Henry Schwartz shared a post
December 24 at 8:02 AM ·
A little Christmas cheer for the option trading community
TradeAlert
December 23 at 8:52 PM ·
A Visit from Volatility (with apologies to Clement Clarke Moore)
'Twas the year vol exploded and all through the street
Option traders were scrambling on every new tweet
The market was tanking, implieds through the roof
Inverse volatility products went poof
Market makers were smiling, the few that were left
While those who had shut down were simply depressed
Exchanges were happy, as volume ran high
Even hedgers felt jolly as downside was nigh
When out in the spu pit arose such a clatter
The fed told the market just what was the matter
A few minor targets were slightly off track
But raising the funds rate would put things right back
The analysts pondered which way would we go
As credit and tariffs made earnings so-so
And after the VIX cash had shown so much fear
The market went higher but cracks did appear
A pullback predicted, the market then fell
And kept grinding lower, a new kind of hell
The buyside was hurting, the prop traders too
Derivative traders knew just what to do
Long call spreads! long put spreads! long combos and collars!
With straddles! and strangles and time-spreads for dollars!
In leaps or in weeklys, a put or a call
An option position can offset the fall
As managers shifted their risk to and fro
The selloff persisted, how low could we go
The bull run was over it seemed safe to say
Would Powell or Buffet or Trump save the day?
Well here’s where the story begins to get sad
Concentrated long-only positions are bad
Trades must be entered with caution and care
Risk must be managed or losses will flair
Risk and reward is the name of the game
Hedging and writing can lessen the pain
We all have our up years and down sometimes too
The key to survival is not to get blue
Those who have traded through thick and through thin
Know that the markets can change on a whim
So stick to your game plan, keep risk limits tight
Happy Holidays to all, may the New Year delight.
December 24 at 8:02 AM ·
A little Christmas cheer for the option trading community
TradeAlert
December 23 at 8:52 PM ·
A Visit from Volatility (with apologies to Clement Clarke Moore)
'Twas the year vol exploded and all through the street
Option traders were scrambling on every new tweet
The market was tanking, implieds through the roof
Inverse volatility products went poof
Market makers were smiling, the few that were left
While those who had shut down were simply depressed
Exchanges were happy, as volume ran high
Even hedgers felt jolly as downside was nigh
When out in the spu pit arose such a clatter
The fed told the market just what was the matter
A few minor targets were slightly off track
But raising the funds rate would put things right back
The analysts pondered which way would we go
As credit and tariffs made earnings so-so
And after the VIX cash had shown so much fear
The market went higher but cracks did appear
A pullback predicted, the market then fell
And kept grinding lower, a new kind of hell
The buyside was hurting, the prop traders too
Derivative traders knew just what to do
Long call spreads! long put spreads! long combos and collars!
With straddles! and strangles and time-spreads for dollars!
In leaps or in weeklys, a put or a call
An option position can offset the fall
As managers shifted their risk to and fro
The selloff persisted, how low could we go
The bull run was over it seemed safe to say
Would Powell or Buffet or Trump save the day?
Well here’s where the story begins to get sad
Concentrated long-only positions are bad
Trades must be entered with caution and care
Risk must be managed or losses will flair
Risk and reward is the name of the game
Hedging and writing can lessen the pain
We all have our up years and down sometimes too
The key to survival is not to get blue
Those who have traded through thick and through thin
Know that the markets can change on a whim
So stick to your game plan, keep risk limits tight
Happy Holidays to all, may the New Year delight.
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