📉 Bill
Stock market thread 7/13, go:
Mhmm
long tail risk: buy cheap OTM puts on HYG 4-12 months out,roll every 2 months, using kevinpmooney monte carlo blogger post as a basic framework, but using generalized extreme value distribution to calc the probabilities of payouts 100x premium fitted 2 shape of the returns from par of the underlying;did it all 2019 and paid out in feb/march, stared to load up again in june.i expect fireworks into the 20 sept 20 cdx rolls
📉 Bill
Oh wow HYG/JNK was THE option play in feb. so you think the Fed won't stop in if this repeats in high yield? I know there's a lot of insolvent shitcos being propped up right now tho
Mhmm
Spreads r higher now so its more expensive, but plenty meat on the bone.Theyre not really being propped up though, most ppl think they are. The problem is that dollar denom IG and HY bonds are used in international repo markets as collateral mixed with the insolvent nature. Mix that with 90% of underlying are unsecured with the risk of the overnight chapter 11 or IG downgrade (Ford downgrade in sept '19 before SOFR went tits up). stats on underlying r worse now than jan/feb.
🌊 Zero Two
$VTSAX only bby
🗜️ Mx
My weekly strategy is SPY butterflies in either direction, hedged with an equal VXX butterfly. If I'm right about the market direction, SPY makes money. If am wrong, VXX makes money. The key is to position your P/L ratio as high as possible, so you make more from the winning fly.
🗜️ Mx
Remember that you lose it all if the market flies past your fly (no pun). So, you have to create a fly that covers at least the IV range of the expiration term. TOS will help you with that, generally.
📉 Bill
I guess I'm a simple man and prefer to swing trade and hold long puts several months out in overbought large caps. Currently holding nov $msft
🗜️ Mx
That's not a bad strategy at all. Your LEAP put will make money from the increased volatility as well as delta, if the underlying goes down. Also your time decay is very small and it costs you very little to hold the position.
📉 Bill
It's very stressful and I've lost a bit this summer so far but got to learn when to cut your losses and when to hold. The market so far is dominated by passive investing so when it goes up it goes up a long time, slowly. When it starts to top, look out below as it gets hammered for weeks as people panic and sell the entire index at once. No liquidity in the market anymore
😏 Yt L.
For my own investment strategy I'm selling puts on Wells Fargo at 24.5 for 7/17. I don't think it'll drop that low, and if it does I'd be fine owning it for a while, I think it's mostly stable with decent dividends.