Why Is The Obvious Not So Obvious?

M4-1
I will share text with FV, but all past learning has to go to storage room as I am telling him/her, too much clutter confuse the view.
 
M4-1 said:
VO..i think FV needs something !

VO has file..make FV smile
it one of kind..to open mind
not like the most..with full of boast
the truth so real..will make you squeal

so ask VO..for him to show
and keep it quiet..as it not shite
when read it keep..your mind so deep
do think of say.. what's in essay :)

you see FV..all not what be
for fools galore..do naught but roar
the facts are true..for me and you
so open mind..be one of kind !!!!

M3
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very much appreciated - thank you
 
fairvalue said:
when I write down "agreed" it means for me that I agree with the conclusions as they sound coherent to me:
  • Agreed on plebs at the options market (first account I blew up 20 years ago =)
    • market maker has to cover his ass, while he is obliged to write options
    • he can't by an option for coverage, as I understood it, because the liquidity in the option market is too low
    • instead he covers his postion in futures market, because there he can find enough liquidity to do so#
  • The Open Interest Put/Call ratio of the Option Market
    • as we learned, these postions are not closed, they are open
    • as an assumption, in that option market, there are more option buyer then underwriter
    • so, in that theory, if the option contract is open it has to be covered by the Market Maker to save his position - to keep it simple: plebs go Long (Call/Put) and the Market Maker goes Short (Put/Call)
    • So the Open Interest consits of Puts and Calls; the Market Maker has to cover these positions - but how exactly:
      "To cover the risk of a short call position, at any time prior to the options expiration, a trader can buy a futures contract to deliver to the call owner if the short call is exercised. Owning the futures contract to deliver into the call means that the assignment risk is covered; hence the phrase covered call."
    • That means, in this situation, the Money Maker buys 2 times more Puts at the Future Market which is SELLING futures in releation to BUYING futures to cover his Call underwriting.
  • Above it is stated, that the Money Makers try to let the price be stable, that they won't get bitten by a drop in prices. Why don't they just cover on the futures market? Isn't there enough liquidity? Do they wait for an increase in price to cover these Puts?
questions about questions ...
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never try to explain to someone what you think they should be thinking..as it is a futile effort

the books must be balanced..as with any business..to get an idea of where the mm's are most exposed..then i "used" to look at the strikes with the highest OI for the nearest expiration..back then it was SP 500 options..but now..i think..but not really sure as it really doesn't matter in relation to how i now trade..i would imagine it is all about ES options..but a quick math will tell by using the multiplier for SP 500 options

anyway..the jist is this..the mm's will try to keep ES futures price near the expiry that will balance their books with the most favourable outcome..they can't make money on every trade they must honor..but they don't have to..that is what market making is all about..is it not..

you might have seen pics of traders at nyse holding their head in their 2 hands..this only happens during black swan events..as the surge in money is huge..and at times like that no one can control anything..so balancing the books becomes impossible..especially if too much risk is taken on..

if you look at options prices during high volatility the spreads can be huge..as the mm's are not going to risk sudden violent moves..there are no mm's in the futures market (ES)..so you will see almost normal spreads shortly after the markets start trading after a halt..

you have to go thru this stuff so that it sticks.. remember Madame de Foix :)
 
you can spend endless hours "analysing" data..but it is a lot easier if you come up with a method..or approach..that enables you to place low risk trades..with a good chance of a making a good bit on your winning trades..and losing a small bit on your losing trades..simple math..but..in order to be able to see things as Montaigne did..you must have a very clear mind in relation to all the crap that most talk about..asses remember :) .. and you must fully understand that the people who mostly trade the ES haven't a clue what they are doing..all they know is that they can get paid very large sums of money for throwing OPM around..

nothing has changed since 1580..but some things have become a lot worse !!

Screenshot_2020-12-10-19-39-36-493_atws.app.png Screenshot_2020-12-10-19-41-58-473_atws.app.png
 
fairvalue said:
very much appreciated - thank you
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if you don't get it first time..then do it again..and again..and again..until it sinks into your thick skull.. because..we are all same when it comes to trading..thick as 10 planks put together..so..as VO said..put aside everything you have learned to date..and even better..delete every stupid file you ever downloaded about trading..as all you need is the one VO sent you..

then.. download MT5 and set up a new demo account with AMP futures..set up with the lowest $ amount possible..add MES contract..note that Dec contract expires on 18 Dec so add Mar 21 contract also..and off you go..delete every other symbol..the only symbol you will ever need to make a bit of money is the MES..and..when you "get it" you will know why :)

