Thanks, ON. Looks like the "extreme tornado warning" is over; we're under just plain "tornado warning" now, until 11:45 EST. I've sailed through worse weather than anything this little disturbance can bring, but this living on land shit sucks. Can't reef, heave to, stream a sea anchor, or run off under bare poles... I don't know how you landlubbers stand it.
At least you don't live on the coast. We get this shit to deal with from time to time. Stonados. Very very specific water spouts that pick up Plymouth Rock and conveniently drop them onto brothers just trying to get in a game of B-Ball, in CAMBRIDGE! That's a far cry from Plymouth, yo. Yeah, about 40 miles as the crow flies. That shit just don't happen in Kansas, G. (No need to watch further than the start of the credits.)
This entire post I'm replying to is the single reason why I decided to create a journal. Thank you for detailing so concisely your current mentation. Props to you sir, and thank you for the knowledge!
My pleasure, and I'm glad you find value in it! To me, the critical part of learning is not the accumulation of facts; those are just a jumbled pile of stuff in your brain until you manage to impose structure on it. The "a-ha!" moment comes from the new perspective, the organizing principle that snaps all of those pieces into their correct places on the shelves and creates order. I am finally at the point where I can cautiously take little pieces off the pile and start shelving them... with the caveat that this ordering process is subject to earthquakes at all times, and that all of my new-found comprehension is subject to complete revision. I could have it completely upside down due to missing some key foundational principle. And yet, I'm perfectly cheerful about the process - because it contains information that I need (learning which pieces tend to stay up while others crash, for one). That - the part of learning that most teachers forget, the "beginner mindset" - is what I want to record here; to see how far I've come, and what the path was. And despite my occasional grousing about minutiae, I'm having a blast overall. Yeah, this playground has plenty of barbed wire, deep pits, and the occasional charging elephant or two. It also has little pieces of gold and silver scattered all over, buried treasure for those who are quick and smart, and - this means a lot to me - some really amazing people wandering about the place (plenty of shitheads too, but that's nothing new or different.) My kind of place. I'll stick around.
Just to recap that last position in ROKU again from a different perspective: what I started with, in this phase of it, was a short call and a possible very ugly outcome if it went to the moon. What I've ended up with is a "broken-wing iron condor": The resulting call spread, due to the high price of the long, has a max profit of -59 if ROKU stays below 140; this is actually perfectly fine, since all it does is move the B/E point of the whole trade 0.59 up from where the single naked put would have been, to 112.60. If the price does go up before expiration, then my overall P&L on this trade goes positive at 138 or so (and that number gets revised downwards as time passes; thank you, theta.) ROKU's current IVR/IV% are 76.4 and 100 respectively; I doubt that it can go up much higher, but if it does, this simply moves the pre-expiration positive P&L point further up (whoopee, I get to hold a bit longer.) If it goes down, which seems much more likely, that point moves down - and I go positive earlier as long the price stays within range (also likely, since decreased IV is usually correlated with increasing price.) If the price is above 120 at expiration, I'm out with a good profit; if it's below 120 but above ~112, I'm somewhere between break-even and max profit; if it's below 112, I roll (or, depending on how close I am, take assignment.) The only thing that I don't want it to do is really crash - but that's built into most of my trading anyway, and 112 is pretty close to the bottom of the recent price range. Definitely a much happier scenario than a naked call.
Curious why you think this? If you notice $ROKU IV tends to drift upwards until the earnings event, then depletes and starts its slow ascension back up (rinse/repeat), but the last time $ROKU had earnings its IV rank hit 90%. Although $ROKU next earnings is still about two weeks away I wouldn't expect IV to go down but stay put or rise until the report is released.
That's what I meant by "doubt ... much higher"; from 76 to 90 isn't a huge jump. I get that the effect of IVR on premium is non-linear, but this isn't like the 20 to 100 range in some of the underlyings I use - and I got in when it was already pretty high. I'm still trying to get a feel for a lot of this stuff, and I'm fascinated by the dynamics in ROKU - it's screwed whatever intuition I thought I've developed about IV vs. realized move to hell and gone. I guess that's really about the best way to explain what happened with this trade initially; I guess I mentally telescoped in and out when looking at those huge swings on the chart and thought "oh, must have been due to binary events - can't possibly have anything to do with normal price movement!" Uh-huh... riiiiight. I think I'll just have a separate mental category for "Carnage stocks". ROKU, being the calm, sedate thing it is, will fit in there just fine.
$115.13 UPS 191220P110 $2.10 $116.17 UPS 191220P110 $1.80 $30.00 Hm. I was going to hold this through earnings - the expected move was only a couple of bucks, which is what it turned out to be - but almost 15% after a 3-hour hold on a 60-day expiration? Yeah, I'll take that any time. Other than that - another low-VIX, dead day. How dead? GLD had an IVR below 50. That, my friends, is long past dead and into 'manky' territory. [cite] 'You've been on a lot of battlefields, ain't you?' 'Dozens.' Sergeant Colon nodded. 'So you've seen a lot of corpses, right, when you've been ministering to the fallen—' Corporal Nobbs nodded. They both knew that 'ministering' meant harvesting any personal jewellery and stealing their boots. In many a faraway battlefield the last thing many a mortally wounded foeman ever saw was Corporal Nobbs heading towards him with a sack, a knife and a calculating expression. 'Shame to let good stuff go to waste,' said Nobby. 'So you've noticed how dead bodies get. . . deader,' said Sergeant Colon. 'Deader than dead?' 'You know. More corpsey,' said Sergeant Colon, forensic expert. 'Goin' stiff and purple and suchlike?' 'Right.' 'And then sort of manky and runny . . .' 'Yes, all right—' 'Makes it easier to get the rings off, mind you—' -- Terry Pratchett, "Men at Arms" [/cite] I didn't bother trying. But I bet Nobby would have had an easy time with those rings today.
The irony of reading through your journal, Blue, is something we touched upon I think in our chats... I try to follow what the option folks like you and destriero are doing, and I'm like, "The FACK is going on, this shit makes no sense," but futures are a cake walk to me. You seem to be able to understand all this complicated shit so clearly and is a cake walk for you, but when talking about simple ol' futures, You go "The FACK is going on, this shit makes no sense to me." I love me some ironical mojo. That's why we seem to get along. Plus your irreverent humor. I like that. Spices up the place.