Darrin
@darjohn25
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I trade Volatility & other Derivatives. My opinions are my own and definitely aren’t financial advice.
Dallas, TX
Joined July 2009
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It was a huge honor to be a guest on FWM. 👇 This episode is a deep-dive discussion into my journey, my philosophy on trading & my uncensored warnings regarding the psycho-emotional battles you'll encounter as an Indie Trader.
Thx again,
@choffstein
!
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In the spirit of helping traders keep more of their earnings during what I call payout cycles, I'm going to talk specifically to those of you who stubbornly love to trade Index futures (again, this is the hardest way to make money in trading).
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Do not let anyone distract you from your goals. Do the work, be resourceful, iterate and keep trying.
I’m seeing several accts citing failure statistics and suggesting that retail ppl should just go passive and do something else with their time…
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Don't waste any mental energy trying to understand or craft a narrative around the index price action. You're a trader; not a journalist.
Focus on the ranges, implied vols, real vols and your options structures.
The best explanation for this counterintuitive action is flows.
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$AMZN playing accounting games. The jump in net income included their investment in $RIVN, at a substantially higher valuation than it is now. LOLOL.
The stock probably a short from here.
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If you overpay(in vol terms) for a long option, then you *lose* a good portion of the convexity/asymmetry that drove you to the options market in the 1st place. This is true on the upside or the downside.
I feel like we have to revisit this topic of volatility twice a week.
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@il0venostalgia
I know how to talk to ppl, in person, w/decency and respect w/out popping a Xanax 15 mins prior.
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Option pricing models, especially the ones that most retail ppl use, are not predictive. The predictive piece comes from you. The models will allow you isolate variables, 1 at a time, and observe rates of change—this is good, but not sufficient.
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Truth is;if you’ve been fortunate enough to find some career/business success in life,then most likely it’s a complex mixture of luck/skill/hardwork.
I wish more of the mid-level employees on Fintwit had more grace and self-awareness,and spared the rest of us their projections.
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It was brought to my attn that some retailers were calling into TastyTrade bc they’re selling high IVRank in the Russian ETFs 😳😳🤦🏽♂️🤦🏽♂️.
Most of you who follow me know that I’d never ever advise anyone to blindly sell ‘high IV’. It’s a recipe for complete implosion. Don’t do it.
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In conclusion, I purposely built my life on my own terms so that I wouldn't have to sell products or myself based on hyperbolic claims.
If you follow me, just know that I will try my best to share reproducible, robust tidbits of info that you can apply to your own trading.
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Ive been humbled so many times by the prop & institutional traders I’ve met over the years. When you see the brain power, the work ethic, the professionalism & ultimately the big paydays—you’d never come on fintwit bragging about your retail conquests. At least,I never will LOL.
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Strategy is an area where traders can learn a ton from pro sports bettors & poker players. It seems like alot of traders get caught up in earning trading profits at the most difficult(crowded) table in the casino.
Aim for the low hanging fruit.
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Income Trading, much like Technical Analysis, is difficult to disprove/falsify bc every practitioner has their own "adjustments" and randomized entry/exit techniques.
However, the CBOE publishes several indexes that replicate systematic versions of Income strategies...
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Retail trading, of any style, is a perpetual DIY project. When I reflect on the ppl that I know that were able to go from options theory —> profitable application, the commonality is that they all have high levels of self-efficacy.
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Do y’all ever sit back and process that we are trading video game $$, blank check companies & sketchy EV retailers and just laugh out loud?
Whenever I’m slowing down and trying to process what I actually do for a living, I just have to laugh—I don’t take myself that seriously.
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Here's an SSRN paper on 'Gamma Portfolios' that I found very useful when I built a scan in python that looked for decent DOTM (Deep Out of the Money) Call candidates.
Disclaimer for the retail, non-quants--follow the concepts&work through the formulas :
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I don’t give a damn how many Taleb books you read, how many stochastic calc equations you post, the fact remains that In most circumstances in equity markets, Short Vol, Short Put Skew is +EV over the long run. If you think I’m exaggerating go buy puts every 20-30days w/your $1mm
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I'll say it again:
This time is different. The biggest threat to the new $$ traders is a prolonged period of high vol. Everyone, especially younger investors/traders, have been conditioned to believe that high vol&DDs are short lived--there is some serious pain on the horizon.
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Translation: Just because you landed an institutional *job* doesn’t mean that you aren’t a mediocre, tacky, empty person.
Those of us with a modicum of craftsmanship, pride and class have no desire to switch places with you on our worst days.
