a W-shaped scenario as subsequent infection spikes slow the world's energy demands down again, but a gain in crude stocks will immediately send prices falling. I would expect crude to look for support near the 50% retracement level around $32/bbl, which would push SCO approximately 40% higher than current due to the daily compounded 2x leverage. Another wave of government mandated lockdowns would likely see crude fall to $25 or below, which would put SCO at around $44. Another Oil-geddon scenario would put SCO -at $60 or more.

EIA 2021 Forecast
Risks
Nothing boosts oil prices like a foreign conflict, and tensions have certainly been on the rise this year. An airstrike on a tanker would be a bad headline for this position. Also further OPEC+ cuts would not be good news for me, but many of the participating countries are facing recessionary pressure and may violate their agreements to attempt to save their own budgets. If I am missing any other risks, please let me know.
TL;DR
COV-SARS-2 is once again pressuring global energy demand. The Fed can fuck your SPY puts, but might actually hurt oil prices. Go long on SCO or go with UCO puts. Choose expiration and strike price per your risk tolerance.
Buying SCO directly will decouple the risk associated with trying to time the market. But I know how safe you guys like to play it, so load up on those puts! 🚀🚀🚀
Trade Updates
6/24, 10:00 - I have 7,000 shares of SCO cost averaged in at $17.50. After peaking at $41.62 yesterday, WTI is now trading below $39 on news that crude stocks are building while COVID cases continue to rise exponentially in parts of the US and the world.
6/24, 12:15 - RSI hit oversold on the bounce, so I bought 2,000 more shares. Shaping up to be an excellent day. 10% plus daily gains on an almost 200k position with lots more room to run. Also interesting to note that crude stocks actually gained today even before second wave demand destruction is here. Oil is down over twice as much as SPY for the reasons explained above.
6/25, 7:30 - WTI is down another 2% in pre-market on second wave fears. $37 was a level of support for June 9-17th, and we are right up against it again. If we break through today the next level is at $34.50 for another 15% or more of profits.
6/25, 9:00 - WTI bounces HARD off of the $37 support level on news that continuing unemployment claims dropped slightly. Lesson learned: take partial profits when prior levels of support are reached and buy back in after either support is breached with conviction or next level of resistance is met.
6/26, 8:00 - WTI durdled at the $39 resistance level overnight and is now falling hard pre-market. Looks like I may have a chance to try the partial profit-taking strategy above later today.
6/26, 14:55 - Another strong day, but we did not retest the $37 WTI level again. I took some partial profits (4,000 shares) at end of the day and will watch oil prices through the wknd. As predicted, Texas is already rolling back re-opening plans and cases continue to build exponentially all over the South. South America and India are showing textbook exponential rises as well. I also started some positions in AHPI and APT to play the potential mandatory mask laws. So far the trade is up over $15k.
6/29, 9:30 - Oil is recovering on more economic bullishness. I was stopped out of the rest of my position at $18.50. I will let the dust settle and find another entry point later this week.
7/5 - Several states have rolled back re-opening guidelines as cases continue to grow exponentially. I will be watching WTI action overnight to see if a bearish head and shoulders pattern will complete.
submitted by HypnoticStrix to wallstreetbets [link] [comments]

The Mouthbreather's Guide to the Galaxy

The Mouthbreather's Guide to the Galaxy
Alright CYKAS, Drill Sgt. Retarded TQQQ Burry is in the house. Listen up, I'm gonna train yo monkey asses to make some motherfucking money.

“Reeee can’t read, strike?” - random_wsb_autist
Bitch you better read if you want your Robinhood to look like this:
gainz, bitch


Why am I telling you this?
Because I like your dumb asses. Even dickbutts like cscqb4. And because I like seeing Wall St. fucking get rekt. Y’all did good until now, and Wall St. is salty af. Just google for “retail traders” news if you haven’t seen it, and you’ll see the salty tears of Wall Street assholes. And I like salty Wall St. assholes crying like bitches.
https://www.zerohedge.com/markets/retail-investors-are-crushing-hedge-funds-again

That said, some of you here are really motherfucking dense & the sheer influx of retardation has been driving away some of the more knowledgeable folks on this sub. In fact, in my last post, y'all somehow managed to downvote to shit the few guys that really understood the points I was making and tried to explain it to you poo-slinging apes. Stop that shit yo! A lot of you need to sit the fuck down, shut your fucking mouth and listen.
So I'm going to try and turn you rag-tag band of dimwits into a respectable army of peasants that can clap some motherfucking Wall Street cheeks. Then, I'm going to give you a mouthbreather-proof trade that I don't think even you knuckleheads can mess up (though I may be underestimating you).
If you keep PM-ing me about your stupid ass losses after this, I will find out where you live and personally, PERSONALLY, shit on your doorstep.
This is going to be a long ass post. Read the damned post. I don't care if you're dyslexic, use text-to-speech. Got ADHD? Pop your addys, rub one out, and focus! Are you 12? Make sure to go post in the paper trading contest thread first.

THE RULES:
  1. Understand that most of this sub has the critical reading skills of a 6 year old and the attention span of a goldfish. As such, my posts are usually written with a level of detail aimed at the lowest common denominator. A lot of details on the thesis are omitted, but that doesn't mean that the contents in the post are all there is to it. If I didn't do that, every post'd have to be longer than this one, and 98% of you fucks wouldn't read it anyway. Fuck that.
  2. Understand that my style of making plays is finding the >10+ baggers that are underpriced. As such, ALL THE GOD DAMN PLAYS I POST ARE HIGH-RISK / HIGH-REWARD. Only play what you can afford to risk. And stop PM-ing me the second the market goes the other way, god damn it! If you can't manage your own positions, I'm going to teach your ass the basics.
  3. Do you have no idea what you're doing and have a question? Google it first. Then google it again. Then Bing it, for good measure. Might as well check PornHub too, you never know. THEN, if you still didn't find the answer, you ask.
  4. This sub gives me Tourette's. If you got a problem with that, well fuck you.

This shit is targeted at the mouthbreathers, but maybe more knowledgeable folk’ll find some useful info, idk. How do you know if you’re in the mouthbreather category? If your answer to any of the following questions is yes, then you are:
  • Are you new to trading?
  • Are you unable to manage your own positions?
  • Did you score into the negatives on the SAT Critical Reading section?
  • Do you think Delta is just an airline?
  • Do you buy high & sell low?
  • Do you want to buy garbage like Hertz or American Airlines because it's cheap?
  • Did you buy USO at the bottom and are now proud of yourself for making $2?
  • Do you think stOnKs oNLy Go uP because Fed brrr?
  • Do you think I'm trying to sell you puts?
  • If you take a trade you see posted on this sub and are down, do you PM the guy posting it?
  • Do you generally PM people on this sub to ask them basic questions?
  • Is your mouth your primary breathing apparatus?
Well I have just the thing for you!


