Trading with Krugman

[Nomad Trader]

Even on a daily close VIX was definitely higher in Feb than Dec. I further recall it topping 60 intraday in Feb - it wasn't called the Vixplosion and the Volocaust for nothing! In my experience it's inevitable that options sellers like yourself get carried out in body bags from time to time. I'm wondering how you plan to handle those situations considering that in a previous post it was suggested that you'd continue selling ever more vol the higher it goes.

Anyway, I wonder if there's somewhere we can see your equity curve and how it unfolds in real-time. I can't seem to find it on your blog nor on the TradingView website?

Cheers.

 

[krugman25]

Even on a daily close VIX was definitely higher in Feb than Dec. I further recall it topping 60 intraday in Feb - it wasn't called the Vixplosion and the Volocaust for nothing! In my experience it's inevitable that options sellers like yourself get carried out in body bags from time to time. I'm wondering how you plan to handle those situations considering that in a previous post it was suggested that you'd continue selling ever more vol the higher it goes.

Anyway, I wonder if there's somewhere we can see your equity curve and how it unfolds in real-time. I can't seem to find it on your blog nor on the TradingView website?

Cheers.

I would expect to have a lower draw down than long stock. If volatility was low prior to the event I would likely not have a position in the market prior.

I handle those situations by not having over-leveraged short premium positions and also by making short premium 1/3 of my overall portfolio plan. I have noticed that there is a lot of focus on the short premium part of my portfolio, but very few have paid attention to the fact that it is only a fraction of my overall trading plan.

(I discuss my trading plan and risk mitigation in detail in my intro video)

My P&L is in every screenshot I post, both per position as well as the overall portfolio. My broker doesn't generate historical P&L data, so I am left with generating a curve from my screenshots at the end of the year.

P&L and transaction records have already been discussed in detail.

 

[Nomad Trader]

"If volatility was low prior to the event I would likely not have a position in the market prior."

That makes no sense and it highlights your focus on IVR. Of course it never seems low but when it goes from 40 to 80 you'll realise pretty quick that you're in trouble and probably wind up covering at the highs due to lack of margin or forced liquidation.

"My broker doesn't generate historical P&L data."

That's a huge red flag for both your broker and the TradingView website. Why do you think it is that they hide the most important chart of all?

Lastly, you need to be aware that options are always and everywhere expensive to trade (no matter if you have a low cost broker or not). Even 4 trades per week could be enough to kill the idea.

Without being able to show a simple real-time equity curve, I'm exiting the thread.

Good luck.

 

[sle]

VIX was higher in December than in February

It really depends on the metric you are using. VIX index went all the way to 50 at the open on the 6th of February, for example.

 

[krugman25]

"If volatility was low prior to the event I would likely not have a position in the market prior."

That makes no sense and it highlights your focus on IVR. Of course it never seems low but when it goes from 40 to 80 you'll realise pretty quick that you're in trouble and probably wind up covering at the highs due to lack of margin or forced liquidation.

"My broker doesn't generate historical P&L data."

That's a huge red flag for both your broker and the TradingView website. Why do you think it is that they hide the most important chart of all?

Lastly, you need to be aware that options are always and everywhere expensive to trade (no matter if you have a low cost broker or not). Even 4 trades per week could be enough to kill the idea.

Without being able to show a simple real-time equity curve, I'm exiting the thread.

Good luck.

IV is mean reverting, so I sell it when it is higher rather than lower. Sell higher, buy lower, Nothing surprising there. I am aware of vega, delta, and gamma risk.

Expanding vol hurts but is manageable if a position isn't oversized.

My broker provides everything I need to file my taxes. Historical P&L isn't one of them. If they someday add it I will write a gleeful post about it.

My expense ratio is around 1-2% (fees, spreads, commissions), but glad to see you ask about it. You would be the first.

You clearly have a lot of pre-canned short premium arguments, but I appreciate your interest in my journal.

 

[krugman25]

It really depends on the metric you are using. VIX index went all the way to 50 at the open on the 6th of February, for example.

What was it the day before? Genuinly curious as I don't remeber.

 

[sle]

What was it the day before? Genuinly curious as I don't remeber.

Monday, it was ~38 at the close (well, depends if you look at cash or futures close, cause it was a SHITSHOW). It was 17 and some pennies at the Friday close.

 

[krugman25]

Monday, it was ~38 at the close (well, depends if you look at cash or futures close, cause it was a SHITSHOW). It was 17 and some pennies at the Friday close.

I do remeber we went from Moonlight Sonata to Ride of the Valkyries, in a short 24 hours.

 

[krugman25]

I do remeber we went from Moonlight Sonata to Ride of the Valkyries, in a short 24 hours.

It was rough but I have had TWTR and SNAP short strangles that have taken me on a much tougher ride. 50% price movements in less than a month, ouch.

Like I mentioned in my intro video, I try not to sell premium in individual stocks. Now you all know why.

 

[sle]

I do remeber we went from Moonlight Sonata to Ride of the Valkyries, in a short 24 hours.

You like classical music?

In my opinion, the early part of the year was like the Griegs Hall of the Mountain King, spooky andante culminating with a crazy crescendo in early Feb.