If the expiration of one asset is 8am and another asset is noon and each has different exercise cutoff times do you know what vols you are relative vol trading?
If one name has a known event coming do you know what ex-event vol you are trading?
What happens to implied correlation measures during earnings season? They break if you don't normalize.
Your career goal should not be to know how to do this. This is brain damage in relatively small markets.
When I say relatively small I mean take vol opportunities market and cut SIG, CitSec, and Jane combined market share.
Pro tip: if you are in it for money, find a way to clip a coupon on beta instead
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None of this should be attempted at home unless you listened to @darjohn25 with Corey and thought "yea, I could do that"
it's more natural to use vol-informed ideas to structure directional option trades (if you dig thru the vol wiki there's plenty on how to think about this)
Banks and market makers get short say an 80%-60% put spread every year due to the annual Hacienda hedge. If the market drops, vol beta is strong...but what if the market trades below that 80% strike...
Now the hedgers are short an ITM puts and long an OTM put. In other words, they went from being short a PS to being long skew on risk reversal. The inventory causes the call skew to firm, and the vol beta to decline to the downside as dynamic hedgers are no longer stressed lower
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