Table of Contents:
I. Maybe, just maybe, I know what I’m talking about
II. Post-mortem of the February - March 2020 Great Depression
III. Mouthbreather's bootcamp on managing a position – THE TECHNICALS
IV. Busting your retarded myths
V. LIQUIDITY NUKE INBOUND
VI. The mouthbreather-proof trade - The Akimbo
VII. Quick hints for non-mouthbreathers


Chapter I - Maybe, just maybe, I know what I’m talking about
I'm not here to rip you off. Every fucking time I post something, a bunch of dumbasses show up saying I'm selling you puts or whatever the fuck retarded thoughts come through their caveman brains.
"hurr durr OP retarded, OP sell puts" - random_wsb_autist
Sit down, Barney, I'm not here to scam you for your 3 cents on OTM puts. Do I always get it right? Of course not, dumbasses. Eurodollar play didn't work out (yet). Last TQQQ didn't work out (yet). That’s just how it goes. Papa Buffet got fucked on airlines. Plain retard Burry bought GME. What do you fucking expect?
Meanwhile, I keep giving y'all good motherfucking plays:
  1. 28/10/2019: "I'ma say this again, in case you haven't heard me the first time. BUY $JNK PUTS NOW!". Strike: "11/15, 1/17 and 6/19". "This thing can easily go below 50, so whatever floats your boat. Around $100 strike is a good entry point."
  2. 3/9/2020: "I mean it's a pretty obvious move, but $JNK puts."
  3. 3/19/2020, 12pm: "UVXY put FDs are free money." & “Buy $UVXY puts expiring tomorrow if we're still green at 3pm. Trust me.”
  4. 3/24/2020: “$UUP 3/27 puts at $27.5 or $27 should be 10-baggers once the bill passes. I'd expect it to go to around $26.”
And of course, the masterpiece that was the TQQQ put play.
Chapter II. Post-mortem of the February - March 2020 Great Depression
Do you really understand what happened? Let's go through it.
I got in puts on 2/19, right at the motherfucking top, TQQQ at $118. I told you on 2/24 TQQQ ($108) was going to shit, and to buy fucking puts, $90ps, $70ps, $50ps, all the way to 3/20 $30ps. You think I just pulled that out of my ass? You think I just keep getting lucky, punks? Do you have any idea how unlikely that is?
Well, let's take a look at what the fuckstick Kevin Cook from Zacks wrote on 3/5:
How Many Sigmas Was the Flash Correction Plunge?
"Did you know that last week's 14% plunge in the S&P 500 SPY was so rare, by statistical measures, that it shouldn't happen once but every 14,000 years?"
"By several measures, it was about a 5-sigma move, something that's not "supposed to" happen more than once in your lifetime -- or your prehistoric ancestors' lifetimes!
"According to general statistical principles, a 4-sigma event is to be expected about every 31,560 days, or about 1 trading day in 126 years. And a 5-sigma event is to be expected every 3,483,046 days, or about 1 day every 13,932 years."

On 3/5, TQQQ closed at $81. I just got lucky, right? You should buy after a 5-sigma move, right? That's what fuckstick says:
"Big sigma moves happen all the time in markets, more than any other field where we collect and analyze historical data, because markets are social beasts subject to "wild randomness" that is not found in the physical sciences.
This was the primary lesson of Nassim Taleb's 2007 book The Black Swan, written before the financial crisis that found Wall Street bankers completely ignorant of randomness and the risks of ruin."
I also took advantage of the extreme 5-sigma sell-off by grabbing a leveraged ETF on the Nasdaq 100, the ProShares UltraPro QQQ TQQQ. In my plan, while I might debate the merits of buying AAPL or MSFT for hours, I knew I could immediately buy them both with TQQQ and be rewarded very quickly after the 14% plunge."
Ahahaha, fuckstick bought TQQQ at $70, cuz that's what you do after a random 5-sigma move, right? How many of you dumbasses did the same thing? Don't lie, I see you buying 3/5 on this TQQQ chart:
https://preview.redd.it/9ks35zdla5151.png?width=915&format=png&auto=webp&s=2c90d08494c52a1b874575ee233624e61ac27620
Meanwhile, on 3/3, I answered the question "Where do you see this ending up at in the next couple weeks? I have 3/20s" with "under 30 imo".

Well good fucking job, because a week later on 3/11, TQQQ closed at $61, and it kept going.
Nomura: Market staring into the abyss
"The plunge in US equities yesterday (12 March) pushed weekly returns down to 7.7 standard deviations below the norm. In statistical science, the odds of a greater-than seven-sigma event of this kind are astronomical to the point of being comical (about one such event every 160 billion years).
Let's see what Stephen Mathai-Davis, CFA, CQF, WTF, BBQ, Founder and CEO of Q.ai - Investing Reimagined, a Forbes Company, and a major fucktard has to say at this point:

"Our AI models are telling us to buy SPY (the SPDR S&P500 ETF and a great proxy for US large-cap stocks) but since all models are based on past data, does it really make sense? "
"While it may or may not make sense to buy stocks, it definitely is a good time to sell “volatility.” And yes, you can do it in your brokerage account! Or, you can ask your personal finance advisor about it."
"So what is the takeaway? I don’t know if now is the right time to start buying stocks again but it sure looks like the probabilities are in your favor to say that we are not going to experience another 7 standard deviation move in U.S. Stocks. OTM (out-of-the-money) Put Spreads are a great way to get some bullish exposure to a rally in the SPY while also shorting such rich volatility levels."
Good job, fuckfaces. Y'all bought this one too, admit it. I see you buying on this chart:
https://preview.redd.it/s9344geza5151.png?width=915&format=png&auto=webp&s=ebaef4b1414d901e6dafe354206ba39eb03cb199
Well guess what, by 3/18, a week later, we did get another 5 standard deviation move. TQQQ bottomed on 3/18 at $32.73. Still think that was just luck, punk? You know how many sigmas that was? Over 12 god-damn sigmas. 12 standard deviations. I'd have a much better chance of guessing everyone's buttcoin private key, in a row, on the first try. That's how unlikely that is.
https://preview.redd.it/luz0s3kbb5151.png?width=587&format=png&auto=webp&s=7542973d56c42e13efd3502331ac6cc5aea42630
"Hurr durr you said it's going to 0, so you're retarded because it didn't go to 0" - random_wsb_autist
Yeah, fuckface, because the Fed bailed ‘em out. Remember the $150b “overnight repo” bazooka on 3/17? That’s what that was, a bailout. A bailout for shitty funds and market makers like Trump's handjob buddy Kenny Griffin from Citadel. Why do you think Jamie Dimon had a heart attack in early March? He saw all the dogshit that everyone put on his books.

https://preview.redd.it/8fqvt37ama151.png?width=3711&format=png&auto=webp&s=0b06ee5101685c5274c6641a62ee9eb1a2a3f3ee


Read:
https://dealbreaker.com/2020/01/griffin-no-show-at-white-house
https://www.cnbc.com/2020/03/11/bank-ceos-convene-in-washington-with-president-trump-on-coronavirus.html
https://www.proactiveinvestors.co.uk/companies/news/914736/market-makers--didn-t-show-up-for-work--macro-risk-ceo-says-914736.html
https://www.chicagobusiness.com/finance-banking/chicago-trading-firms-seek-more-capital
https://www.housingwire.com/articles/did-non-qm-just-disappear-from-the-market/
https://www.bloomberg.com/news/articles/2020-03-22/bruised-hedge-funds-ask-clients-for-fresh-cash-to-buy-the-dip
https://fin24.com/Markets/Bonds/rand-bonds-rally-after-reserve-bank-intervention-20200320

Yup, everyone got clapped on their stupidly leveraged derivatives books. It seems Citadel is “too big to fail”. On 3/18, the payout on 3/20 TQQQ puts alone if it went to 0 was $468m. And every single TQQQ put expiration would have had to be paid. Tens or hundreds of billions on TQQQ puts alone. I’d bet my ass Citadel was on the hook for a big chunk of those. And that’s just a drop in the bucket compared to all the other blown derivative trades out there.

https://preview.redd.it/9ww27p2qb5151.png?width=2485&format=png&auto=webp&s=78f24265f3ea08fdbb37a4325f15ad9b61b0c694
Y’all still did good, 3/20 closed at $35. That’s $161m/$468m payoff just there. I even called you the bottom on 3/17, when I saw that bailout:

"tinygiraffe21 1 point 2 months ago
Haha when? I’m loading up in 4/17 25 puts"
"dlkdev
Scratch that, helicopter money is here."
"AfgCric 1 point 2 months ago
What does that mean?"
"It means the Fed & Trump are printing trillions with no end in sight. If they go through with this, this was probably the bottom."

