There's so much that can be explained about what a mm thinks about and what tools they use when they handle a show. After so many reps the mental checklist and "feel" of the call is automatic but dissected it's prolly interesting to the corners of fintwit.
A really simple example would be someone soliciting a quote for a risk reversal. Take a symbol like URBN.
You are thinking about the class of customer the broker represents, where you are in the brokers pecking order.
Then you think about the stock itself.
What's the liquidity in the shares? What term do they want to trade? Are they looking to collar stock or disguising a skew trade? Well is it delta neutral or live?
How's the borrow? Confident in div dates? Are the screens stale or a good indicator of the fair vols for the name?
I feel like I should make a video describing exactly what happens when a broker calls a desk with an option show.
Might be NSFW.
Seriously the signal chain from phone call, to the print on an exchange floor is not widely understood.
Announcement, crossing and blocking etc
The adverse selection of your order not being blocked. How the floor traders free roll off that moment. Why prop shops have people on various floors so they can block orders from crossing without getting their tribute.
Something important to realize is that anything represented by a broker on the floor of an exchange is considered "public" info since anyone can access that info by hiring a broker
Phone negotiations that result in an order/ trade are private until they are "announced" on floor
Suppose there was a $10 strike call on both of these investments. What's it worth?
Ok I'll take 150 retweets, and a million likes now.
If someone managing money finds any of this "eye-opening" they are committing malpractice. This is what's known as a first round interview question for a 21 year old analyst role. There are no dumb questions, but if you have a seat and any of this is interesting I'm 🤯
If your work makes you study companies and business models you build a deep pattern library to cross-reference a new idea against, adjusting for differences.
I totally lack this and it's a cool thing to have. Next best thing would be to lean on your friends who have it I guess
You can read and listen to pods to learn it maybe. You can even pick up some jargon that compresses some of the patterns (ie "melting ice cube"). But I wonder how far you can get without immersion of investing in companies.
When I hang out with friends (local dads) and shop talk comes up I'm always the one slowing it down "hold on what does that mean". A lot of it very credit/PE-sounding stuff, with more references to legal sounding stuff than I'm used to.
My career has mostly been surrounded by Ayn Randian types but some of the absolute smartest people I've seen in this biz are very progressive and kind of black sheep and I've always been intrigued by genius idealogues.
On one hand you have what Munger says about them...
A fintwit-raised dashboard of dashboards (kind of like layouts in Bloomberg/TradingView/Koyfin/Excel etc) where individuals shared:
🧠the reasoning for what's on it
⏱️the timeframe/decision the metric informs
i say "rhetorical" since it would not make sense for people to contribute to this...but maybe. I think I could have shared every one of my dashboards and what my positions were and i think almost everyone would still f it up...
since the strategies are ultimately discretionary and sizing, gameplan, and relationships are important
But the dashboards themselves are useful base rate starting points esp since they narrow from the infinite
I appreciated how he qualitatively spells out why shorting stocks as a hedge changed the trade.
(you can also see it as short term structure trade with a fixed near expiry)
A lazy treatment would simply calibrate betas of near and long-dated futures and short a ton of stock since you are long the high-beta short end of the div term structure...but Byrne wasn't lazy about the idea.
He intuitively understands that any calibrated beta is...
...sensitive to the volatile measuring period we were going thru.
So instead, his intuition focuses on what matters. The fact that the beta (which is an input to the hedge ratio) itself is volatile and what the trade really cares about is the slope or rate between...
"I know rich people who bot [insert any asset levered] and they play 67 rounds of golf a week now" is a really cool brand of tweet.
Keep em coming, I don't want to forget how garbage our tax code is.
I don't golf but I can only imagine how many convos rich people have around the 9th hole when everyone's had a beer, is nice and loose, and safely politically sorted about how much fiscal stimulus is destroying this country.
Don't worry rich dude, if you've played Monopoly you know that an airdrop of money in the endgame just ends up as a rent check in the mail. Nothing really changes except which rich dude's snapshot holds the crown when the winners split the pot