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11 May, 4 tweets, 1 min read
Look closely Sam's dropping hints.

The best trading/mm firms aren't just capturing spreads. They use market intel to read the table and make big bets. Obsession was finding real EV knowing they had bankroll to bet big when they found it.
It ties back to a lesson I've mentioned before and makes sense when your bankroll is large

if you make money every day you're leaving money on the table

You don't close trades unless your getting edge to do so.
Like Darrin said on @choffstein pod...if you sell a tail you must collect the whole premium otherwise the times you lose multiples mean you def have neg ev

Example below...
So selling a tail at .90 when you think it's worth .85 then buying it back for .10 when you think it's worth .05 is a winner that time but a long term losing strategy

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More from @KrisAbdelmessih

Kris Profile picture
12 May
Reading about scarcity mindset from @NeckarValue and the Horowitz interview

We have a hack at home to help (my wife picked it up from a pod guest maybe) for keeping scarcity mind away:

"You can never be negative when you're in a state of gratitude" ImageImage
I have found the phrase weirdly effective.

I had a scarce mindset until my 30s. My wife is anything but and I literally watched by example why it's so pointless.

(She's experienced scarcity in scary ways that her abundance mindset was almost necessarily adaptive)
Not everyone feels gratitude and it's not my place to judge anyone.

But if you do self-identity as having gratitude and want to break scarcity thinking loops, maybe it will help.

If not, no harm just leave it alone.

You can't be negative when you're in a state of gratitude
Read 4 tweets
Kris Profile picture
10 May
Outstanding.

That's an interview with a trader.

Last 10 minutes advice so 🔥🔥. Real talk.
A few favorite takeaways:

Building sims instead of backtesting as a way to get more samples. Table stakes to get a fingertip feel especially when you don't get the apprentice experience

(btw, doing this gig w/o being an apprentice sounds impossible so huge props to Darrin)
The idea of pricing out financial products to the penny. Darrin called it "back-office" kinda stuff that retail doesn't do. Corey said he does this too.

This is exactly what you do at a mm/arb shop. Giant spreadsheets pricing fair value for financial products. Not optional work
Read 9 tweets
Kris Profile picture
6 May
I remember haggling over some trinket in Khan el-Khalili 16 years ago.

The seller opened at equiv of $50. I negotiated down to $2 and still felt ripped off.

I remember telling the guy off

"You would have let me pay $50 for something you were willing to sell at $2"
It didn't bother me that much (negotiating in my bad Arabic felt like a fun game) but I realized how much I internalized the concept of open outcry and if your bid/offer was inferior to one that was shouted it was technically illegal. Made me appreciate how our markets work.
The reason I remembered the story was a convo I was having at lunch with a friend yesterday. We were discussing compensation. Employers and employees navigate semi-transparent labor markets.

We were discussing a particular strategy.
Read 18 tweets
Kris Profile picture
4 May
Here's a story that starts with Costco and ends with a broader question.

After a recent shopping trip I was telling a friend how good the Kirkland tequila anejo is. I was wondering which spirit brand they laundered the Kirkland name thru.
After some raving about Costco and how you can literally drop $300 there on a casual Friday morning and not feel bad about it my friend shared a story of Costco's buying power.
She was privy to Costco's dealings with the Hidden Valley brand. She told me that years ago Costco in an desire to be more healthy didn't want to sell a product with msg...the magic ingredient in HV Ranch dressing.
Read 8 tweets
Kris Profile picture
3 May
I'm with the octopus. I was thinking of what to write about Lily and honestly the octopus did a better job than I could expressing my feelings.

Every part of what octopus said too.

I've spoken to Lily a bunch offline as well. She is learning, trying, talented and generous.
Go back and read that last post she wrote about things that were said to her.

If for a moment you think being a woman doesn't play into this, I think your high.

I've never been treated even 1% as poorly as she has. And she's consistently nice and humble.
Hating on a 25 year old that isn't even running real money or doing anything except openly sharing her strategy is an especially crap look.

I think the zero-sumness of options has crept into some of your worldviews.

Did you lose by her gaining followers?
Read 8 tweets
Kris Profile picture
16 Apr
Some general thoughts which keep coming up based on questions I get in DMs about option trades.

Novice traders/learners might find them discouraging but I think in the long-run knowing this now will help you plan your learning more efficiently.
There's 3 large categories of using options. Each has a very different starting point.

Be very aware which category your strategy targets.

1. Options as expressions of directional axes
2. Relative value volatility trading
3. Using vol flows to generate directional alpha
1. Options as expressions of directional axes

If this is your strat, then 95% of the work is upstream of your option implementation.

Your fundamental work may uncover a forecasted distribution that disagrees with the option surface.

cont...
Read 16 tweets

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