Henry Schwartz shared a post December 24 at 8:02 AM · A little Christmas cheer for the option trading community TradeAlert December 23 at 8:52 PM · A Visit from Volatility (with apologies to Clement Clarke Moore) 'Twas the year vol exploded and all through the street Option traders were scrambling on every new tweet The market was tanking, implieds through the roof Inverse volatility products went poof Market makers were smiling, the few that were left While those who had shut down were simply depressed Exchanges were happy, as volume ran high Even hedgers felt jolly as downside was nigh When out in the spu pit arose such a clatter The fed told the market just what was the matter A few minor targets were slightly off track But raising the funds rate would put things right back The analysts pondered which way would we go As credit and tariffs made earnings so-so And after the VIX cash had shown so much fear The market went higher but cracks did appear A pullback predicted, the market then fell And kept grinding lower, a new kind of hell The buyside was hurting, the prop traders too Derivative traders knew just what to do Long call spreads! long put spreads! long combos and collars! With straddles! and strangles and time-spreads for dollars! In leaps or in weeklys, a put or a call An option position can offset the fall As managers shifted their risk to and fro The selloff persisted, how low could we go The bull run was over it seemed safe to say Would Powell or Buffet or Trump save the day? Well here’s where the story begins to get sad Concentrated long-only positions are bad Trades must be entered with caution and care Risk must be managed or losses will flair Risk and reward is the name of the game Hedging and writing can lessen the pain We all have our up years and down sometimes too The key to survival is not to get blue Those who have traded through thick and through thin Know that the markets can change on a whim So stick to your game plan, keep risk limits tight Happy Holidays to all, may the New Year delight.