I was hopping around the city meeting with bank deriv sales desks. Routine relationship maintenance.
(late to every meeting since I planned poorly and you can't cross 5th ave during St Patty's parade)
Anyway...
That evening I was at dinner as a client. As I went to the bathroom I checked my phone and my family chat was blowing up.
My sister just had a baby.
I hadn't told my east coast fam I was in NYC bc it was a quick biz trip.
I called my mom in NJ and stunned her with the knowledge that I was an hour away in NYC.
Anyway, I excused myself from dinner, hopped on a bus to my childhood house in Hazlet, borrowed my mom's car and drove down to Jersey Shore Medical Center.
It was close to midnight
When I walked into the hospital room I'll never forget my sister's look of 'what are you doing here?'
I got to meet my new nephew, spent an hour chatting with my sis and her husband, and made it back to NYC with enough time to grab my bags and get back to JFK.
Anyway, St Patrick's Day has taken new meaning since then in my mind.
Happy 5th birthday to my nephew!
(My second son was born 6 weeks later. Both of my sons are matched in age with my sister's boys which is a really fun dynamic.)
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We are watching people put a price on their reputations in realtime.
Their bet is they will make so much money they won't need them.
Here's the thing. I've seen this many times. And it will probably work and be fine.
But as I'm struggling to teach my 7 yr old these days, it's what you do when nobody is looking. Fear of repercussions is the lowest bar.
This also implies you should not worry if people get what is coming to them. That can be the thought of someone who abstains bc they fear repercussions themselves.
It will sap your energy to concern yourself. Just protect yourself and others who you can protect.
An example of thinking about wanting to be long options where the stock ain't going.
In my PA I might consider stock replacement. Not ITM calls though. OTM calls.
Why?
The first thing most might think is "steep upside slope"
That's not exactly what I'm thinking.
US large cap is expensive by every measure. Fine. Well Meb Faber said Japan went to 90 p/e. The market could 2 to 3x from here on flat earnings. Falling behind on that would suck. Not acceptable. Wealth effect would mean I could never afford a house in that world.
Still...
That's not really the driver of the trade expression. It's that given the valuation I'm ok missing a 10% rally say but if the market rolls over there's my actual win condition.
Not being overly exposed to the sell-off (I know stonks only go up)
A thread about directional edge vs carry based on a convo I had with a younger trader.
His strategy was to sell options when IV was in the 100th percentile. What are some problems with this?
The most obvious is that 100th percentile depends on your lookback window and the relevance of that window is I don't know, arbitrary. The historical distribution of IV does not need to have any relevance with respect to qualitative information you have today. (Umm, GME).
Here's another issue.
Any day when vol goes up after a 100th percentile IV day is just another 100th percentile IV day.
The next day given, that you just hit 100th percentile yesterday, just doesn't care that yesterday was a "top" compared to the days that preceded it.
Watching finance/tech moguls who have ridden govt-sponsored near zero cost of capital to multi-gen wealth not answer the door when the govt comes back around looking for a wealth tax rebate
Don't get me wrong it's a bad idea...but strictly for practicality reasons. Not for some ethical or other made up incentive theory. We haven't cared about sht like that since GS was made whole on AIG CDS, entrenching TBTF, and favoring monetary over fiscal until a pandemic hit.
Next time the govt buys assets to stimulate the economy it should also buy a lookback option from the asset sellers. Then we can say "look you knew the rules before you took the money". They still would have signed up bc people love to sell options too cheap...