Neiderhoffer

[EPrado]

Quote from marketsurfer:

furhermore, it seems to me, that given a little more time with these alleged positions, VN would have had another fantastic year to add to his impressive record.

there are many questions to ask, just scratching the surface.



surf ace

Yeah.....and if they added another quarter to the game of football, perhaps USC wouldnt have lost to Stanford Saturday night on the final drive of the game.

Gimme a break surf............

 

[Pa(b)st Prime]

Quote from atticus:

I doubt the possibility of going debit was in the powerpoint presentation. Is that really the issue? I doubt the first paragraph read, "how to go debit in two easy steps".

These discussions illustrate the shallowness of Surf and Nitro.

Let's assume that the margin on a pit traded SP future is $25,000. We know that with SPAN margins the deposit on a deep, deep, deep OTM put will be a fraction of the futures requirement. A PRUDENT manager would probably limit himself to 25k for each naked short put. Just in case, eh? However let's do some math. A put 300-400 points OTM with a year to go (pre vol spike) might trade for 10pts. That's $2500 for each contract. Hence if Vic had used PRUDENT position sizing his returns would have been a very un-sexy 10% a year. Ratchet it up 4 notches and voilà you get into the Vic zone of 40%.

Now naturally Surf and Vic believe in mean reversion (except to the upside. Vic is a perma-bull). They think margins are static, volatility is static and that insurance should always be cheap. They think the market owes them 40% a year without risk. Hogwash.

I'm sure Vic's powerpoint went like this: 1.) I lost before because I strayed from my bailiwick, i.e. U.S. index markets. 2.) This time I'll be so far OTM that I'm bullet proof from an overnight black swan event. 3.) We're so far OTM we can make adjustments on a grind lower.

Of course the Texas hedge only added fuel to the fire.

 

[atticus]

Quote from marketsurfer:

ok.

how do you know this is what occurred? and if it did, the reasoning behind it??

thanks,

surf

I sent you additional info in a PM last weekend. I am not going to release it publicly. I think you know what I am referring to.

 

[marketsurfer]

Quote from atticus:

I sent you additional info in a PM last weekend. I am not going to release it publicly. I think you know what I am referring to.

thanks, you have a PM.

surf

 

[marketsurfer]

Quote from Pa(b)st Prime:

These discussions illustrate the shallowness of Surf and Nitro.

Let's assume that the margin on a pit traded SP future is $25,000. We know that with SPAN margins the deposit on a deep, deep, deep OTM put will be a fraction of the futures requirement. A PRUDENT manager would probably limit himself to 25k for each naked short put. Just in case, eh? However let's do some math. A put 300-400 points OTM with a year to go (pre vol spike) might trade for 10pts. That's $2500 for each contract. Hence if Vic had used PRUDENT position sizing his returns would have been a very un-sexy 10% a year. Ratchet it up 4 notches and voilà you get into the Vic zone of 40%.

Now naturally Surf and Vic believe in mean reversion (except to the upside. Vic is a perma-bull). They think margins are static, volatility is static and that insurance should always be cheap. They think the market owes them 40% a year without risk. Hogwash.

I'm sure Vic's powerpoint went like this: 1.) I lost before because I strayed from my bailiwick, i.e. U.S. index markets. 2.) This time I'll be so far OTM that I'm bullet proof from an overnight black swan event. 3.) We're so far OTM we can make adjustments on a grind lower.

Of course the Texas hedge only added fuel to the fire.

thanks, pabst, for a non attack post.

i'll defer to you and atticus for the technical option stuff at this level.

VN is not paid to grind out 10% a year, he is paid to take risk to earn outsized returns--- im sure the investors are aware of the risk. im also sure that VN was aware of the potential risks, perhaps a perfect storm of margin raising and redemptions did matador in?

surf

 

[DT-waw]

Pabst, you won't convince surf with rational, logical arguments. i smell some sort of blind faith in a guru here. even if vic will bankrupt for the 10th time doing exactly the same mistakes i guess surf will still treat him as one of the best managers in the world. reminds me of god existence threads on ET few years ago... faith and science people ways of thinking come from different planets, galactics or i should even say universes

 

[nkhoi]

after a winning streak it's hard to get off the bus

 

[marketsurfer]

Quote from EPrado:

Yeah.....and if they added another quarter to the game of football, perhaps USC wouldnt have lost to Stanford Saturday night on the final drive of the game.

Gimme a break surf............

how about if they changed the rules when your team was already down, then your star quarterback decided he didn't want to play any longer quiting?? so the managers decide to give up, just when you were close to the winning touchdown??

surf

 

[marketsurfer]

Quote from DT-waw:

Pabst, you won't convince surf with rational, logical arguments. i smell some sort of blind faith in a guru here. even if vic will bankrupt for the 10th time doing exactly the same mistakes i guess surf will still treat him as one of the best managers in the world. reminds me of god existence threads on ET few years ago... faith and science people ways of thinking come from different planets, galactics or i should even say universes

not at all DT. yeah, VN is a good friend, but facts are he has earned far more over the years than he has lost this time.

when you embrace risk attempting to earn outsized returns, losses come with the territory. things happen outside of your control. remember, VN is/was swinging a big stick and is paid to seek big returns---hence given little wiggle room in perfect storm type environments-- i postulate that he did the right thing given the circumstances.

 

[atticus]

I went debit to the tune of $2MM in 2000; a peak to trough swing of $9MM, so I am nobody to preach on the subject. It was cash I had accumulated over 15 years. The difference is obviously magnitude, but mostly the fact that not a penny was OPM, although there was some corp-financing. I no longer trade w/o wing-stops, that's what I learned.

I got taken out, pure and simple. Nobody to blame but your's truly.