The Ins and Outs of 'Expo' Trading
This blog explores the unique trading market of 'expo' trading. It explains how mental math, reading the situation, and a scenario game plan are all important aspects of successful trading.
Kris
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So 0DTEs are a thing. Expiration every day. Lovely.
— Kris (@KrisAbdelmessih) March 7, 2023
A few unsolicited thoughts...
First of all, "expo" trading as we'd call it was IMO a pure trader's market. You don't need sheets or a model. -
Just listen to where the straddle is trading on legs, know the asset price and what time it is. You could price the board in your head.
— Kris (@KrisAbdelmessih) March 7, 2023
You have muscle memory "at this time of day in this asset the straddle would be fair around X"
In open outcry it was about speed -
Mental math, reading the situation etc.
— Kris (@KrisAbdelmessih) March 7, 2023
It was exhausting. If I had a lot of strikes on going into expo I made sure to sleep well the night before. You were going to trade a lot and needed to be on your toes. And you'd want a scenario game plan going into it. -
But overall it was not some technical sht. It was pure trading. Trying to buy an option at a 1 pm price while it was still noon. You get a feel for it.
— Kris (@KrisAbdelmessih) March 7, 2023
Doing StockSlam in the Bay area this week and the experience lets you viscerally feel what this abstraction of words means -
Today, it's still a speed game. And because very few people have a true 1 day risk they need to hedge it's a table of fish. So once again, the firms that doubled down on tech with $50mm+ cap ex budgets are the beneficiaries
— Kris (@KrisAbdelmessih) March 7, 2023 -
Meanwhile customers of 0 dte have nice LTV to those firms because the optically tight bid/ask doesn't skin you in 1 day like a loan shark would.
— Kris (@KrisAbdelmessih) March 7, 2023 -
A lot of pennies to be had for them. Anyway, when I transitioned off the floor I traded expo much less. My relative advantage fell because pit pecking order gave way to non-cutting edge tech.
— Kris (@KrisAbdelmessih) March 7, 2023
If you are trading 0dte do you know the nature of your skill? -
Anyway, I'm looking fwd to meeting up with many of you this week and hope that StockSlam will make the idea of pure trading concrete.
— Kris (@KrisAbdelmessih) March 7, 2023 -
You'll see that a random walk doesn't mean everyone is equal. You can find relative value because of "flow" which comes from disagreement about odds...
— Kris (@KrisAbdelmessih) March 7, 2023 -
But the opportunity comes from understanding how a disagreement differs from consensus and the gamesmanship around execution.
— Kris (@KrisAbdelmessih) March 7, 2023
Degen it up
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