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One of my best friends worked as a trader on a credit derivatives team at GS HQ. His bonus for this particular year was just under 600k and he said to me on the phone”How’s a man supposed to have a wife, a mistress and a Porsche on only 600k?” 😂😂😂True story.
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~12 yrs ago, when I was alone, ostracized from college friends and some family, and nobody wanted to give me sh*t, I still kept my head down and focused on learning. On getting better and eventually becoming a professional.
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The hurdles to successfully building any business are high—so what? That’s a given.
Focus on the advantages you do possess&block out all the noise.
Also, observe the person giving the “advice”. Do they have their sh*t together? Is their “professional” life even desirable?
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Here are some heuristics that I use for trading high vol regimes:
1. Don’t a dogmatic asshole. If you get long VX and it pays you .50 vol pts over 3-4 hrs, take the money intraday. Trying to prove you’re not a “day trader” is DUMB AF. Make $ & ditch the ego…
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While options burn 🔥everyday, GPT-4 has been doing a better job tutoring me on python than any Wes Mckinney book that i've purchased (no shade his books are good).
Thus far, ChatGPT is the best tutor/explainer I've ever had for coding purposes. For $20/month too lol.
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81, 82 dollar Crude + sky high mortgage rates + rate hikes + a lower Vix complex+ emergency bank intervention by the Fed…not sure how this overhang would make Mgrs take a bullish stance on equities.
But hey, judging by fintwit and YT gurus the party is back on to 4300, right?
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In a wretched situation like this, the simplest answer is often the correct one.
Thank You to the wonderful young woman, who will remain anon, who provided all the information and details that we needed to identify the individual who did this.
Thank from the bottom of my ♥️
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Too many creatives,artists, entertainers,bullshitters and lawyers on the left. Not enough operations minded ppl, engineers, &small2mid sized biz owners etc
This hyper focus on non profit hustles & public emotive displays will guarantee that your ass loses to the R’s everytime.
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Just FYI to all my young guys and gals: Don't ever respond to haters and trolls like I do. Restrain yourself and use the block button. Ego is the Enemy and will lead you to self-sabotage.
I'm human w/a bad temper and alot of pride. Definitely don't follow my lead on this.
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Always be on the lookout for single stocks that are decent companies(good fundies) , where the realized vol is down trending to stable. These can be good atm put spread and CC candidates. Usually, I can find a 4-7 pt VRP in their weekly options.
These quick hits add up come YE.
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Here are some tips for those of you trading for +Edge:
1. It is a very *lonely* endeavor. A vast majority of the literature(articles, ssrn papers, credible blogs) are written by investors/pm's/quants that decided ,a priori, that this is not a game they want to play...
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I'm a very price sensitive options trader, which means that I do care about the future movement that the atm straddle implies.
However, and this where I think some ppl disagree with me, I prioritize realized vol--whether its trending downwards or upwards--over everything else.
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Options 101: The theta decay curve (it resembles a log f(x) ) that you’re introduced to by options gurus only applies to:
1. OTM options. ATM options decay at a steadier, more linear rate.
2. Keep in mind that this smooth “decay” can be reversed by a spike in ivol.
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The hardest lesson, both in life and in trading, is learning to make the transition from small stakes (usually in your 20s) to a big stakes game.
The big stakes positioning usually comes w/dependents, a spouse, employees,and larger dollar amounts...
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Not to get all emo with 13,3k+ of you, but since
@SinclairEuan
has finally taken the step to offer a course to retail&industry pros,I thought that I should talk about how much his books influenced me.
Back in 2010,Fintwit was the wild west & owned by stocktwits personalities.
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The Allianz discovery was bad. I always wonder: "How do these ppl get allocated billions of dollars while being this incompetent?"
Credentialing is clearly the most germane input on the allocator's checklist.
"Twilight of the Elites" by Chris Hayes was ahead of its time.
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Non-political, political take:
If they can overturn Roe, you better believe the other stuff can be overturned too.
Just sayin.Let this be a reminder for those of us that were excluded from full citizenship in the founding docs.
#knowyourdownside
The Supreme Court has voted to strike down Roe v. Wade, according to an initial draft majority opinion written by Justice Samuel Alito and obtained by POLITICO.
“We hold that Roe and Casey must be overruled,” Alito writes.
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I had a blast in NYC w/
@Ksidiii
and
@JasonMutiny
. Dinner was amazing &it was Great to hangout in person 💯.
I recorded a long form,in studio interview w/Jason for
@RealVision
. Hopefully,you guys will find some value in it and enjoy.
Thx to good folks at RV for inviting me!
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It’s interesting how ppl who think they’re smarter than everyone else (cynical bears)always reach to buy puts at outrageous prices. You’d think, since they’re so smart, they’d find more effective ways to get short. But they won’t because they’re mostly driven by ego & bitterness.