"hurr durr, it went lower on 3/18 so 3/17 wasn't the bottom" - random_wsb_autist
Idiot, I have no way of knowing that Billy boy Ackman was going to go on CNBC and cry like a little bitch to make everyone dump, so he can get out of his shorts. Just like I have no way of knowing when the Fed decides to do a bailout. But you react to that, when you see it.
Do you think "Oh no world's ending" and go sell everything? No, dumbass, you try to figure out what Billy's doing. And in this case it was pretty obvious, Billy saw the Fed train coming and wanted to close his shorts. So you give the dude a hand, quick short in and out, and position for Billy dumping his short bags.
Video of Billy & the Fed train

Here's what Billy boy says:
“But if they don’t, and the government takes the right steps, this hedge could be worth zero, and the stock market could go right back up to where it was. So we made the decision to exit.”
https://www.businessinsider.sg/bill-ackman-explains-coronavirus-trade-single-best-all-time-podcast-2020-5
Also, “the single best trade of all time.” my ass, it was only a 100-bagger. I gave y’all a 150-bagger.
So how could I catch that? Because it wasn't random, yo. And I'm here to teach your asses how to try to spot such potential moves. But first, the technical bootcamp.

Chapter III. Mouthbreather's bootcamp on managing a position – THE TECHNICALS

RULE 1. YOU NEVER BUY OPTIONS AT OPEN. You NEVER OVERPAY for an option. You never FOMO into buying too fast. You NEVER EVER NEVER pump the premium on a play.
I saw you fuckers buying over 4k TQQQ 5/22 $45 puts in the first minutes of trading. You pumped the premium to over $0.50 dudes. The play's never going to work if you do that, because you give the market maker free delta, and he's going to hedge that against you. Let me explain simply:

Let's say a put on ticker $X at strike $50 is worth $1, and a put at strike $51 is worth $2.
If you all fomo in at once into the same strike, the market maker algos will just pull the asks higher. If you overpay at $2 for the $50p, the market maker will just buy $51ps for $2 and sell you $50ps for 2$. Or he'll buy longer-dated $50ps and sell you shorter-dated $50ps. Max risk for him is now 0, max gain is $1. You just gave him free downside insurance, so of course he's going to start going long. And you just traded against yourself, congrats.

You need to get in with patience, especially if you see other autists here wanting to go in at the same time. Don't step on each other's toes. You put in an order, and you wait for it to fill for a couple of seconds. If it doesn't fill, AND the price of the option hasn't moved much recently, you can bump the bid $0.01. And you keep doing that a few times. Move your strikes, if needed. Only get a partial fill or don't get a fill at all? You cancel your bid. Don't fucking leave it hanging there, or you're going to put a floor on the price. Let the mm algos chill out and go again later.

RULE 2. WATCH THE TIME. Algos are especially active at x:00, x:02, x:08, x:12, x:30 and x:58. Try not to buy at those times.
RULE 3. YOU USE MULTIPLE BROKERS. Don't just roll with Robinhood, you're just gimping yourself. If you don't have another one, open up a tasty, IB, TD, Schwab, whatever. But for cheap faggy puts (or calls), Robinhood is the best. If you want to make a play for which the other side would think "That's free money!", Robinhood is the best. Because Citadel will snag that free money shit like no other. Seriously, if you don't have a RH account, open one. It's great for making meme plays.

RULE 4. YOU DON'T START A TRADE WITH BIG POSITIONS. Doesn't matter how big or small your bankroll is. If you go all-in, you're just gambling, and the odds are stacked against you. You need to have extra cash to manage your positions. Which leads to
RULE 5. MANAGING YOUR WINNERS: Your position going for you? Good job! Now POUND THAT SHIT! And again. Move your strikes to cheaper puts/calls, and pound again. And again. Snowball those gains.
RULE 6A. POUND THOSE $0.01 PUTS:
So you bought some puts and they’re going down? Well, the moment they reach $0.01, YOU POUND THOSE PUTS (assuming there’s enough time left on them, not shit expiring in 2h). $0.01 puts have amazing risk/return around the time they reach $0.01. This is not as valid for calls. Long explanation why, but the gist of it is this: you know how calls have unlimited upside while puts have limited upside? Well it’s the reverse of that.
RULE 6B. MANAGING YOUR LOSERS:
Your position going against you? Do you close the position, take your loss porn and post it on wsb? WRONG DUMBASS. You manage that by POUNDING THAT SHIT. Again and again. You don't manage losing positions by closing. That removes your gainz when the market turns around. You ever close a position, just to have it turn out it would have been a winner afterwards? Yeah, don't do that. You manage it by opening other positions. Got puts? Buy calls. Got calls? Buy puts. Turn positions into spreads. Buy spreads. Buy the VIX. Sell the VIX. They wanna pin for OPEX? Sell them options. Not enough bankroll to sell naked? Sell spreads. Make them fight you for your money, motherfuckers, don't just give it away for free. When you trade, YOU have the advantage of choosing when and where to engage. The market can only react. That's your edge, so USE IT! Like this:

Example 1:
Initial TQQQ 5/22 position = $5,000. Starts losing? You pound it.

https://preview.redd.it/gq938ty8e5151.png?width=944&format=png&auto=webp&s=734ab7ed517f0e6822bfaaed5765d1272de398d1
Total pounded in 5/22 TQQQ puts = $10,824. Unfortunately expired worthless (but also goes to show I'm not selling you puts, dickwads)
Then the autists show up:
"Hahaha you lost all your money nice job you fucking idiot why do you even live?" - cscqb4
Wrong fuckface. You see the max pain at SPX 2975 & OPEX pin coming? Sell them some calls or puts (or spreads).

https://preview.redd.it/7nv23fr41a151.jpg?width=750&format=pjpg&auto=webp&s=14a8879c975646ffbfe2942ca1982bfabfcf90df
Sold 9x5/20 SPX [email protected], bam +$6,390. Still wanna pin? Well have some 80x5/22 TQQQ $80cs, bam anotha +$14,700.

https://preview.redd.it/1iqtpmc71a151.jpg?width=750&format=pjpg&auto=webp&s=df9b954131b0877f4acc43038b4a5a4acf544237
+$21,090 - $10,824 = +$10,266 => Turned that shit into a +94.85% gain.

.cscqb4 rn

You have a downside position, but market going up or nowhere? You play that as well. At least make some money back, if not profit.

Example 2:

5/22, long weekend coming right? So you use your brain & try to predict what could happen over the 3-day weekend. Hmm, 3 day weekend, well you should expect either a shitty theta-burn or maybe the pajama traders will try to pooomp that shite on the low volume. Well make your play. I bet on the shitty theta burn, but could be the other, idk, so make a small play.

