HYG selling off doesn't tell you much about credit. It's got the rate move sitting inside it. People see that chart dropping and start panicking about credit going crazy. But on a big move in yields it's going to fall whether or not credit is doing anything at all. The quick fix is HYGH, the hedged version, which strips the rate part out. If HYGH is going nowhere while HYG drops, spreads aren't really widening and what you're looking at is the bond move. That's what I've had on my screen through these bond moves, and it's been pretty quiet. I'm not sure how good HYG is as a credit barometer these days anyway, given what's in it.

Whether I buy a call or a call spread mostly comes down to how expensive the vol is. When vols are elevated, the calls are just expensive. So I'd cheapen that up with a call spread, selling a strike up where I think the stock's going to struggle to get through anyway. When vol's cheap relative to where it's been, the outright call starts to make more sense, as long as the stock isn't realising much less. You're not overpaying for the move, and you keep all the upside if it really goes. Case in point, $SMH calls don't look bad for year end which implied vol cheap across the whole term structure.

A lot of options end up expiring worthless, and for plenty of them that was always the plan. Puts bought as a hedge are a bit like fire insurance on your house. You're paying for it so you don't have sleepless nights.

Bank of America is the most oversold name on our strategy compass, and it got there on weak guidance its CEO gave at a conference. Brian Moynihan warned that investment banking fees would fall 10% to 20% year on year this quarter, with trading revenue flat. The stock dropped on it, and across the broader universe of names we look at, nothing's more stretched to the downside right now. Vol's plateauing, skew has turned up. Looks like a bounce setup.

I run my money in two halves, and options do a completely different job in each. The first half is a long only portfolio I've built over many years. My pension, savings, that kind of thing, allocated across equities, commodities, cash and crypto. I don't change that allocation very often. I pivot it a bit based on what I'm seeing, and I use options around it to protect it when things look overbought. Or when the market's rallying and there's no risk priced in at all, because that's when hedges are cheap to put on. The second half is alpha generation. That's where the tools I've built come in, looking for opportunities cross-asset, and it breaks into three types of trade. Delta trades, which are directional. Theta trades, trying to earn premium. And vega trades, taking a view on volatility itself. Keeping them separate stops the long term money getting dragged into short term decisions. I teach it as the Delta, Theta and Vega frameworks, because each one asks a different question.

The safer time to sell vol is after it's already dropped, and I know that sounds backwards. Say the gamma data tells you the street got longer gamma on a rally. If that's true, market makers got long, so they should be offering vol down a bit. So check. Did implied vol actually come in? If it did, that's the data being backed up by what the market's doing, and now you can sell vol in that name a lot more safely. If the gamma number went up and the vol didn't budge, I wouldn't lean on the number. The instinct is to sell when vol's in the 70th percentile because it's high. I'd rather watch it drop first and let that confirm the street's long. It's counterintuitive, I know. But in a high gamma environment realised tends to get crushed, so there's usually still plenty of juice left to harvest after the confirmation.

The idea that market makers push stocks to max pain at expiry is complete nonsense. Someone in the Discord asked me about a take that gets posted around every OPEX. It says market makers make the most money if the stock pins at max pain, so after a big rally they've got an incentive to drive the price lower and wipe out all that in-the-money call premium. Think about what a market maker actually holds. They sold a call, it's gone deep in the money, and they've hedged it with stock or futures. At that point they don't care that it's in the money. The hedge is doing the work. They've got zero interest in making the stock drop so the option loses its intrinsic value. Their P&L doesn't really depend on it. So I'd take anyone building a whole OPEX thesis on that with a big pinch of salt. The real number to care about into expiry is CHARM, i'll put out an article about that soon.

Something uncomfortable about selling volatility that I keep coming back to. The track record is most impressive at exactly the moment the strategy is most dangerous. Think about how the numbers accumulate. You harvest the premium day after day and the equity curve goes up in a smooth line. The longer the calm lasts, the better the record looks, the more confident the operator gets, and the larger the position tends to become. Every incremental day of quiet makes the strategy look more proven and makes the eventual reckoning bigger. So the statistic people usually reach for, how long it has worked, is close to useless as a safety measure. A short vol book that has performed beautifully for three years has not demonstrated that it is safe. It has demonstrated that it has not yet met the event it is short. That is not an argument against selling vol. The premium is real and it is one of the more persistent things in markets. It is an argument about how you sell it. Defined risk, wings to protect you, a structure where the worst day is a number you have already looked at and accepted. The question I would want answered before running anyone's premium strategy is not what it has returned. It is what happens on the day it is wrong, and whether that number has ever actually been tested. Smooth is not the same as safe.