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This was so good. I watched 3x’s.
"
#Gambling
,
#investing
&
#trading
, it's all exactly the same..."
Vol trader & renowned author,
@SinclairEuan
joins
@JasonMutiny
in the last segment of this week's Real Visionaries for a look at his wild journey from market making & sports betting to even card counting in
#Vegas
.
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Hope you guys enjoy this 👇🏽.
It’s so weird seeing my name on a Flirting w/ Models episode. Kinda surreal.
I’m honored to have been a guest. Big Thanks to Corey for inviting me 🙌🏽
*whistles innocently*
😗💨
Oh, did I leave this here? How clumsy of me.
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In my experience, the traders who are very good at hitting homerruns w/long gamma structures are extremely meticulous, strategic,personality types.
I'd guess that if you're anonymously starting beefs w/random retail traders on fintwit using(at best)spurious logic,that aint you.
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Just found out yet another 1 of my childhood friends died.He drank himself to death which caused liver failure.
There is a crisis amongst men, especially bk men but all men,that nobody gives a damn about.Many guys are committing slow suicide due to despair & low econ prospects.
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Anecdotally, I am fairly confident that Powell's mandate of raising rates and stalling the economy is having a material impact on the real economy. Which, in turn, will likely lead to an outperformance of short vol strategies expressed using options imho.
The past two months
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So here's a question that I posed to Euan, that I want to open up to all of you:
Can extreme volatility in an asset class provide an edge to the median trader within that market, by itself? Even if the trader's methods are hocus-pocus and based on astrology?
My answer: Yes.
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Big winner on $VXX for those who joined in on Wed. Like I say all the time, we get paid (Long or Short Vol) to take unwanted risk at some of the most uncomfortable times.
I could tell by the replies that most of you thought I was crazy af, but this the reality of trading.
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I'm not a mathematician, I don't have Ivy League credentials, nor do I have institutional pedigree--I'm the definition of the little guy. If you're like me,know that there will be plenty of insults and ego blows from the top dogs. Ignore it, believe in yourself & keep grinding.
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Lastly, understand volatility.Even though you're trading a linear instrument, that doesn't give you a free pass to be ignorant re: ranges,movement,and options implied movement.
This will save your ass and give you a sophisticated perspective on managing risk.
Hope this helps💯
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I’ll take Fintwit and Voltwit over RE and VC twit all day,everyday.
I can’t tolerate anymore threads about mobile home parks and “How I got rich using the BRR method” 🤦🏽♂️.RE seems to be adjacent to the Make Money Online crew. Same talking pts, Same god complex amongst the gurus.
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Wow. Just wow.
I always said that nobody understands socialism and collaboration like rich/wealthy ppl.
They just insist on Randian individualism for the rest of society.
BANK OF AMERICA, CITIGROUP, JPMORGAN CHASE, WELLS FARGO, GOLDMAN SACHS, MORGAN STANLEY, BNY MELLON, PNC BANK, STATE STREET, TRUIST AND U.S. BANK TO MAKE UNINSURED DEPOSITS TOTALING $30 BILLION INTO FIRST REPUBLIC BANK
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This was predictable, but its still impressive to observe all the brainiacs that Sinclair attracts for his courses and books.
The slack chat is turning into a who's who of math, science, and programing nerds.
I'm in there reppin for the blue collar, avg man lmao.
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So much of my experience on Fintwit could be summed up by telling ppl to deeply study the work of
@SinclairEuan
and Artur Sepp. Euan gives away the farm in all of his books and Artur in his research papers. You just have to work through the technical material.
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For ppl who were trading in ‘08,they know that the clamor&perverse lust for a meltdown of the fin system wasn’t prevalent in media at the time.
Ppl were freaked out&unsure abt whether they’d be able to w/draw $ from the ATM.
I blame hollywood&the doomsday newsletter industry.
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🤦🏽♂️ I wish wealthy entertainers would just be quiet and not give “business” advice.
1. Most ppl, men or women, are not willing to be sex workers to accumulate 💰
2. Acknowledge luck. Your dad was one of the top celebrity lawyers in Hollywood. You grew up rich, that helps a lot.
“I have the best advice for women in business,” Kim Kardashian says. “Get your f--king ass up and work. It seems like nobody wants to work these days.”
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Wow. One day (when I have lots of free time) I’ll read the Afghan Papers in full. But, just perusing excerpts and holy smokes was this a money grab. Damn. I used to think the banks were the money centers but now I realize it’s the professional war profiteers connected to DOD.