Sold some ES_F spreads (for those unaware, ES is a 50x multiplier, so 1 SPX = 2 ES = 10 SPY, approximately). -47x 2955/2960 bear call spreads for $2.5. Max gain is $2.5, max loss is 2960-2955 = $5. A double-or-nothing basically. That's $5,875 in premium, max loss = 2x premium = $11,750.
Well, today comes around and futures are pumping. Up to 3,014 now. Do you just roll over? You think I'm gonna sit and take it up the ass? Nah bros that's not how you trade, you fucking fight them. How?
I have:
47x 2960 calls
-47x 2955 calls

Pajama traders getting all up in my grill? Well then I buy back 1 of the 2955 calls. Did that shit yesterday when futures were a little over 2980, around 2982-ish. Paid $34.75, initially shorted at $16.95, so booked a -$892 loss, for now. But now what do I have?

46x 2955/2960 bear calls
1x 2960 long call

So the fuckers can pump it. In fact, the harder they pump it, the more I make. Each $2.5 move up in the futures covers the max loss for 1 spread. With SPX now at ~3015, that call is $55 ITM. Covers 24/46 contracts rn. If they wanna run it up, at 3070 it's break-even. Over that, it's profit. I'll sell them some bear call spreads over 3050 if they run it there too. They gonna dump it? well under 2960 it's profit time again. They wanna do a shitty pin at 3000 today? Well then I'll sell them some theta there.
Later edit: that was written yesterday. Got out with a loss of only $1.5k out of the max $5,875. Not bad.
And that, my dudes, is how you manage a position.

RULE 7 (ESPECIALLY FOR BEARS). YOU DON'T KEEP EXTRA CASH IN YOUR BROKER ACCOUNT. You don't do it with Robinhood, because it's a shitty dumpsterfire of a broker. But you don't do it with other brokers either. Pull that shit out. Preferably to a bank that doesn't play in the markets either, use a credit union or some shit. Why? Because you're giving the market free liquidity. Free margin loans. Squeeze that shit out, make them work for it. Your individual cash probably doesn't make a dent, but a million autists with an extra $1200 trumpbucks means $1.2b. That's starting to move the needle. You wanna make a play, use instant deposits. And that way you don't lose your shit when your crappy ass broker or bank gets its ass blown up on derivative trades. Even if it's FDIC or SIPC insured, it's gonna take time until you see that money again.


Chapter IV. BUSTING YOUR RETARDED MYTHS

MYTH 1 - STONKS ONLY GO UP

Do you think the market can go up forever? Do you think stOnKs oNLy Go uP because Fed brrr? Do you think SPX will be at 5000 by the end of the month? Do you think $1.5 trillion is a good entry point for stonks like AAPL or MSFT? Do you want to buy garbage like Hertz or American Airlines because it's cheap? Did you buy USO at the bottom and are now proud of yourself for making $2? Well, this section is for you!
Let's clear up the misconception that stonks only go up while Fed brrrs.

What's your target for the SPX top? Think 3500 by the end of the year? 3500 by September? 4000? 4500? 5000? Doesn't matter, you can plug in your own variables.

Let's say SPX only goes up, a moderate 0.5% each period as a compounded avg. (i.e. up a bit down a bit whatever, doesn't matter as long as at the end of your period, if you look back and do the math, you'll get that number). Let's call this variable BRRR = 0.005.

Can you do the basic math to calculate the value at the end of x periods? Or did you drop out in 5th grade? Doesn't matter if not, I'll teach you.


Let's say our period is one week. That is, SPX goes up on average 0.5% each week on Fed BRRR:
2950 * (1.005^x), where x is the number of periods (weeks in this case)

So, after 1 month, you have: 2950 * (1.005^4) = 3009
After 2 months: 2950 * (1.005^8) = 3070
End of the year? 2950 * (1.005^28) = 3392

Now clearly, we're already at 3015 on the futures, so we're moving way faster than that. More like at a speed of BRRR = 1%/wk

2950 * (1.01^4) = 3069
2950 * (1.01^8) = 3194
2950 * (1.01^28) = 3897


Better, but still slower than a lot of permabulls would expect. In fact, some legit fucks are seriously predicting SPX 4000-4500 by September. Like this dude, David Hunter, "Contrarian Macro Strategist w/40+ years on Wall Street". IDIOTIC.
https://twitter.com/DaveHcontrarian/status/1263066368414568448

That'd be 2950 * (BRRR^12) = 4000 => BRRR = 1.0257 and 2950 * (BRRR^12) = 4500 => BRRR = 1.0358, respectively.

Here's why that can't happen, no matter the amount of FED BRRR: Leverage. Compounded Leverage.

There's currently over $100b in leveraged etfs with a 2.5x avg. leverage. And that's just the ones I managed to tally, there's a lot of dogshit small ones on top of that. TQQQ alone is now at almost $6b in AUM (topped in Fed at a little over $7b).

Now, let's try to estimate what happens to TQQQ's AUM when BRRR = 1.0257. 3XBRRR = 1.0771. Take it at 3XBRRR = 1.07 to account for slippage in a medium-volatility environment and ignore the fact that the Nasdaq-100 would go up more than SPX anyway.

$6,000,000,000 * (1.07^4) = $7,864,776,060
$6,000,000,000 * (1.07^8) = $10,309,100,000
$6,000,000,000 * (1.07^12) = $13,513,100,000
$6,000,000,000 * (1.07^28) = $39,893,000,000.

What if BRRR = 1.0358? => 3XBRR = 1.1074. Take 3XBRRR = 1.10.
$6,000,000,000 * (1.1^4) = $8,784,600,000
$6,000,000,000 * (1.1^8) = $12,861,500,000
$6,000,000,000 * (1.1^12) = $18,830,600,000
$6,000,000,000 * (1.1^28) = $86,526,000,000

And this would have to get 3x leveraged every day. And this is just for TQQQ.

Let's do an estimation for all leveraged funds. $100b AUM, 2.5 avg. leverage factor, BRRR = 1.0257 => 2.5BRRR = 1.06425

$100b * (1.06^4) = $128.285b
$100b * (1.06^8) = $159.385b
$100b * (1.06^12) = $201.22b
$100b * (1.06^28) = $511.169b

That'd be $1.25 trillion sloshing around each day. And the market would have to lose each respective amount of cash into these leveraged funds. Think the market can do that? You can play around with your own variables. But understand that this is just a small part of the whole picture, many other factors go into this. It's a way to put a simple upper limit on an assumption, to check if it's reasonable.

In the long run, it doesn't matter if the Fed goes BRRR, if TQQQ takes in it's share of 3XBRRR. And the Fed can't go 3XBRRR, because then TQQQ would take in 9XBRRR. And on top of this, you have a whole pile of leveraged derivatives on top of these leveraged things. Watch (or rewatch) this: Selena Gomez & Richard H. Thaler Explaining Synthetic CDO through BLACKJACK

My general point, at the mouth-breather level, is that Fed BRRR cannot be infinite, because leverage.
And these leveraged ETFs are flawed instruments in the first place. It didn't matter when they started out. TQQQ and SQQQ started out at $8m each. For the banks providing the swaps, for the market providing the futures contracts, whatever counter-party to whatever instrument they would use, that was fine. Because it balanced out. When TQQQ made a million, SQQQ lost a million (minus a small spread, which was the bank's profit). Bank was happy, in the long run things would even out. Slippage and spreads and fees would make them money. But then something happened. Stonks only went up. And leveraged ETFs got bigger and more and more popular.
And so, TQQQ ended up being $6-7b, while SQQQ was at $1b. And the same goes for all the other ETFs. Long leveraged ETF AUM became disproportionate to short AUM. And it matters a whole fucking lot. Because if you think of the casino, TQQQ walks up every day and says "I'd like to put $18b on red", while SQQQ walks up and says "I'd only like to put $3b on black". And that, in turn, forces the banks providing the swaps to either eat shit with massive losses, or go out and hedge. Probably a mix of both. But it doesn't matter if the banks are hedged, someone else is on the other side of those hedges anyway. Someone's eating a loss. Can think of it as "The Market", in general, eating the loss. And there's only so much loss the market can eat before it craps itself.

