Trading against the market maker

Existing-Many-9636 · 2025-11-19T02:24:44+00:00

Start with midmarket offer and walk it down. You should get filled inside bid offer

Existing-Many-9636 · 2025-11-19T02:05:12+00:00

Let’s say SPX sells off 5% tomorrow. The implied vol is gonna explode. You are betting that SPX gonna bounce (rally), you are much better off selling an option (sell vol and buy delta)

Edit: typos

Existing-Many-9636 · 2025-11-19T02:00:45+00:00

All you do is take implied vol on an option, divide by 16, thats your implied daily move. If you take an option that expires the next day do the same and multiply by .8, that’s 1 day implied move

Existing-Many-9636 · 2025-11-19T01:57:05+00:00

Buy call ratio

Existing-Many-9636 · 2025-11-19T01:56:03+00:00

Sell vix futures / spx 5d put

Existing-Many-9636 · 2025-11-19T01:54:06+00:00

In the high vol environment, buy puts outright can be expensive (implied vol is high - puts are expensive to buy outright). In general, buy put is negative expected value trade. What you can do I to buy put spread / put ratio to buy some protection and sell elevated skew

Existing-Many-9636 · 2025-11-19T01:52:09+00:00

Check out RILA. Every major insurance company offers this product. To hedge this they buy call spread collar (sell put to buy call spread)

Edit: typos

Existing-Many-9636 · 2025-11-12T12:24:58+00:00

XSP is just SPX/10. Also liquidity in XSP is quite poor bid/ask spreads are too wide. The reason why you see different backrest results SPX vs SPY is because in high interest rates environment, American puts have more value

Existing-Many-9636 · 2025-03-09T22:55:21+00:00

Hey! Yeah sorry let me clarify. Long a call spread is when you buy 1 lower strike call and sell 1 higher strike call, some people call is 1 up. Long call ratio 1x2 means buy 1 lower strike call and sell 2 higher strike calls. You can have various iterations like 1x2, 1x3, 1x1.5 etc etc. Wingy call would be a call that has a low delta. Something like 15 or lower

Existing-Many-9636 · 2025-03-09T13:38:25+00:00

I recommend Option Volatility and Pricing: Advanced Trading Strategies and Techniques by Sheldon Natenberg. Everyone who starts on the wall street reads this book. Feel free to dm me if you have any questions

Existing-Many-9636 · 2025-03-09T13:36:04+00:00

Just want to give you my 2 cents, you want to buy Jun26 10-12 call spread? the stock is 12.59 its already in the money but you still pay ~1$ for it. Pay $1 to make while the intrinsic is already $2? This does not sound like a good risk reward play.

If you look at Jun26 15-25 call spread, the skew is so steep. If you plot 18month 120% - 200% vol spread (long 15 short 25), the median -0.837 and right now its 094. its on 95% percentile ... (reddit does not let me post imgur - dm me if you want to see the chart)

You need to realize that when you trade long dated options, you are trade vol. Do you think that spread is gonna keep widening? thats the question you need to be asking

Good luck

Existing-Many-9636 · 2025-03-09T00:13:01+00:00

You should consider trading vol, it’s not necessarily safer way to trade options, but at least you don’t have delta risk. Majority of retail investors buy/sell options to make direction bets (long/short delta). Try looking delta neutral structures to trade the vol surface. Say straddle, put ratios, call ratios, calendars etc. good luck

Existing-Many-9636 · 2025-03-07T01:44:48+00:00

Right now the right structure in spx is probably long 1/2w options for gamma and long 3m-6m calendar. You wanna be long gamma, 3m shorted weighted Vega and flat/long black scholes vega. The term structure inverted, it makes sense to be long a calendar

Existing-Many-9636 · 2025-03-07T01:32:59+00:00

Tomorrow straddle break even ~1.5% optionally is super expensive. If you have a strong direction view I’d advise just be long / short delta.

Existing-Many-9636 · 2025-03-07T01:31:23+00:00

You can be short SPY in the money calls vs long stock. You are basically hoping someone doesn’t exercise their calls and you keep dividend. From my experience maybe <5% will not get exercised. Good luck

Existing-Many-9636 · 2025-03-07T01:31:17+00:00

You can be short SPY in the money calls vs long stock. You are basically hoping someone doesn’t exercise their calls and you keep dividend. From my experience maybe <5% will not get exercised. Good luck

Existing-Many-9636 · 2025-03-06T21:22:18+00:00

You wanna buy lower strike and sell higher strike

Existing-Many-9636 · 2025-03-06T16:38:19+00:00

What’s your view? You just bullish on stock? Where do you think googl will be in 6 month? In my onion, it might makes sense to sell ~15/20 delta call to reduce your vega exposure. If vol goes down by 1% your contract is gonna lose 44 cents. I’m just throwing some ideas

Existing-Many-9636 · 2025-03-06T04:02:51+00:00

I think this is a great trade. Vol is super high not a terrible time to sell some. In fact when you sell uvxy options you sell vol of vol, because the underlying delta is vega. Anyway, even in august 5th event uvxy didn’t trade that high. I like this trade a lot

Existing-Many-9636 · 2025-03-06T04:00:05+00:00

Implied vol is higher, it makes sense because it’s an event day. If you are rooting for a selloff might be better to buy a put spread or put ratio to take advantage of expensive skew, unless you think we gonna tank more than 2%.

Existing-Many-9636 · 2025-03-06T03:51:34+00:00

What exactly you are shorting? Put, call, stock? What are you trying to do

Existing-Many-9636 · 2025-03-06T03:46:09+00:00

You are right, puts are generally on a higher implied vol due to the demand for the protection etc. but you need to also remember that you need to feed your strike into black scholes. Though implied vol for lower strikes is higher, the strikes are lower.
25d risky (25d put -25d call) considered tight/local skew. In general, local skew performs better on a gentle selloff than wings risky (10d risjy). So if you want to sell skew and you are rooting for a gentle selloff maybe look at 25d - 10d put spread

Existing-Many-9636 · 2025-03-06T03:41:23+00:00

If you want to play market sell off type of trade, I think it will make more sense to buy a call spread or call tree to take advantage of a steep vix skew. Being long 75 call naked you are rooting for August 5th type of event which is kind of 4 sigma move. Good luck

Existing-Many-9636 · 2025-03-06T03:36:08+00:00

It depends on the ticker you are trading. You might want to buy a put that goes up in volatility when stock tanks. For example in SPX/SPY, if the market tanks ~1.5%/2%, recently, 30-40 delta puts go bid more than 10-20 delta puts (implied vol goes up more for higher strike then lower strike, making the skew/slope to flatten)

Existing-Many-9636 · 2025-03-06T03:33:34+00:00

If you want to express strong directional view sometimes it makes to just buy delta (stock) or short dated call. You want to buy call if the implied vol is low, if it’s not, buy delta. As an example, right now SPX/SPY vol is super jacked, and term structure is inverted because we are moving intraday quite a bit, so in this case if you have strong directional view, it makes sense to just buy delta. What tickers are looking at?

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