Victor Niederhoffer--- Rare Silver Auction Catalog
- Thread starter marketsurfer
- Start date
honestly, i like rearden, have spent time barefoot with VN in his trading room/home learning and watching him work------ however, i have no idea of his positions etc. i do know that he trades multiple tactics--these people who claim one method have no clue and are mostly basing the claims on press reports, etc.
i also know that there are valid reasons behind every trade and strategy.
once again, i'll ask you, do you think its fair/proper for an exchange to raise the margin several times when they are aware that traders have large open positions who will basically get squeezed out? i have no idea, but it seems fishy to me.
surf
This was written in 1997 February:
BLOWOUT? While nearly three-fourths of his trades make money, Niederhoffer says, the rest can be brutal: When the yen soared in March, 1995, he was down as much as 35%. Some industry pros believe Niederhoffer's contrarian style puts him at risk of a blowout. ''It's a matter of time before something goes wrong,'' warns Frank J. Franiak of Monroe Capital in Chicago. Yet Niederhoffer has shown a knack for rebounding from losses. ''Whatever voodoo he uses, it works,'' marvels Timothy P. Horne, chairman of Watts Industries Inc. and a customer since 1982.
One example happened on Dec. 13. When the Standard & Poor's 500-stock index was moving against his big options position, Niederhoffer dashed out of the trading room in his sprawling Connecticut home. He trotted through hallways crammed floor to ceiling with art, past the indoor squash court, seashell display, and library of classic first editions, out the door and into the chilly drizzle for a jog. ''Sometimes, looking at a screen doesn't help you,'' he explains. Down $14 million when he took his jog, Niederhoffer stayed with the trade and eventually made $5 million. Odd? So what?
By Greg Burns in Weston, Conn.
http://www.businessweek.com/1997/06/b3513104.htm
BLOWOUT? While nearly three-fourths of his trades make money, Niederhoffer says, the rest can be brutal: When the yen soared in March, 1995, he was down as much as 35%. Some industry pros believe Niederhoffer's contrarian style puts him at risk of a blowout. ''It's a matter of time before something goes wrong,'' warns Frank J. Franiak of Monroe Capital in Chicago. Yet Niederhoffer has shown a knack for rebounding from losses. ''Whatever voodoo he uses, it works,'' marvels Timothy P. Horne, chairman of Watts Industries Inc. and a customer since 1982.
One example happened on Dec. 13. When the Standard & Poor's 500-stock index was moving against his big options position, Niederhoffer dashed out of the trading room in his sprawling Connecticut home. He trotted through hallways crammed floor to ceiling with art, past the indoor squash court, seashell display, and library of classic first editions, out the door and into the chilly drizzle for a jog. ''Sometimes, looking at a screen doesn't help you,'' he explains. Down $14 million when he took his jog, Niederhoffer stayed with the trade and eventually made $5 million. Odd? So what?
By Greg Burns in Weston, Conn.
http://www.businessweek.com/1997/06/b3513104.htm
Surf, I don't know what it's like to manage $$billions. Chances are extremely high that I never will.
That said, I do know this much: you NEVER sell bullish premium when VIX levels are at >10-year low extremes. EVER
There is nothing in one's favor on that side of the trade. Extrinsic value is laying flat on the basement floor. You are pocketing pennies versus dollars when volatility inflates, as it surely will one day.
If one is compelled to place a bullish bet selling low vol, better make sure it is a small position that expires <b>sooner than later.</b> The longer you expose your low-vol (low gamma per se) bet into the unknown future places odds of probability that much higher for the market to mean-revert volatility extremes. If even for a little while.
It's not that VN had market direction terribly wrong. He did have totally wrong belief that it would continue to be a straight line higher away from his puke point. Bad bet.
Never sell bearish premium with VIX >30. But... that mistake is somewhat better than selling bullish premium with VIX near freakin' 10. Anyone who understands how gamma and extrinsic expansion both work clearly understands those fundamental basics.
Bottom line, that specific trade may/may not have worked. An untold number of them may have worked before. Eventually, it is an absolute certainty that one fatal market move will come along.