If you were a time traveller, how much money do you think you could make by trading derivatives? Do you think you could make $20 trillion? You know the future prices after all... But no, you couldn't. There isn't enough money out there to pay you. So you'd move the markets by blowing them up. Call it the Time-travelling WSB Autist Paradox.

If you had a bucket with a hole in the bottom, even if you poured an infinite amount of water into it, it would never be full. Because there's a LIQUIDITY SINK, just like there is one in the markets.
And that, my mouth-breathing friends, is the reason why FED BRRR cannot be infinite. Or alternatively, "STONKS MUST GO BOTH UP AND DOWN".

MYTH 2 - YOU CAN'T TIME THE MARKET

On Jan 14, 2020, I predicted this: Assuming that corona doesn't become a problem, "AAPL: Jan 28 $328.3, Jan 31 $316.5, April 1 $365.7, May 1 $386, July 1 $429 December 31 $200."
Now take a look at the AAPL chart in January. After earnings AAPL peaked at $327.85. On 1/31, after the 1st hour of trading, when the big boys make moves, it was at $315.63. Closed 1/31 at $309.51. Ya think I pulled this one out of my ass too?
Yes you can time it. Flows, motherfucker, flows. Money flow moves everything. And these days, we have a whole lot of RETARDED FLOW. Can't even call it dumb flow, because it literally doesn't think. Stuff like:

  • ETF flows. If MSFT goes up and AAPL goes down, part of that flow is going to move from AAPL to MSFT. Even if MSFT flash-crashes up to $1000, the ETF will still "buy". Because it's passive.
  • Option settlement flows. Once options expire, money is going to flow from one side to another, and that my friends is accurately predictable from the data.
  • Index rebalancing flows
  • Buyback flows
  • 401k passive flows
  • Carry trade flows
  • Tax day flows
  • Flows of people front-running the flows

And many many others. Spot the flow, and you get an edge. How could I predict where AAPL would be after earnings within 50 cents and then reverse down to $316 2 days later? FLOWS MOTHERFUCKER FLOWS. The market was so quiet in that period, that is was possible to precisely figure out where it ended up. Why the dump after? Well, AAPL earnings (The 8-K) come out on a Wednesday. The next morning, after market opens the 10-Q comes out. And that 10-Q contains a very important nugget of information: the latest number of outstanding shares. But AAPL buybacks are regular as fuck. You can predict the outstanding shares before the market gets the 10-Q. And that gives you EDGE. Which leads to

MYTH 3 - BUYBACKS DON'T MATTER

Are you one of those mouthbreathers that parrots the phrase "buybacks are just a tax-efficient way to return capital to shareholders"? Well sit the fuck down, I have news for you. First bit of news, you're dumb as shit. Second bit:

On 1/28, AAPL's market cap is closing_price x free_float_outstanding_shares. But that's not the REAL MARKET CAP. Because the number of outstanding shares is OLD AS FUCK. When the latest number comes out, the market cap changes instantly. And ETFs start moving, and hedges start being changed, and so on.

"But ETFs won't change the number of shares they hold, they will still hold the same % of AAPL in the index" - random_wsb_autist

Oh my fucking god you're dumb as fuck. FLOWS change. And the next day, when TQQQ comes by and puts its massive $18b dong on the table, the market will hedge that differently. And THAT CAN BE PREDICTED. That's why AAPL was exactly at $316 1 hour after the market opened on 1/31.

So, what can you use to spot moves? Let me show you:
Market topped on 2/19. Here’s SPY. I even marked interesting dates for you with vertical lines.

https://preview.redd.it/7agm171eh5151.png?width=3713&format=png&auto=webp&s=d94b90dcd634c8dc688925585bf0a02c3299f71b
Nobody could have seen it coming, right? WRONG AGAIN. Here:

https://preview.redd.it/i1kdp3cgh5151.png?width=3713&format=png&auto=webp&s=7a1e086e9217846547efd3b6c5249f4a7ebe6d9e
In fact, JPYUSD gave you two whole days to see it. Those are NOT normal JPYUSD moves. But hey maybe it’s just a fluke? Wrong again.

https://preview.redd.it/fsyhenckh5151.png?width=3693&format=png&auto=webp&s=03200e10b008257ae15d40b474c4cf4d8c23670f
Forex showed you that all over the place. Why? FLOWS MOTHERFUCKER FLOWS. When everything moves like that, it means the market needs CASH. It doesn’t matter why, but remember people pulling cash out of ATMs all over the world? Companies drawing massive revolvers? Just understand what this flow means.
The reversal:
https://preview.redd.it/4xe97l0oh5151.png?width=1336&format=png&auto=webp&s=07aaa93f6b1d8f542101e40e431edccbc109918f
https://preview.redd.it/v6i0pdmoh5151.png?width=1338&format=png&auto=webp&s=74d5589961db2f978d4d582e6d7c58a85f6305f9
But it wasn’t just forex. Gold showed it to you as well. Bonds showed it to you as well.
https://preview.redd.it/40j53u8th5151.png?width=3711&format=png&auto=webp&s=fe39ab51321d0f98149d33e33253e69f96c48e23
Even god damn buttcoin showed it to you.
https://preview.redd.it/43lvafhvh5151.png?width=3705&format=png&auto=webp&s=1ef53283cbc0fb97f71c1ba935c0bd747809636e
And they all did it for 2 days before the move hit equities.

Chapter V. LIQUIDITY NUKE INBOUND
You see all these bankruptcies that happened so far, and all the ones that are going to follow? Do you think that’s just dogshit companies and it won’t have major effects on anything outside them? WRONG.
Because there’s a lot of leveraged instruments on top of those equities. When the stock goes to 0, all those outstanding puts across all expirations get instantly paid.
Understand that Feb-March was a liquidity MOAB. But this will end with a liquidity nuke.
Here’s just HTZ for example: $239,763,550 in outstanding puts. Just on a single dogshit small-cap company (this thing was like $400m mkt. cap last week).
And that’s just the options on the equity. There’s also instruments on etfs that hold HTZ, on the bonds, on the ETFs that hold their bonds, swaps, warrants, whatever. It’s a massive pile of leverage.
Then there’s also the ripple effects. Were you holding a lot of HTZ in your brokerage margin account? Well guess what big boi, when that gaps to 0 you get a margin call, and then you become a liquidity drain. Holding long calls? 0. Bonds 0. DOG SHIT!
And the market instantly goes from holding $x in assets (HTZ equity / bonds / calls) to holding many multiples of x in LIABILITIES (puts gone wrong, margin loans, derivatives books, revolvers, all that crap). And it doesn’t matter if the Fed buys crap like HTZ bonds. You short them some. Because when it hits 0, it’s no longer about supply and demand. You get paid full price, straight from Jerome’s printer. Is the Fed going to buy every blown up derivative too? Because that's what they'd have to do.
Think of liquidity as a car. The faster it goes, the harder it becomes to go even faster. At some point, you can only go faster by driving off a cliff. THE SQUEEZE. But you stop instantly when you hit the ground eventually. And that’s what shit’s doing all over the place right now.
Rewatch: https://www.youtube.com/watch?v=3hG4X5iTK8M
And just like that fucker, “I’m standing in front of a burning house, and I’m offering you fire insurance on it.”

