By Todd Harrison May 20, 2004 3:00 pm
Good luck into expiration!
Till the morning comes, it'll do you fine.
Till the morning comes, like a highway sign,
Showing you the way, leaving no doubt,
Of the way on in or the way back out.
The afternoon Minx has hit the links and left us guessing what she thinks. What was yesterday's feast (volatility) is today's famine and the lucky ducks who were long gamma are now cursing the very same positions. Thus is the life cycle of optionality and having been on both ends of that trade, I can assure you that it's a double edged sword. Long gamma, while letting you sleep at night, is like a Chinese water torture on days like this. Drip City!
With that said--and perhaps because it was said--there's still plenty of trading left in this session and we gotta stay on our toes. We know the overall dynamic--folks are forced to 'sell down' and 'buy up' due to the expiration--and we're also aware that as a function of the massively short theta (decay), there is a buy side skew all other things being equal. I'm not playing that factoid but it's "out there" and I wanted to remind ye faithful that it exists.
I've been scanning my screens for something useful to say but other than relative lethargy in the semis, the slinky stinky breadth in the Nazz, some smeltage in the metals (closed on their low), curious action in the trannies (Dow theorists watching closely) and an all-around slacking performance by Collins, there's little to report. And just as you shouldn't be pressing for something to trade (no forcing!), I'm not gonna toss out an opinion for opinion's sake. It's a toss-up into the bell so watch our tells and let it show itself.
One point I wanted to make--and this is something Mr. Saut and I discussed last night and Mr. Succo has touched on repeatedly--is that making money doesn't necessarily mean that it was a "good" trade. Consistency in our world is dependent on probability and the pressers, guessers, shooters and looters will cancel each other out before long. A "good" trade is defined as an opportunity that has advantageous reward relative to the incremental risk. So don't curse yourself if you miss moves--bide your time until you find that ever-elusive edge.
I'm gonna practice what I preach and surprise Princess Maia (and Sir Bradley) in Baltimore tonight so I'll be leaving the 'Ville in the capable hands of my fellow professors. I lobbed this decision back and forth a few times before hitting myself in the forehead and "seeing" it. If we are to truly "work to live" rather than "live to work," lifestyle decisions come down to moments like these. This is one screwy world--we gotta live for the moment and make every day count.
May peace be with you and fare ye well.
position in qqq
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