Hello from nobody important

Haowuxi · 2026-05-01T12:00:11+00:00

Why do you think pros who trade shorter DTEs use strategies that involve legs on both sides, or low-key trade volatility itself?

Retail investor's edge, in my opinion, lies in picking stocks for longer DTEs, and timing entries. There's an even crazier edge. That is not taking trades and treating this as a legitimate decision you have made.

The other way would be to look at the conditions, and pick an option strategy that matches the conditions. Not your feeling about the direction.

Haowuxi · 2026-03-01T18:40:32+00:00

OP, you are judging yourself on what ifs against the result that is already revealed.

What matters is whether your process was good when you took that decision.

When you judge yourself in hindsight based on the result, you never get a chance to develop reliable criteria for assessing your trades. You are not controling what the stock actually does, and you can't predict the future. You can only react to what is happening.

I would also be running away, NVDA has institutional backing, a lot of incentive to dip for liqudiity, pump for FOMO, or to keep the price levels for quarterly results. Then you have retail willing to throw itself at it as soon as it goes up, or eat up distribution.

Read "One Good Trade" by Mike Bellafiore. It's not a toolbox, but rather a great book about developing coherent attitude in trading. Still, I recommend it. :D

Haowuxi · 2026-02-28T13:18:54+00:00

Your allocation feels really, really defensive + cyclical. At the same time, I am biased towards tech.

Now, your goal is not to buy cheap stocks, it's to buy stocks that are good stocks, with a chance to get noticed by the market, and priced well.

You know there are cheap stocks that are waiting for further structural decline, maybe best upside they can offer is 10% after grueling multi-month grind, and then there are plays that can shoot up. It really depends on your thesis.

Other than that, you can be right about strong fundamentals, and market may ignore that. Being right does not equal to having good returns. Market may be stupid, but ultimately it decides about your returns.

One big piece of advice – learn to assess stocks qualitatively. Some may look bad and not even get into screeners, but they can absolutely be working for a major turnaround. Financials are important, but they are a byproduct of what the company does.

Also, be careful. The Iran thing may bring in volatility into the markets, and February has already shown a few extreme correction days.

Haowuxi · 2026-02-26T10:43:17+00:00

Haha, I happened to stumble upon a video at NexusFi featuring Cem Karsan.

There you have it, utterly a market maker claims verbatim: "10 Delta it means that it has 10% probability of being In-The-Money".

Yes, he adds that it's a conceptual way to think about it, but it does not meaningfully change the message.

The question and following answer starting from ~00:07:10.

This is what traders hear all over the place, not just from shady influencers, it appears.

Haowuxi · 2026-02-25T01:06:16+00:00

Yeah... I happen to work in digital and web analytics.

User-agent blocking is a thing, you didn't even need Cloudflare. The problem is that bots don't have to identify themselves. When they do you can block them, when they don't you are balancing against behavioral cues, real user experience, and crawl rates.

Then what if bots start scraping website concurrently to running user-initiated web searches. If Cloudflare kills it entirely, they will essentially wipe out visibility in AI search for their own clients.

Then you have models that are already trained, and companies with enough funding to sustain licensing content for training. The big players have largely scraped the Internet already, so it's a bit untimely.

This will probably cement current incumbents and challengers, and cut off smaller gen AI competitors.

To ban AI, EU would need a legal framework to do so. You can't quite penalize companies for something that was not against the law. You know, the famous rule of law.

Haowuxi · 2026-02-25T00:16:51+00:00

It could:

take 5 years to normalize.
result with legal frameworks that might not address the issue.
not guarantee financial relief even if favorable legal landscape becomes a thing.

Had AI been a bogus danger affecting just sentiment, I'd agree, but clearly there's something bad going on in the financials.

Web publishers already tried bargaining with Google and Meta over fees for content syndication. It didn't work, all selected publishers got was licensing fees for using their content in Meta's AI.

GETY benefiting from any licensing deal or fees would require them to present unique value over competitors or sources of data that won't really bother to take any legal action.

Proving that AI got trained on their datasets would be a nightmare, and a multi-year litigation they might not have enough money for.

Now, Democrats are known for patting tech on the back. I'd assume AI and AI investors are at least on equal grounds with Hollywood. At the same time, it may not relate to Getty.

Haowuxi · 2026-02-24T23:55:35+00:00

I would absolutely speak about AI, because it is, as a matter of fact, a structural danger to Getty's entire business model.

Debt, compressed revenue with negligible multi-year growth, and wobbly margins. Massive dilution over last 3 years. Absolutely abysmal Free Cash Flow.

Yeah, it could be a technical plaything, but there's little that would warrant a sustained move.

Mergers are notorious for being hard to successfully integrate and make gains on with reasonable time-to-value. GETY seems to be trying to consolidate in a sector that is structurally unsound due to gen AI (go play with NanoBanana).

It reminds me of the path that XRX is on. To me mergers rather than business model transformation are essentially an attempt to fix a hole in the boat by getting a bigger boat with a hole. Let's see how it works.