One of the more instructive trades of my career was one that should have worked and did not, and it taught me what a put spread actually is. February 2018. I had a put spread on the book. The market sold off four or five percent in a violent move, the sort of day protection is bought for. I looked at my position expecting a decent number and the put spread had barely changed in value. My honest first reaction was to wonder how that was even possible. A hedge, in a proper sell-off, doing nothing. The answer is that a put spread is a short skew position. You are long a put nearer the money and short one further out. Those lower strikes are where the short vega is concentrated in a move down, and when vol and skew explode the way they did that week, the option you are short gains more than the one you are long. Skew steepened violently against me and it swallowed the gain the delta was handing me. There is a second problem stacked on top. A put spread only pays its maximum when the short strike decays to nothing, which means at expiry. Sell-offs happen fast and bounce fast, so the moment your protection theoretically looks best is usually a moment you cannot cash it at. If the market had settled at the lows, the skew would have come back in and I would have got the money. Markets do not tend to do that. So put spreads are not a cheaper version of a put. They are a different position, with a different exposure, that behaves worst in exactly the conditions you bought it for. I'm not saying don't buy them, I'm just saying know what you're buying when you do.

The VIX does not tell you where the market is going... Here are 2 things people believe about the VIX, worth putting down. That it's a fear gauge, and that it predicts direction. It does neither. It measures the movement the market expects over thirty days regardless of direction. A high VIX says expect a big move. No opinion which way. Often the bigger moves happen on the way up after VIX has already spiked.

The delta pairing I use on a hedging put spread When building a put spread for protection, I pick it in delta space rather than strikes. Buy around a 30 to 40 delta put. Sell near 15 delta to cheapen it. Protection where a drawdown starts, financed by a strike far enough out to be worth selling. These are just guideline to get you started, then you adjust strikes to fit your risk/reward and views.

$VIX at 2026 lows. Defying the usual seasonality, but we have FOMC and mid-terms coming. I've slowly been accumulating some long vol exposure. After Labour Day people might wake up to the fact that their is some risk...

So I think there's going to be quite a bit of resistance on the way to $85K on bitcoin. But if we get enough news to break us through that, then it could be that could open the door for $100K by year end if this really does kick off a new bull market. Look out for that.

Watch when stocks inside one story start trading against each other rather than as a group. That shift says the market has decided the pie stopped growing, so the argument moves to who takes share. Different regime entirely. Rotation within a theme is a maturity signal.

I sell puts covered almost always, having made peace with taking delivery. The exception needs several things at once. Volatility astronomical, the name oversold, the whole market visibly panicking. All three together. Strict criteria make an occasional tail bearable.

Big rallies in commodities tend to end with a volatility burst... @3peakstrading made an observation about how these moves finish that I have been chewing on since, because it applies well beyond the asset he was talking about. Gold has had an enormous run. The question everybody asks is whether it has topped, and most people try to answer it with price. Levels, retracements, whether the trend line broke. His tell is volatility rather than price. Rallies in commodities and other trending assets tend to end with a burst of volatility to the upside. The move goes near vertical, implied vol blows out, and that is what a top usually looks like from the inside. Which makes sense once you think about who is trading at that point. A steady trend is people accumulating. A vertical finish is people who cannot bear to miss it any longer, plus anyone short being forced out. That combination produces exactly the frantic two-way risk that makes implied vol explode. The practical consequence is that a rally which is still grinding higher on unremarkable volatility has probably not finished. His read on gold was that we had not seen the blow-out yet, so this might only be the first leg. I would hold that loosely. Plenty of trends end quietly. But asking what volatility is doing at the top of a parabolic move is a better question than asking what price is doing, and hardly anybody asks it.