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Fintwit is a lot like strolling the Vegas strip: The guy next to you is either a multi millionaire or a pan handler or a pimp LOL.
I think most of the ppl following me are aware of this, but there are some huge, top tier traders that you have access to. Take advantage.
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FWIW: Masculinity involves actually doing sh*t IRL. Building things; Building Businesses; Protecting and Providing for your family; Pressing forward to accomplish your goals in the face of extreme adversity.
There is nothing tough about behaving like a rude d*ck on twtr.
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At this point, the short vol trader (like me) is faced with a familiar dilemma: Do you take the money&run OR hold out for more?
Despite great large cap earnings as a tailwind, I’ve learned to take the winner&then wait for the inevitable (likely smaller) vol spike to re-enter.
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Speaking from personal experience, I’ve never had the luxury to automate everything and then go golf all day as a trader. Usually by the end of each trading day,I’m exhausted.The work involves non-stop observation, record keeping and constantly questioning your assumptions.
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I'm very grateful to have made friendships w/imho Top Tier Quants.
@SinclairEuan
casually mentioned to me that I shouldn't being afraid to cross the spread on earnings trades and/or vol trades. For him,this is rudimentary. For me, his throwaway equations translate to real $$ 😂
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Often times, like today, as an option/vol trader you'll be faced w/a high class problem:
Your vol forecast was correct, you're short the straddle and you've made your expected Vega profits. But, there's still 60-70% of premium left on a structure that expires in 4 hrs. WDYD?
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I’ve listened to lots of interviews & watched presentations(on RealVision & elsewhere) w/Long Vol Mgrs recently. These guys can sell the entire Book of Revelations better than Hollywood.All that’s missing is The Rock or Will Smith as the lead protagonist. They’re Great Salesppl.
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I'm human and im competitve af...the amounts of $$ being made by degens & RHers every-freaking-day makes my vol trading dollars look like child's play. They're buying pr's & BK stocks that are going 10x in a few hrs. Hard not to be jealous. Honest confession.
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To my young followers: Stack Up your 💰💰. Some of you are blessed to be in the industry&have risk taking positions at reputable firms or on prop desks.
I know you guys like the finer things in life, I do too. But always keep cash or cash equivalents stashed away…
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😂 Cem is the man. The episode was great. Although, I must admit I had to slow the speed down to 1.0x from 1.25x (my usual) because Cem packs a ton of info into every sentence LOL.
There are a number of smug, self-styled market professionals who sneer at Cem's dealer positioning and so-called "vanna" dynamics, his Emoji-laden megathreads, and his infamous asterisk'd market levels.
If you *are* one of those people, ***don't*** listen to this podcast.
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I swear women develop a superpower once they get married where they can come up with insanely creative ways to spend $.
As you get older and presumably earn more, the more creative they become.
Marriage definitely ain’t cheap LOL.
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Ok Defi bros, A 2x secured loan is not even a loan 😂. I made the mistake of going deep down this rabbit hole. The narrative spin from the crypto nerds re: lending/farming/staking would impress even the most talented of RealVision storytellers and bear prophets.
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Ask yourself: Why would a trading educator sell you a signal on the underlying, that has a >85% hit rate, and then instruct you to sell .12 delta put spreads?
1. Why not buy calls? (Assuming the pricing is favorable.)
2. Why not sell ATM puts?
3. Why not trade the /ES orSPXL?
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@wanyeburkett
100% true. 🎯🎯🎯there’s nothing funny about it if it’s to trigger the conservatives.
Horrible PR and branding strategy. You will lose normies and ultimately the pushback will undo lots of progress that prior generations died for.
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When I explain the types oftrades I place,I think ppl are underwhelmed. Short straddles,Long straddles,short 🔼hedged calls&puts—nothing fancy. Often times,in the same basket of names for mos/q’s at a time.
Sorry,I don’t have any complex 2nd order skew trades to tell you abt 🤷🏽♂️
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Just left the Mercedes dealership (wifey wanted a new whip) & I was talking to our sales guy and he said that their supply chains are reckt. He said they got 1 G Wagon in 2 days ago, listed it at 190k and it sold in hours for 250k—+60k over sticker.
It’s a tale of 2 America’s.
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The early feedback on my FWM episode has been overwhelming. I can't tell you guys how gratifying it is to receive praise from ppl that I respect and admire. And, that are the best of the best in the vol space.
Thank You! I'm glad that so many of you found my insights useful.🙏
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Since we're on the topic of higher order greeks, I can tell yall that a good way to grok advanced topics like Shadow Delta or Charm or Vanna or Vomma or Speed is to go in your analytics plat (TOS in this case) and change the setting to 'Delta, Vega..' and then adjust the T+n.
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