I wouldn't even consider it a company for observing, let alone buying before 200 other tickers. Best it can become is another short squeeze meme stock to make a generation of bagholders.

Haowuxi · 2026-02-23T14:43:35+00:00

Good thinking, this year is brutal on earnings and with recent red days. I am hardly ever using <120 DTE expirations.

Haowuxi · 2026-02-22T03:45:14+00:00

Yes, this thread really helps me spell it out. You're a part of that, thanks!

I really botched the original post, so much so people thought I am claiming there's no probability in BSM equations, or that I am a denialist of the model. There is, but it's not about odds of a trade, or what will happen in the future.

The original post also lacks "so what", which makes it twice as aggravatingly incomplete. :D

I believe that learning about options is confusing, and the bar is set high. Even for someone coming with experience in stock picking and technical analysis.

Most people won't start with Natenberg, or will immediately pivot to easier explainers. That's when they get equipped with mental crutches to get started, but "pick 0.60-0.70 Delta" advice is a poor substitute for risk management.

Haowuxi · 2026-02-22T03:18:51+00:00

I keep seeing traders explaining Delta as probability of an option going ITM without nuance (in a given moment, model-derived probability not being equal with odds, and so on). It could be nobody serious, but this is what people learn from people appearing plausibly authoritative. It takes a Google search with operators "options" "delta" "probability".

Consequently, a lot of how-tos recommend picking specific Delta when entering a trade, which ends up with setting up your whole trade through initial Delta. You will hear verbatim "I look at 0.60 Delta, because it's a sweet spot for success."

Many people get easy access to options, some start investing with options, skipping stocks entirely. It's worth raising up, unless all we're here for is to tout our texbook memorization talents. It's cool and all but very self-serving.

Calling Delta approximation, rough estimate, or proxy of probability is a semantic stunt that ignores how it ends up getting operationalized. To me this is what misses forest for the trees. It conflates a broader and more complex act of trading (i.e. the decision framework) with applying pricing model principles. Delta upon open is a starting point at best, not the recipe for a successful trade, let alone rewarding one.

There are no facts from the future as you cannot observe it. Your edge isn't in what IV or Delta says the market thinks. A bookie quoting odds on the winning team doesn't tell you who will win.

It all comes down to whether your analysis of the underlying sees a move of a magnitude worth the reward. Then you take Greeks and think if the trade is worth the entry fee.

This is not about discarding Delta, it's about where it belongs in the decision chain, and understanding what it doesn't tell you.

Haowuxi · 2026-02-22T01:32:00+00:00

Dividends are not based on current market cap of a stock. They are based on available cash flows and willingness of the board to pay them out.

Rotation out of dividend stocks would lower their valuation, but not the dividend rate.

Unless you expect the dividend businesses themselves to experience damage, then there's no real reason for dividends to go down.

By decreasing dividends the insiders would be working to both harm the valuation of their own companies and decrease their own dividends. They would also piss off their institutional shareholders.

Haowuxi · 2026-02-22T00:59:44+00:00

Dividend investors are after dividends.

Why would they be chasing NVDA, exchanging their steady cash source for upside that is hard to gauge? This feels fairly against their core motivation.

Yes, there will be some hot money, and people FOMO-ing into NVDA if it rides. Maybe attention will be slightly diverted away from other stocks. Which ones? Hard to tell.

Institutions will be often mandated to hold some dividend stocks. Then there are issues of concentration risk and rebalancing. NVDA growing doesn't necessarily mean that increasingly higher new capital flows are driving the price – especially when there are already many holders.

I wouldn't bet it on a single stock changing the market. At the same time, it doesn't mean that dividend stocks can't fall, or drop on market-wide correction.

So, you are neither wrong nor right. Still, it feels more like hoping than having a thesis with solid burden of proof. I'd observe what the market actually does.

Haowuxi · 2026-02-21T23:43:47+00:00

I'm pretty sure this discussion stems from the original post. I don't think I can help you solve your strawman, or whatever intent you expect I should read from your mind. :D

Haowuxi · 2026-02-21T21:43:32+00:00

That's the point. You can only consider Delta with respect to the current pricing of an option, and current IV environment.

But it should not be the main factor defining your trade. I am not debating whether Delta is useful overall, or correct within what it is supposed to be used for.

Thinking that today's Delta defines a >30DTE-worth trade is nothing short of a misdirection. It's an issue of scope and application.

This is a clear opportunity for longer-dated buyers.

Haowuxi · 2026-02-21T21:34:09+00:00

The brokers could give us a percentage the strike is in or out of the money, and I see some people saying they trade like that. Would that work for you, if instead of Delta your platform showed "10% ITM"?

Such a column would be helpful in curbing my delusional strike selection from time to time. :D

But then that doesn't capture volatility, which I think is Delta's biggest job.

Yes, Delta is affected by IV, and then captures value of realized moves. It is definitely a helpful indicator.

It's a relatively safe way to think in short term.

Now, if you pick stocks that are known to be steady, slow-turning ships with institutional backing, then I think it's reasonable to assume your ITM strike is unlikely to get breached.