There is never any question about that fact. Walking thru a minefield can make one a temporary hero. But eventually, there does come one last step.
*
My sincere regards as always, surf. Best Holiday Wishes to you and annaland
That said, I do know this much: you NEVER sell bullish premium when VIX levels are at >10-year low extremes. EVER
There is nothing in one's favor on that side of the trade. Extrinsic value is laying flat on the basement floor. You are pocketing pennies versus dollars when volatility inflates, as it surely will one day.
If one is compelled to place a bullish bet selling low vol, better make sure it is a small position that expires <b>sooner than later.</b> The longer you expose your low-vol (low gamma per se) bet into the unknown future places odds of probability that much higher for the market to mean-revert volatility extremes. If even for a little while.
It's not that VN had market direction terribly wrong. He did have totally wrong belief that it would continue to be a straight line higher away from his puke point. Bad bet.
Never sell bearish premium with VIX >30. But... that mistake is somewhat better than selling bullish premium with VIX near freakin' 10. Anyone who understands how gamma and extrinsic expansion both work clearly understands those fundamental basics.
Bottom line, that specific trade may/may not have worked. An untold number of them may have worked before. Eventually, it is an absolute certainty that one fatal market move will come along.
There is never any question about that fact. Walking thru a minefield can make one a temporary hero. But eventually, there does come one last step.
*
My sincere regards as always, surf. Best Holiday Wishes to you and annaland
Quote from austinp:
Surf, I don't know what it's like to manage $$billions. Chances are extremely high that I never will.
*
My sincere regards as always, surf. Best Holiday Wishes to you and annaland
thanks man, merry christmas and happy new year to you!
surf
Multiple tactics with negative correlation??
More to the point..Is it fair what the exchanges did??Not particuarly,but it does prevent traders such as Vic from taking down investors plus the clearing agent,and serves as a defacto risk manager,albeit a bit late..
Its a good point you bring up,but I am sure it is disclosed that the Exchanges have the right to raise the requirements,and as you are fond of saying of sophisticated investors,they are surely aware of the risks.I assume you view Vic as a savvy investor..
Surf,no one in their right mind sells 3.75 billion worth of garbage,long dated OTM S&P puts for 50 basis points.The only reason to do it is that it probably requires close to zero, to little capital,and the returns are exceedingly high on margin capital.Its a fucking Ponzi scheme,or should I say Margin arbitrage.Ild like to see you come up with a better explaination as to why ANYONE would sell the 65% of spot put for apx 65 bps with one year + till expiration.
Do you have any idea what Vics non levered returns would look like,if this was atypical of what he does??
Vic was out for Vic,and nobody other than Vic was out to get Vic
Seriously Surf,Hes a BUM..Get him a job as a bartender
Upcoming New Year, new me.Quote from Pekelo:
So why don't you use the earlier handle, Jimmy Jam?
Although I understand, you had like 4 with JJ, so a change is nice....
1. Intelligent discussion amongst senior traders (um, senior to me
).2. One shot guidance to traders who might need help or have less experience.
3. Posting in the "walk the walk" PnL thread in 2008.
I
1. They changed the rules on Vic in the middle of the game.
2. They changed the rules and played games with Soros also, which is at least one reason why he probably didn't like the way Vic played the game ... because he knew what could go on behind the scenes, and apparently Vic didn't.
3. Everything is on our part is conjecture, until Vic writes the documentary about what led up to his downfall and puts it in print.
I
Were they supposed to wait until he was out of his trade? The exchange is there to protect the exchange and investors not VN.
I was caught in two halted stocks this month. That's like me saying "how dare they not delay the halt until I am out of my position. They must be out to get me."
I am sure Mr. Niederhoffer has no problem accepting responsibility for his actions. You're making him look like a fool making these arguements on his behalf.
translation: Including the miss-naming, I want to bait you and argue with you on a personal level.
***
Um, no thanks, I'm more than done with presenting extensive evidence of Victor Niederhoffer's excellence in all things trading and more to the readers of the thread.
The can draw their own conclusions, I'm sure it won't matter to Vic, and it definitely doesn't matter to me.
Goodbye,
I