Dear Traders,
This weekend I'm heading to Chicago.
I land Thursday, spend the night at my parents' house, then pick up my buddy Pat at the airport and head to Michigan to spend the weekend with my high school friends on a lake.
We'll share old stories, make fun of each other, party on the lake, and laugh a lot.
It's one of my favorite things I get to do all year.
When I drive back to my mom's house at the end of the weekend, I'll already be looking forward to next year.
It's amazing how old friends remind you who you are and ground you, isn't it? They don't let you get away with any of the pretenses you've developed over the years. They bring you back to the person who complained about curfews, wondered what he was going to do this weekend, and was still learning to drive.
Whether it's college or high school, almost all of us hang onto a few close friendships for the long haul.
I've kept a few from college and my early work life (Hi Tim!), but this group of nine guys are some of my favorite people, and this weekend is going to be a blast.
Few things bring us back to the days before jobs, marriages, children, and "adult responsibilities": going back to your hometown or your college, eating the food your parents or grandparents made for you, and above all the men and women who knew us in our formative years.
Maybe that's why I love trading options so much.
I got my start on the AMEX trading equity options, but I did all my real growing up on the Cboe, working in the SPX pit (where options on the S&P 500 index trade) with the firm that started the VIX (the market's fear gauge).
Trading SPX in particular feels like home to me. No, I don't win all the time. But I know it so well that even when I lose, I know how and why, and I usually know I'm going to lose pretty early on.
Sure, I've added new wrinkles. When I was on the floor, there were no weekly options, let alone daily ones. But because I know the product so well, I was able to fold them into my trading pretty quickly.
Ask any trader and they'll tell you the same thing. Volatility traders trade vol (they bet on how much the market moves, not which way). Directional traders trade direction. Premium sellers sell premium (they collect option income and bet the big move doesn't come). They pick up new wrinkles along the way, but because they know what they're doing so well, they adapt and improve.
Take Olivia Voznenko, "Voz."
She's been trading zones in SPY successfully for several years now (zones are price areas on the chart where she expects the market to bounce or stall). Now she's taking those same zones to the QQQ with as good or better results. Her QQQ zones are a direct application of what she's been doing in SPY all along. Same playbook, with a wrinkle.
You can see what she's doing by watching this.
Your only option,
Mark Sebastian