During moments of market stress, it’s normal to have clients reach out and ask “what are your thoughts”. One client reached out last week during the selloff and was surprised to hear me have a bullish stance while the market was getting sold off.
It’s important to have your own take based on your own data. Headlines can alter sentiment very fast and smart money doesn’t operate on the headlines that are fed to the fishes. That’s not how trading works.
The client responded jokingly, “you guys are supposed to be our vol guys”
That’s the other problem with asset management…. everyone is trying to push their own book & agenda.
If you are an allocator and you have a vol manager that always claims the sky is falling,
that person is pushing their agenda or is way out of line with what is really going on. There is no alpha in that.
If that’s the case there’s no need to pay someone to manage money for you to put on a constant trade structure (aka: long SPX 10 delta put).
The alpha comes from the manager’s expertise in their ability to take risk. In some way shape or form it will boil down to that.
If you are a family office/ allocator/ accredited investor, beware of the sales guys that push a theme without a holistic understanding.
If the manager is not delivering alpha, you don’t need to pay someone 2 and 20 to click buy every month on some vanilla trade structure. The manager should be able to remove his stance, view what the environment is saying and make decisions on that.
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What this list will do is mold your mentality to become an overall better trader
It will help you zone in on the psychological aspect of the game
Highlighting the emphasis of supply & demand imbalances, while creating asymmetrical payout structures and becoming a risk freak
These skill sets can be applied to any market & asset class. The dynamics of a market remain the same regardless of the product type you are trading. Doesn’t matter if it is 1M Var swaps or front row tickets to a yankee game.
As we grow, you guys continue to take an interest in myself and the team at Ambrus. I just wanted to say that I’m very grateful that you guys have such kind things to say. Im glad to be some kind of value add with the commentary in the vol space and trading world.
I get a lot of people mentioning me/ commenting/ DM’ing etc. I often don’t get the opportunity to read all of it. If I did, I would probably be out of a job due to lack of productivity lol
I pride myself in being a dude who is authentic as can be. I was raised a certain way… if somebody speaks to you, you answer them.
Basic mannerism and respect to everyone in a uniform way. There’s people on here who are mothers/ fathers/ grandparents etc.
It’s weird, but I really can’t explain the love I have for this game. The money that comes from trading is certainly rewarding but there is an internal driver that means something. You could pay me more money to do something else and I just wouldn’t be able to do it.
The first time I realized that I was actually a consistently profitable trader, it was a feeling I couldn’t explain. I looked at the P&L reports and realized it was 9 months straight of profits with solid drawdown control and large sample size (lots of trades).
It was like “damn I could really do this”. From that time I traded well, made mistakes and grew from them. All which helped mold me. So much time and love invested in this craft, I couldn’t even imagine leaving that feeling.
Interestingly enough, the largest vol events did not come from a cheap smile or a rich smile. The smile always was in an area that signified "not too rich" "not too cheap" on a historical lookback. Why is that ?
Here's the reality, the largest blowups come from two-way price action, not directly from one way flow. What the heck does this mean?
Lets take cov-19 for example. Positioning on the street was one sided as there were a ton of hidden basis risk with vol sellers.
When I was a kid trying to get a gig on Wall Street a lot of firms pushed me to the side. But there was one firm that really believed in me, encouraged me and played a big role in my development (even though I never worked there).
This firm is First New York. I am fairly familiar with the culture and the type of traders they push out. Lots of core solid cold blooded killers such as @moreproteinbars and others.
But there was one trader’s story that just always stood out to me. If you guys ever read the last Market Wizards book, the story of Jimmy Balodimas is an extremely unique one.
Balodimas was a trader at FNY who was profitable for years trading an extremely difficult strategy.
”I love being long convexity but it would be better if it came cheaper. We are left trying to be creative using the vol surface or relative value relationships where we can”
Bingo !
The time to be long outright vol are on those days where vol of vol is getting destroyed and nobody wants to touch it. When you are faced with these environments (rising vol) it becomes much more difficult to structure things with value.