Options - the next generation - managing butterflies - when good times roll / when bad times come...
πŸ§΅πŸ‘‡
Say you bought a simple balanced butterfly spread on 1/5 that looks like this

Its balanced, and theta neutral
Then 1/6 happened (Partaeeee)
You got a near 30% change in every leg.

What should you do - sell it?
Manage it?
Or do nothing?
I would manage it - you can close out that middle leg buying 2calls back, and open 2 new legs that are MORE than what you paid for the top and bottom leg, cover exchange fees and the position now becomes free.

You would do this only if you got a lot of time left on spread
In this case, you are out to march23, 2 more months to manage it.

If you thought the market move was total bunk, well, there is another way to manage it

(and there is a reason i think market move is bunk - second picture). Spy popped and flopped, but price stayed hi. #WEIRD
Ok -thats all great if sky is blue, sunshine, glitter...but thats not what happens every day - what if market went the other way?
We have the same setup, but now options dropped by 30%+

Well, it it happened in the overnite, nothing we can do.
But this is a major part of WHY YOU ONLY DO SPREADS IN A MARKET LIKE THIS

You are out of pocket 100$

After that 30% drop overnite? Meh.
Look at what happened to butterfly now?

You spent 128.
After 30% drop - now you down $20.
Big woop.

But some defense moves if you want
Remember - we got 2 months to work this thing, looking at whats going on w/ spy, my bet is its going to continue to chop around...
But, defense move
a) just sell the whole spread and be done with it
b) change it to a CREDIT spread from a debit spread.
c) just wait and do nothing
b) change it to a credit spread - ez
Now you have a condor credit spread
these options will bleed, but they CAN go the other way.

You buyback 1 of the 385 and sell 1@379.

With the choppyness of these markets, im really not sure id make any move until i saw a clear direction.
If it were me, id prolly take my gains and run (SELL!) - close the position and wait for another extreme position (like EOD FRI or EOD Thurs) to plot a new entry opposite of market.
Notice the MASSIVE chop in the overnight session.
Its just nuts.
If i were down, id set a stop loss and live with it.
But prolly not change my position.
you got 2 months to work it.

Longer dated options would have been better.

Say june or july - the OP manipulation dont work so good out there...

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More from @frankoz95967943

Dec 21
This is the dxy.

it is not "THE DOLLAR"

DXY is a basket of currencies heavily weighted and skewed towards the EURO.

This is a vix and currency thread.
πŸ‘‡πŸ§΅ Image
Here is the vix - notice on the left that as the DXY went up the vix began to follow and was suddenly kneecapped in march 2022?

Thats when UVIX and SVIX were launched.

But everytime the DXY spiked you got a spike in the vix

Verticle dotted lines show a few of them. Image
Enter my calculated vix.

I modeled the vix to see where the vix should be based on yields.

Notice again the detach as of march 2022

1/(BATS:HYG/(BATS:UUP-(1/(TVC:US30Y*5+TVC:US20Y*4+TVC:US10Y*3+TVC:US05Y*2+TVC:US01Y)*100-FX:USDCAD*100)*100/2)*10000) Image
Read 46 tweets
Nov 29
This is a currency thread.

And for many of you, this will answer a LOT of questions....

I am going to start very slow and basic - by the time im done you will be a currency expert.

πŸ‘‡πŸ§΅

en.wikipedia.org/wiki/Supply_an…Image
Lets explain this simply.

CocaCola.

CocaCola company produce lots of cocacola expecting holiday demand. They double production.

And lets say the demand didnt materialize - economy bad, people lose jobs or whatever.

What happens to price of cocacola?

It goes down.
Now take the inverse.
Cocacola - UNDERPRODUCES - expecting holiday demand to be very low so the market is UNDERSUPPLIED with cocacola.

But government decide to give everyone free digital money that can only be spent on cocacola.

What happen to demand? Explode higher.
Price moon.
Read 55 tweets
Nov 24
This is my cat.

This is a financial thread.

"Oz - then why are you leading with a picture of your cat?"

Cause her belief system is exactly like that of the USD and the US government - she thinks she is the center of the universe and everything revolves around her...

πŸ‘‡πŸ§΅ Image
Oil going up in price is deflationary - if people are spending all their money on fuel, they arent buying anything else.

But US is an oil producer - the biggest oil producer on the planet right now actually....and everyone - especially europe - needs it.
After poot invaded ukraine, US set in motion price controls + money printing to fight that deflationary force.

It was a plan that biden and G7 hoped would end the war quickly, starve russia of revenue, and G7 would come out on top.
Read 30 tweets
Nov 24
As ya'll shop in the American capitalist system that's better than every other system, yet, can't seem to produce a reliable supply of eggs...and when they are available, they are hyper expensive...

It is 1USD = 25000 vnd.

Here's Vietnam and a few prices of other things:
πŸ§΅πŸ‘‡ Image
Those eggs are $2 USD per dozen.

Tooth paste $2 Image
Cococola $0.95 Image
Read 10 tweets
Nov 7
A lot of people dont remember this or its implications...

πŸ‘‡πŸ§΅sidley.com/en/insights/ne…
Because like any instrument, treasuries can be gamed....
reuters.com/business/finan…
Read 51 tweets
Nov 6
Last night was interesting - the planners used the cover of trumps election to rebalance global currencies.

Here is the vix.
πŸ§΅πŸ‘‡ Image
Heres foreign oil producing currencies - on this chart purple line going up?
It means foreign currencies got STRONGER.

But heres the deal - ya, they produce oil, but thats not the only trade that goes on.

And the g7 planners need to keep some level of parity to otther currenciesImage
Thats the Euro-pee; notice that move

They weakened the F out of their currency.

For the Euro-P to weaken like this one of 2 things need to happen:
1) Someone bought a f tone of euro-pee debt
or
2) They printed a F ton of money Image
Read 12 tweets

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