Don’t baghold!
Now is not the time to baghold junk. Take your cash. Not the time to buy cheap crap. You don’t buy Hertz. You don’t buy USO. You don’t buy airlines, or cruises, or GE, or motherfucking Disney. And if you have it, dump that shit.
And the other dogshit that’s at ATH, congrats you’re in the green. Now you take your profits and fucking dump that shit. I’m talking shit like garbage SaaS, app shit, AI shit, etc. Garbage like MDB, OKTA, SNAP, TWLO, ZM, CHGG etc.
And you dump those garbage ass leveraged ETFs. SQQQ, TQQQ, whatever, they’re all dogshit now.
The leverage MUST unwind. And once that’s done, some of you will no longer be among us if you don’t listen. A lot of leveraged ETFs will be gone. Even some non-leveraged ETFs will be gone. Some brokers will be gone, some market makers will be gone, hell maybe even some big bank has to go under. I can’t know which ones will go poof, but I can guarantee you that some will. Another reason to diversify your shit. There’s a reason papa Warrant Buffet dumped his bags, don’t think you’re smarter than him. He may be senile, but he’s still a snake.
And once the unwind is done, THEN you buy whatever cheap dogshit’s still standing.
Got it? Good.
You feel ready to play yet? Alright, so you catch a move. Or I post a move and you wanna play it. You put on a small position. When it’s going your way, YOU POUND DAT SHIT. Still going? Well RUSH B CYKA BLYAT AND PLANT THE GOD DAMN 3/20 $30p BOMB.

Chapter VI - The mouthbreather-proof play - THE AKIMBO
Still a dumbass that can’t make a play? Still want to go long? Well then, I got a dumbass-proof trade for you. I present to you THE AKIMBO:

STEP 1. You play this full blast. You need some real Russian hardbass to get you in the right mood for trading, cyka.
STEP 2. Split your play money in 3. Remember to keep extra bankroll for POUNDING THAT SHIT.
STEP 3. Use 1/3 of your cash to buy SQQQ 9/18 $5p, pay $0.05. Not more than $0.10.
STEP 4. Use 1/3 of your cash to buy TQQQ 9/18 $20p, pay around $0.45. Alternatively, if you’re feeling adventurous, 7/17 $35p’s for around $0.5.
STEP 5. Use 1/3 of your cash to buy VIX PUT SPREADS 9/15 $21/$20 spread for around $0.15, no more than $0.25. That is, you BUY the 21p and SELL the 20p. Only using Robinhood and don’t have the VIX? What did I just tell you? Well fine, use UVXY then. Just make sure you don’t overpay.


Chapter VII - Quick hints for non-mouthbreathers
Quick tips, cuz apparently I'm out of space, there's a 40k character limit on reddit posts. Who knew?

  1. Proshares is dogshit. If you don't understand the point in my last post, do this: download https://accounts.profunds.com/etfdata/ByFund/SQQQ-historical_nav.csv and https://accounts.profunds.com/etfdata/ByFund/SQQQ-psdlyhld.csv. Easier to see than with TQQQ. AUM: 1,174,940,072. Add up the value of all the t-bills = 1,686,478,417.49 and "Net other assets / cash". It should equal the AUM, but you get 2,861,340,576. Why? Because that line should read: NET CASH = -$511,538,344.85
  2. Major index rebalancing June 22.
  3. Watch the violent forex moves.
  4. 6/25 will be red. Don't ask, play a spread, bag a 2x-er.
  5. 6/19 will be red.
  6. Not settled yet, but a good chance 5/28 is red.
  7. Front run the rebalance. Front-run the front-runners of the rebalance too. TQQQ puts.
  8. Major retard flow in financials yesterday. Downward pressure now. GS 180 next weeks looks good.
  9. Buy leaps puts on dogshit bond ETFs (check holdings for dogshit)
  10. Buy TLT 1/15/2021 $85ps for cheap, sell over $1 when the Fed stops the ass rape, rinse and repeat
  11. TQQQ flow looks good:
https://preview.redd.it/untvykuxea151.jpg?width=750&format=pjpg&auto=webp&s=a0a38c0acb088ebff689d043e48466eb76d38e2f

Good luck. Dr. Retard TQQQ Burry out.
submitted by dlkdev to wallstreetbets [link] [comments]

How to not get ruined with Options - Part 4a of 4 - Finally, the TRADES!

Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)
---
In parts 1 and 2, I explained the basics for options. In parts 3a and 3b I explained simple and more advanced options strategies, but all of this does not help much without concrete examples. These two last posts (4a and 4b) conclude my introduction related to options. I will show some of my key trades, explaining the why, the how, the entries and exits, and potential mitigations in case of losses. Most gave great returns, and I had a few small losses. Overall, in the past few months, I have been lucky to play along with the market, and the high volatility had a positive impact. Hopefully, nothing wsb worthy (although few of them might qualify :)). I wanted to explain the basics first, then show the trades last, as I did not want anyone to try to emulate these without understanding how/why they worked.
First, here are the high-level idioms that drive my investments:
These idioms are pretty straightforward, and should not be too controversial. Overall, I am pretty market neutral, with a bullish tint. And as I explained before, I prefer selling options than buying them. My trades reflect that, and I avoid making trades that could damage my portfolio significantly if the market went up or down significantly. People who get ruined with options do not take this into account and are just gambling.
Other key things about trading in general, and options in particular:
Now the moment we have been waiting for, some of my trades:
The short naked puts or covered calls:
I only do pure covered calls when the market has dropped significantly, and use the recent market conditions as a floor. March dropped quite hard, and I am not convinced that we would reach it again soon, but I still have to prepare for it. That being said, the months of March to June have been really good for covered calls as the market traded up first, then sideways, with high implied volatility. I usually target shares that are solid or did not go up too much, so the March floor is not too far lower than my strike. I usually sell naked puts after a few down days in a row and covered calls after a few up days in a row. And if the market is farther from the floor, I trade safer names when the market goes up, and target high beta when the market dropped significantly.
I am not giving you a full list, but let’s say that it was not hard, and still is, to find good names that return 1-2% per month AFTER accounting for a 15-25% share drop. Yup, you read that right, it does not work in normal markets, but it is the case right now. Even if $WM, $WMT, $INTC, $NNN, $EWW, $DLTR, $COF, $BAC, etc. dropped by around 20%, I would gladly pocket my 1-2% premium, and scoop these at a huge discount. Even if it dropped further, I can continue rolling the puts until the market bounces back. Some of the high beta names include $CCL, $REM, $DIG, $BUD, $JETS, $XOP, etc. For a high beta, I am targeting 3-5-10% or more of premium, but I usually try to offload them when they go up significantly.
But there are few other riskier trades that are worth calling out:
$DKNG - DraftKing: 11.8% in ~3 weeks.
I forgot about the IPO, and got in the game 5 days later. Although, I am not a gambler, and the stock went up already, but I had a feeling that RH fams would jump on it (gamblers beget gamblers), and that would give a floor to the stock. Volatility was high, so selling naked PUTs made sense.
May 7: SELL -1 DKNG 100 15 MAY 20 22.5 PUT @ 1.06
Per contract - Max risk: $2144 - Max profit: $106 (4.9% of max risk)
May 8: SELL -1 DKNG 100 19 JUN 20 22.5 PUT @ 2.15
Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)
As you know the max risk of going to $0 is possible but highly improbable, so RORAC (Return on Risk-Adjusted Capital) is much higher than these 4.9 to 10.5%.
The $1.06 premium was one week before expiration! I sold the MAY and JUNE PUTs at the same time. And the price was at $24 already. If the price dropped, I would continue rolling my PUTs until I am profitable. The price went up, I rolled my MAY PUTs just before earnings (and a day before expiration), to take advantage of the earning volatility, and avoiding expiration day.
May 14: SELL -1 DKNG 100 15 MAY 20/19 JUNE 20 22.5 PUT @ 2.15
Per contract - Max risk: $2035 - Max profit: $215 (10.5% of max risk)
So one week later, I bought back my MAY PUTs for $0.25 (pocketing already 3.7% of the profit) and sold the same JUNE contract as the week before with a better price and an overall premium of $2.15 (same as the week before, despite paying back the $0.25! And the stock was already up in a week. Can you believe that shit? Volatility increase definitely helped. Thanks RH gamblers!).
June 1: BUY +1 DKNG 100 19 JUNE 20 22.5 PUT @ 0.05
After a bit more than 3 weeks of holding, I decided to buy back all my contracts for $0.05 per share, for an overall 11.8% profit on risk. I pretty much reached max profit already, no need to take more risk, with 19 days to go to expiration. FWIW the stock was at $44 by expiration. It was way too much for my taste, with no premium worth the risk of any new trade.
Could I have made more profit buying shares, calls, or synthetic shares? Sure. But there was no guarantee on the direction, timing, or amplitude of the move. Here, I won almost 12% with a high probability of success, even if the stock barely budged or dropped a bit. And since 6/19 expiration, the stock dropped to $33 now. It’s hard to predict when to sell. I want many singles and doubles with few losses, instead of once in a while home runs with many losses in between.
As it dropped for 5 days to $33, I recently sold some PUTs for a $22.5 strike again:
June 29: SELL -1 DKNG 100 21 AUG 20 22.5 PUT @ 1.25
Per contract - Max risk: $2125, max profit: $125 (5.8% of max risk)
Because the PUT was deep OTM, the premium was low. The stock will have to drop by more than 35% for me to start losing money, and I can still roll my PUTs then. That seems a good trade. Wish me luck!
You can see here, that you have to look at your max risk, your max profit for every trade you are getting into, as well as the chance for them to be profitable.
$USO / $DBO / $USL: 12% in 2 months
Here is one that absolutely did not go to plan initially, but I was able to turn it around.
First, the trade that led to the disaster:
April 17: SELL -1 MAY 15 20 4 PUT @ 0.35
Per contract - Max risk: $365 - Max profit: $35 (9.5% of max risk)
Remember that USO split 1:8 on April 29, if you want to look at the numbers. On 4/17, USO was worth $4.20. Oil kept dropping and dropping for weeks and weeks, until that Friday where I decided that it was finally a good time to get into oil (like a bunch of other suckers). The lowest oil price in 40 years, etc. My trade could absorb a 14% loss in USO before I started losing money, so it did not feel too risky, and I could roll the PUTs if needed. USO rolled all their future contracts earlier that week, they were already into May Futures. Yeah, contango was a concern but seemed manageable (or so I thought).
Well, except that on Monday 4/20, oil blew up. What was bad, became an awful day. Oil tanked hard because April futures dropped, and some people paid to get rid of their contracts. Tankers started to get full, too much oil, and not enough space. USO dropped to 3.75, it was still above my break-even point of $3.65, but the volatility spiked, so the value of my short put increased a lot, that was some heavy losses. Why did I go into that trade on Friday, gosh?!?
The volatility was so high, every oil trader was running around like a headless chicken, RH gamblers were taking much heavier losses than mine (because they started buying USO long before me, oil was going to go back up, that was a sure deal! Right?). I decided to wait one more day, to see how the dust would settle. On Tuesday, USO dropped even more because now it started impacting next Month's Future (May). Tuesday was the April Future expiration, so trading was all over the place. USO dropped to $3, well below my break-even point, volatility was still high, my losses were twice as big. There was a strong possibility that May Future expiration would behave the same as April, and the rollover of May Futures to June Futures would end up in a real quagmire due to an even higher contango. USO was not the right tool, I messed up, no way moving forward, even rolling my PUTs are not going to do it, USO will drop faster than the premium I can collect. Get out, get out, get out...
April 21: BUY +1 MAY 15 20 4 PUT @ 1.42
I bought back my short PUT at more than 4 times the premium price. Gulp. That hurts.
Taking a step back, this was an extreme situation and not a normal loss with a stupid long term thesis. And I lost a bit of money jumping at the wrong time. A negative future price is not a common occurrence.
USO was the wrong instrument to profit from oil, it even dropped down to $2.11. And never recovered its value from 4/17 despite oil being higher than that day. I made a mistake, but there must be better instruments that can tackle contango. Enters DBO and USL. DBO has a 6-12 month away contract, so very little impact from contango. USL has the same number of contracts from all months (next month, month after next, etc..., until the 12th month). It is mostly impacted by the contango on the front months (so for 1/12 of the value, or a bit more), but it is not as volatile as USO (USO since changed their composition too, to buy multiple months futures).
Oil blew up, volatility is extremely high, many oil traders (and RH gamblers) got ruined, but oil is bound to go up eventually. The initial trade to sell volatility through selling naked puts, and rolling as needed until oil goes back up, without being killed by the contango still seemed sound with even less risk and better rewards this time around.
April 20: SELL -1 DBO MAY 15 20 6 PUT @ 0.63
Per contract - Max risk: $537 - Max profit: $63 (11.7% of max risk)
April 20: SELL -1 USL MAY 15 20 12 PUT @ 1.05
Per contract - Max risk: $1095 - Max profit: $105 (9.5% of max risk)
April 21: SELL -1 DBO MAY 15 20 5 PUT @ 0.90
Per contract - Max risk: $410 - Max profit: $90 (21.9% of max risk)
April 21: SELL -1 USL MAY 15 20 11 PUT @ 2.25
Per contract - Max risk: $875 - Max profit: $225 (25.7% of max risk)
Notice that I sold the first batch on April 20, as I was still losing money from USO. The volatility spiked, and it was too good to pass. This is a key reason why you should never put all your money on one trade, but only a few percents at most. That way if the things are not going as planned, you don’t lose a ton, and if you can find a more advantageous position, you can double down if you have some dry powder left (but DO NOT overdo it!). It’s all about the proper sizing of trades and overall risk. I sold the 2nd batch when I closed my losing USO trade when oil dropped further and volatility increased even more! 22% to 26% potential profit on ATM puts? Just wow!
The plan for the exit is to close for $0.05 or roll to the next month for further profit. I sized my DBO and USL trades a bit more than my USO trades, so I would make up for the heavy losses. And I did roll in May and closed the June contracts for $0.05 both DBO and USL. Their prices both creeped up slowly, and the volatility dropped to something normal. DBO and USL trades were extremely profitable, and despite the heavy USO losses, the overall profit was still quite good.
Today, the price of DBO and USL is a bit high for a good profit/risk profile with naked short PUTs, however, we have some other strategies.
The verticals:
Most of my bread and butter is on selling naked puts, and/or selling covered calls, but sometimes I dabble in verticals. Here are some examples:
$UBER: 13.2% in a month
This is an example of waiting for the right time before you trade. End of May, the market went up by 36% since the bottom, it started to be over-extended. Although SPY could continue higher, it was time to think about a reversion to the mean. I needed to find a share that would continue to struggle for a long time, even as Coronavirus was lingering. I hear the news that LYFT is taking over UBER’s market and that UBER is still struggling, with potential layoffs. That seems a good candidate, and UBER has a good day at $36, let’s see what we can make of the numbers.
May 29: SELL -1 UBER JUL 17 20 42/45 CALL @ 0.40
Per contract - Max risk: $260 - Max profit: $40 (15.3% of max risk)
So I keep my $40 profit per contract as long as UBER is under $42 at the July 17 expiration. I did not pick $42 randomly, this was actually above the top that UBER reached in February. So the struggling UBER would need to go over its pre-corona numbers for me to lose money. Unlike naked puts / covered calls, where you can just be patient and roll over and over, sizing for verticals is important, the potential for full losses is a real possibility, and will happen. Sure, you could try to roll your short call and hope that the stock price will drop, but you may just end up amplifying your losses. If you really want to do that and continue with the risk, it’s easier to roll your short puts in a bull spread as the market will eventually go up.
In any case, UBER continued to go up a bit, struggled at $38 (so not even close to my vertical), then reversed. I put an order to close my position at $0.05, as there was almost a month left until expiration, and I already almost reached my max profit.
June 22: BUY +1 UBER JUL 17 20 42/45 CALL @ 0.05
$SPY: Various
I also have been using SPY verticals directly as the market bounced back like crazy. I earned more than I lost, and because I am overall positive delta, even if I lose a bit of money on my edges, I am still very profitable.
For shit and giggles, one trade to show how you can take advantage of the high volatility:
June 5: SELL -1 SPY JUL 17 20 330/333 CALL @ 0.91
Per contract - Max risk: $209 - Max profit: $91 (43.5% of max risk)
June 26: BUY +1 SPY JUL 17 20 330/333 CALL @ 0.08
Profit of $83 per contract (39.7% of max risk)
June 5, SPY was $320, 45% higher than the bottom 2½ months ago, and I had hard time believing that after the market really thought that SPY would go back to pre-corona level with still phase 1 not over, no clear treatment, vaccine many months away, and potential for a 2nd wave (News flash: It’s happening before even the phase1 finished). Trees don’t grow to the sky. Again being, overall positive delta, even if this vertical had a loss, I would still profit from SPY going over my short calls. As I said earlier, I am a reversion to the mean guy, with a bullish tint. I can’t stand losing money when the market is going up (because the market could always continue going back up).
Here is another trade, not so good this time, so I don’t paint an overly rosy picture:
May 12: SELL -1 SPY JUN 19 20 305/308 CALL @ 0.79
Per contract - Max risk: $221 - Max profit: $79 (35.7% of max risk)
June 18: BUY +1 SPY JUN 19 20 305/308 CALL @ 2.48
Ouch - loss of $169 per contract (76.4% of max risk)
SPY blew way past my short and long calls. It dropped a bit before expiration, so I was able to avoid a full loss.
My verticals above are bearish spreads when I think the market will revert to the mean. But here is an example of a bullish spread:
April 6: SELL -1 SPY DEC 16 22 200/180 CALL @ 4.85
Per contract - Max risk: $1515 - Max profit: $485 (32% of max risk)
May 12: BUY +1 SPY DEC 16 22 200/180 CALL @ 3.95
Profit of $90 per contract (5.9% of max risk)
I sold the vertical a couple of weeks after the bottom, with blood in the street, even some of mine, volatility was still very high. With this trade, I would have lost money if SPY was less than $195 in more than 2 years. Heh, I could even roll the puts if the short put was still ITM in 2 years. The only reason I bought back and closed the trade was that it was using a non-negligible buying power for the next 2 years. That is a long time to earn the full $485 per contract. Have to watch out for opportunity costs too in some other trades.
The hedge:
Here is another construct that I found interesting. Again, taking advantage of the current high volatility. Back in early June, as the market bounced to $320, I wanted another bearish hedge, but this time more efficient than just selling a vertical. I wanted a good protection for my long delta, but that’s not free. And I don’t like to lose money if the hedge is not used, so what to do?
June 5: SELL -1 SPY NOV 20 20 370/380 CALL @ 0.57
Per contract - Max risk: $943 - Max profit: $57 (6% of max risk)
I picked November expiration because I expect that we will still be in the middle of the Coronavirus quagmire. $370 is almost 9% higher than the SPY top. I doubt that the economy will be back full speed by then. Again, I am positive delta, so if SPY somehow reaches $370, I may have to forgo all my overall gains between $370 and $380, but I won’t lose money overall. And then I bought this bearish vertical:
June 5: BUY +1 SPY NOV 20 20 245/250 PUT @ 0.57
Per contract - Max risk: $57 - Max profit: $443 (777% of max risk)
Here, I used the money from my short bearish CALL spread to buy a long bearish PUT spread. As long as SPY does not end above $370 by expiration, my hedge is free. If the market drops significantly my bearish PUT spread will be very profitable.

