Kudos to MMs

Quote from nitro:

Right now you are catching nickles and dimes falling from the sky. When that turns into an anvil falling from the sky you have to catch, you will give back all the nickles and dimes, and there may be a crater where you stood.
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Boy, I knew that was coming. Which is exactly why I posted about the study showing that fed futures have been wrong(in easing cycles) ever since they were allowed to be traded, check the pms

There is a historical premium to being long, not to mention all the subtle facts I listed in the past that public markets have a hard time pricing(because they are unusual)
-Fed is using unusual and exigent authority till Jul 2010, unusual and exigent means things are bad
-It makes no sense whatsoever to buy mortgages(buying happens till late Q1 2010) and hike rates
-There was roughly a 6 month delay when the fed removed 'considerable period' till they hiked. This time it havent even happened, and this assumes there is no difference between the words considerable and extended, which for a language oriented agency like the fed its a bad assumption(that is likely to mean 9 month or more)

Being long 2010 ZQ is like writing overpriced insurance
 
To show my point look at May 2010 ZQ, even IF you are right and the fed hikes once(two months after ending a massive mortgage buying program which is a downright laughlable proposition), I lose...4bps, if I'm correct I make 30bps
If they hike twice, you lose 30bps. This stuff is completly mispriced for anyone who have read the Fed's mandate and studied how it reacts to inflation and employment data
 
"FV" ~928

"FV" has been skyrocketing higher recently. Annoying when you have a bearish position on. Fortunately, it is so out of whack that there is plenty of room for edge.
 
Bought ES @ 1079.50 (and some SPY for residual risk) to go delta neutral on the BWB (broken wing butterfly). I don't make much money here to either side until I take this off, or a big move to the downside occurs. I am protecting decent gains.

As a benefit, I can do some gamma and vomma scalping until I think it becomes more directional. I need to keep up with theta.
 
Quote from nitro:

Bought ES @ 1079.50 (and some SPY for residual risk) to go delta neutral on the BWB (broken wing butterfly). I don't make much money here to either side until I take this off, or a big move to the downside occurs. I am protecting decent gains.

As a benefit, I can do some gamma and vomma scalping until I think it becomes more directional. I need to keep up with theta.
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My timing on this was nearly perfectly atrocious. A few more minutes and I would have left the short bias on. Oh well.

I am a bit surprised by the market today actually. I am not making any money today even though the options clearly have a short bias. This is as a result of the long ES getting me delta neutral this morning. I am going to leave it on and see what happens the next couple of days. If my intuition is this far off, then something fundamental may have changed.
 
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