M3
 
M4-1 said:
if you don't get it first time..then do it again..and again..and again..until it sinks into your thick skull.. because..we are all same when it comes to trading..thick as 10 planks put together..so..as VO said..put aside everything you have learned to date..and even better..delete every stupid file you ever downloaded about trading..as all you need is the one VO sent you..

then.. download MT5 and set up a new demo account with AMP futures..set up with the lowest $ amount possible..add MES contract..note that Dec contract expires on 18 Dec so add Mar 21 contract also..and off you go..delete every other symbol..the only symbol you will ever need to make a bit of money is the MES..and..when you "get it" you will know why :)

M3
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Why AMP futures? I'm aware of the small spread for MES with AMP but for non US accounts the fee for money transfers is effectively a tax on profits, something like 2% in and then 2% for withdrawls. If all someone wants to do is trade from a chart then any broker's chart should be adequate, metatrader isn't special for discretionary trading. Every broker will have something equivalent to MES, equivalent in the sense that charts and price fluctuations are similar such as SPX cash. UK cfd and spreadbetting brokers will have their version of MES, maybe not quite the same but based on it, probably with slightly bigger spread but not vastly so, but with no fees for money transfers.
 
davroz said:
Why AMP futures? I'm aware of the small spread for MES with AMP but for non US accounts the fee for money transfers is effectively a tax on profits, something like 2% in and then 2% for withdrawls. If all someone wants to do is trade from a chart then any broker's chart should be adequate, metatrader isn't special for discretionary trading. Every broker will have something equivalent to MES, equivalent in the sense that charts and price fluctuations are similar such as SPX cash. UK cfd and spreadbetting brokers will have their version of MES, maybe not quite the same but based on it, probably with slightly bigger spread but not vastly so, but with no fees for money transfers.
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important things first..

forget about CFD brokers like CMC, IG, GFT and the rest..waste of time..if you are going to try and make some money trading the MES..then you need a reliable data feed directly into Globex..and with AMP global that is CQG with MT5..sorted

next..trading tools..this is of course a minefield for those with very little experience..all i can say is after many years of using most of the packages out there..MT5 is ideal for trading the MES..and..if you want some fancy DOM and order setups..they even provide Sterotrader for free use with MT5..but i would advise anyone considering to just use MT5 on it's own

so..the 2% in and out..well..to be honest i can't confirm that as i haven't lodged any money yet..if you look at my recent live trades posted..i have used MT5 mobile and my IB account..on my PC i have MT5 trading linked to my IB account..so..i can trade the ES chart and DOM using AMP CQG data feed..and route my order via API to the MES..try and get this feature with other platforms and it won't be cheap..

when i lodge money into my AMP account it will prob be $500 to start..2% is $10 if that turns out to br tge case..that is 2 x MES points..which is nothing..and..as i won't be withdrawing the $500 until it is doubled..then another 2% won't bother me..do you now get the picture

a lot of times you will find that you are just wasting your time in relation to trading..this is one of them..when i say the small little pleb won't get a better chance to make a few quid than trading the MES with AMP global..well..i have just explained my reasons above !!!
 
M4-1 said:
never try to explain to someone what you think they should be thinking..as it is a futile effort

the books must be balanced..as with any business..to get an idea of where the mm's are most exposed..then i "used" to look at the strikes with the highest OI for the nearest expiration..back then it was SP 500 options..but now..i think..but not really sure as it really doesn't matter in relation to how i now trade..i would imagine it is all about ES options..but a quick math will tell by using the multiplier for SP 500 options

anyway..the jist is this..the mm's will try to keep ES futures price near the expiry that will balance their books with the most favourable outcome..they can't make money on every trade they must honor..but they don't have to..that is what market making is all about..is it not..

you might have seen pics of traders at nyse holding their head in their 2 hands..this only happens during black swan events..as the surge in money is huge..and at times like that no one can control anything..so balancing the books becomes impossible..especially if too much risk is taken on..

if you look at options prices during high volatility the spreads can be huge..as the mm's are not going to risk sudden violent moves..there are no mm's in the futures market (ES)..so you will see almost normal spreads shortly after the markets start trading after a halt..

you have to go thru this stuff so that it sticks.. remember Madame de Foix :)
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your are pusing me to be precise, skeptical and thinking on my own - it get that :) the only way to learn

lets be precise, I learned it - or at least I can follow that concept - as you said, no way to tell other people what they should think or not
 
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