Hi Alex I’ve been on the ride with you for awhile. I used trailing stops on my cfds on gold and silver and got out before it got to bad. Your work is great but the market always humbles us. Keep on trucking/grinding let the hater’s hate. I’ve got nothin but love for you. I missed out on the short because my trailing stops got hit and I’ve been beating myself up a bit. But that’s trading and risk management is the name of the game.
I got schooled Friday as well. On Monday I spent 33 bps for $1 apiece February 24 expiry butterfly puts, $7.5 wide either side of $95. On Friday, silver futures went through the centre and closed at $85.25, but the fly’s price never exceeded $1.04 and closed at $0.83 after hitting $0.74.
Yesterday I learned from Andy that vol spikes can be so big as to suppress a fly’s value as negative vega counteracts any price increase that might otherwise occur from the price drop. Lesson: longer dated flies bought at very high IV give you almost no gamma. Should have bought a put spread. Looking for a drop in IV and bounce Monday.
Your piece made me recall what I think is a cornerstone observation for life.
“Time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid those encounters. We can only approach them in the best possible way.”
yes, you can't put your flys too far out, but also don't want to hold them all the way to expiry, they are a fickle beast.
I've started experimenting again with bull-flys, where the far leg is shorter than the front so if it blows through you still make money, did this with gold back in the day and worked out
Exceptional post-mortem on short vol dynamics. The AGQ rebalance timing at 1:30 is something most retail traders would never connect to price action but it perfectly explains the relentless downmove. I actually felt a version of this responsibility weight last year when discussing a trade setup that ended up reversing hard,and that conflict between managing your own book versus feeling accountable to readers is tricky.
My favorite Campbell Ramble post/interview thus far.
Since you mentioned debate, and regarding your recent Case for Greenland post, I reflected on it quite a bit, but in the end, I thought maybe this guy is just missing some old debate days. On the other team, and as an “enviro”, I would probably have referenced the Bill Burr thesis; but then again, I don’t read much, so ….
The silver jewelry trade is the most susceptible to demand destruction. the Shenzen area is the world's biggest region for silver jewelry manufacturing so that will be a factor in Chinese demand.
As you have the talent to teach your great depth of knowledge in a simple, clear, easy to follow way, i want encourage you to keep the technical parts open to a broader viewerbase and only put the actual trades behind a paywall.
Hey Alex, great post as always! Another potential source of short gamma would be producers starting to hedge their exposure. To my knowledge they usually don’t, as they know that their investors want the exposure to the underlying commodity, but I have heard it around, and given the historically high gap btw spot and production costs I see why they might be tempted
Yeah tough one, you can sell into strength like Rick Rule at $80 on the way up, or trail a stop and get stopped out at $80 on the way down as a trend follower, anything over that is probably luck. Still we can try. I find the toughest thing psychologically is to flip from "run your winners" super bull to "panic first" mega chicken at the exact right spot. I'd guess most stayed on one side too long (or short) as well, just broken clocks. Anyway, great piece I appreciate the analysis.
Thank you for this, you are an excellent writer. Painful Friday but we learn and move on
Hi Alex I’ve been on the ride with you for awhile. I used trailing stops on my cfds on gold and silver and got out before it got to bad. Your work is great but the market always humbles us. Keep on trucking/grinding let the hater’s hate. I’ve got nothin but love for you. I missed out on the short because my trailing stops got hit and I’ve been beating myself up a bit. But that’s trading and risk management is the name of the game.
That is a thoughtful piece - thanks. Good stuff.
I got schooled Friday as well. On Monday I spent 33 bps for $1 apiece February 24 expiry butterfly puts, $7.5 wide either side of $95. On Friday, silver futures went through the centre and closed at $85.25, but the fly’s price never exceeded $1.04 and closed at $0.83 after hitting $0.74.
Yesterday I learned from Andy that vol spikes can be so big as to suppress a fly’s value as negative vega counteracts any price increase that might otherwise occur from the price drop. Lesson: longer dated flies bought at very high IV give you almost no gamma. Should have bought a put spread. Looking for a drop in IV and bounce Monday.
Your piece made me recall what I think is a cornerstone observation for life.
“Time is like a river that carries us forward into encounters with reality that require us to make decisions. We can’t stop our movement down this river and we can’t avoid those encounters. We can only approach them in the best possible way.”
― Ray Dalio
yes, you can't put your flys too far out, but also don't want to hold them all the way to expiry, they are a fickle beast.
I've started experimenting again with bull-flys, where the far leg is shorter than the front so if it blows through you still make money, did this with gold back in the day and worked out
We call that a Reverse Mullet - party in front, business in the back
Exceptional post-mortem on short vol dynamics. The AGQ rebalance timing at 1:30 is something most retail traders would never connect to price action but it perfectly explains the relentless downmove. I actually felt a version of this responsibility weight last year when discussing a trade setup that ended up reversing hard,and that conflict between managing your own book versus feeling accountable to readers is tricky.
My favorite Campbell Ramble post/interview thus far.
Since you mentioned debate, and regarding your recent Case for Greenland post, I reflected on it quite a bit, but in the end, I thought maybe this guy is just missing some old debate days. On the other team, and as an “enviro”, I would probably have referenced the Bill Burr thesis; but then again, I don’t read much, so ….
thanks for this. the rambles, the humility, the s*tposting. love your writing and your thinking and we are all richer for your sharing.
The silver jewelry trade is the most susceptible to demand destruction. the Shenzen area is the world's biggest region for silver jewelry manufacturing so that will be a factor in Chinese demand.
I really enjoyed reading this one, thank you!
As you have the talent to teach your great depth of knowledge in a simple, clear, easy to follow way, i want encourage you to keep the technical parts open to a broader viewerbase and only put the actual trades behind a paywall.
Thanks for this analysis, Great work!
Hey Alex, great post as always! Another potential source of short gamma would be producers starting to hedge their exposure. To my knowledge they usually don’t, as they know that their investors want the exposure to the underlying commodity, but I have heard it around, and given the historically high gap btw spot and production costs I see why they might be tempted
Yeah tough one, you can sell into strength like Rick Rule at $80 on the way up, or trail a stop and get stopped out at $80 on the way down as a trend follower, anything over that is probably luck. Still we can try. I find the toughest thing psychologically is to flip from "run your winners" super bull to "panic first" mega chicken at the exact right spot. I'd guess most stayed on one side too long (or short) as well, just broken clocks. Anyway, great piece I appreciate the analysis.
Pain + Reflection = Progress is the meme we need :) thank you for sharing, I found it very useful. Looking forward to your musings on Copper.
ps: L2M subscriber whose been following your writings on Silver but stuck to no exposure (volatility, price action freaked me out 😅)
oh interesting, thanks for the alpha!
what are some other proxies we might be able to see?