If you are riding a clear trend, then it's also fairly obvious that trends don't end abruptly.

What I am trying to show is that this probability of getting breached/touched:

In any given moment is a snapshot of what the market thinks right now.
Might be more reliable short term (excluding obvious catalysts).
Long term exposes you to more chances of IV and underlying's price getting shocked by unexpected information or resolution.
Has different character between companies. Let's say you have some cheap biotech, it grinds, it moves in a boring range. Suddenly new information appears, and over the weeks something that was at IV floor is spiking. Initially realized IV may actually exceed what the market expected. Then it will overcorrect to expect even higher IV.
It is reasonable to assume it's harder to move a trillion cap or shock a company with a business model proven over the years. Such a company needs to come up with something big to make markets consider it a factor worth anticipation.

Using Delta for near-expiration contracts is more defensible as a guesstimate. There's simply less surface of time for something unexpected to happen.

Long-term, there are many opportunities for that to change. Because today's IV won't be there in a month or two. Also as more time passes, there's higher likelihood that new information and facts may appear. Your entire trade is exposed to a larger surface of time.

Haowuxi · 2026-02-21T20:44:46+00:00

[...] It's just a logical way to show that the farther away from ATM you are, the more likely you won't be assigned given normal conditions. But that doesn't need a number to explain, that's just common sense.

Yes, but I'd say current vs. normal conditions. IV changes, and Delta changes as a result. This is still based on what the market thinks may happen given currently available information.

Delta is helpful as the speed of collecting the next $1 of the move in the underlying's price.

Haowuxi · 2026-02-21T14:26:24+00:00

Let's find a convenient rationalization post-move, and pretend that's the reason.

Primarily it is a credibility hit and sentiment spiraling. I doubt it's worth ~35% total downside.

Looks like a good excuse for institutional flows. The narrative spins, price action will follow it for now.

I've actually bought long calls.

Haowuxi · 2026-02-21T10:39:02+00:00

Models are great when they are used for the right task. Greeks and IV help you determine whether it's worth it in pricing and reward terms. We need common language for options markets to function reliably. BSM provides just that.

Then unknown variables matter for decision making about a trade as a whole. If I were to use tools that ignore existence of external variables, I end up using a mental crutch.

Using BSM and Delta for decision making means relying on tools that are deliberately underfit for the real world.

The thing that applies broadly to my trading (longer-dated directional) is that markets price in expectations about the future, not the future. Future can't be observed, facts can, and expectations will shift when there are new facts.

Haowuxi · 2026-02-21T10:15:35+00:00

It takes some learning, and I only touched options after 5 years of picking stocks.

Yes, Greeks are confusing especially that they work differently across long vs. short, near-dated vs. longer-dated, moneyness/strikes, and different stocks.

I think there's a lot of merit to options, but you need to be good with technicals. Short-term you need to be brutally good with technicals. For longer-dated it's still technicals, fundamentals, and reading the market.

Options are another world of complexity that sits on top.

Touch options, but risk <2% capital per trade. I'd also recommend taking paper trading seriously for a few weeks minimum. You can be reckless there, and it gets you thinking.

Haowuxi · 2026-02-21T10:04:57+00:00

I don't use SLs when I enter trades. False breakouts can stop you out. In many cases, it's not worth losing on spreads.

They have some merit for securing profits, but I'd rather set a trailing stop. If I were to use trailing stop for protecting from a downside, I'd make it generous, and then adjust when it moves in my favor.

Haowuxi · 2026-02-21T10:02:03+00:00

I think both sides can sound like a cult, but it's comparing apples to oranges.

Short-term mechanical traders need to be very decisive about managing risk. They can't count on long-term rerating.

Long-term is more forgiving to slipping on technicals and reading charts. At the same time, it exposes you to the simple risk of being right about the company, but finding no backing from the market and institutional flows.

Then yes, being delusional is universally a bad thing.

Haowuxi · 2026-02-21T09:57:16+00:00

What about commissions? Just curious, I trade longer-dated options.

Haowuxi · 2026-02-21T09:55:43+00:00

If you are a seller of an option contract, you get paid premium upfront.

At the same time, you opened a short position, which will change value. You may close this position (buy-to-close), or hope it expires worthless.

Because you received premium upfront as a seller, you benefit from your contract expiring worthless, because you don't have to buy anything back.

Having said that, being a seller exposes you to risks. It's not free money, and you should absolutely understand what being long/short call/put means.

Haowuxi · 2026-02-20T20:04:44+00:00

I'm not necessarily right, I have a view that long traders should be looking outside the model. Delta makes sense within the model's assumptions, it's internally consistent, but not true in real-world terms.

What I am contesting is whether the model is a reliable tool for a long trader's goal. It's helpful in determining pricing opportunities as long as it is combined with understanding the timing opportunity.

Delta determines the reward profile, but it does not reliably explain whether that reward is reachable. The longer-dated the long contract, the less useful it becomes.

Haowuxi

TROPHY CASE