Once again, it's a long post, so that's all for today.
In the second part of this post, I will show how I used calendars to make some very profitable trades.
I will also explain a more advanced trade that I used to hedge against big losses in a normal market (setup in low volatility), so you can handle more gracefully bear markets ahead of time, and not sell in panic. You can’t use it now, but it could be helpful next time everything is great, and the market is getting overheated a bit.

And finally, remember to always size your trades properly. Do not make one trade create a big loss in your portfolio. Do not overextend! It's way too easy to be over-leveraged with options, take the full risk into consideration.
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Post 1: Basics: CALL, PUT, exercise, ITM, ATM, OTM
Post 2: Basics: Buying and Selling, the greeks
Post 3a: Simple Strategies
Post 3b: Advanced Strategies
Post 4a: Example of trades (short puts, covered calls, and verticals)
Post 4b: Example of trades (calendars and hedges)
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Spread betting is a derivative strategy, in which participants do not own the underlying asset they bet on, such as a stock or commodity. Rather, spread bettors simply speculate on whether the Spread betting explained Spread betting simply allows you to speculate on whether the price of an asset will rise or fall. You can gamble on everything from shares and commodities to stock market Spread betting is essentially betting on an outcome. It is used for events such as sports, the stock market, house prices, the FTSE 100 etc. However unlike normal betting when you either win or lose, spread betting allows you to win and lose small and big amounts. Unlike traditional share dealing, if you believe a market will fall in value, with spread betting you can sell a market and profit from the falling prices. When you open a trade, click sell, this is known as 'going short'. For example, Tesco is trading at 229. Spread betting (sometimes referred to as spread trading) is a way of trading the financial markets without ever having to purchase stocks or shares. Traditional investment in shares involved calling up your stock broker or opening up an online share dealing account and buying x number of shares at a certain price.

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How does leverage work in the financial markets?

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