Market Selloff Q&A | Twitch #29

[MUSIC PLAYING] Hello, again. Once again, on a down day, once
again, TD Ameritrade on Twitch. I’m Anthony Panzeca joined by– Bill Ruby. Hey, Bill. How’s it going, Anthony? Remember a few
weeks ago, remember? And I think we talked
about this a little bit last week at the
beginning of the stream. It was always– Well, it’s even more
dramatic now, yeah. –new high, new high. Yeah. In less than like what? I think it ended up being, if
you look at the 52-week high, when the last time we
made that, and then we make our first 52-week low. I think it’s what? Like two weeks or
something like that. We can take a look at that. Yeah, well, let’s take a
look at that in a minute. It’s kind of– I
mean it’s just– it’s wild times in
the market right now. Yeah. I mean this is– obviously, I’ve only
been trading for what? Probably five– seven– seven years all together? Yeah. And I mean between physical
and stocks and futures, all that, probably
about seven years. This is obviously the
most crazy time period that I’ve seen in my career. I mean I remember it when I
was like in college, you know, when the markets
were doing this. But I didn’t really
have a good pulse on it. But it’s definitely, definitely
the wildest times I’ve seen. Yeah, I was down– I was on the floor for,
actually, the tech bubble in ’99, 2000. That’s actually when I started. And I don’t really remember
this type of volatility. I remember– well, I mean,
the NASDAQ got up to what? 5,000? Right? So now before all
this happened, I believe NASDAQ was
somewhere around a little over 9,000, so point moves– definitely bigger. Sure. You know, because you can
have the same percentage move, and, obviously,
the point move is going to be much bigger when
you’re that much more inflated. Right. But yeah, I don’t know if I’ve
seen anything like this either. I was talking to a friend
of mine the other day. I have– you know, this
type of volatility– you know, they’re
asking me about what my opinion is of the market. Well, my opinion is
this, is that we’re going to see a lot more
continued volatility. Right. Direction? I don’t know. Don’t ask me to
predict a direction. But I think we’ll see
some continued volatility. Right, and that comes
from a few things, and we can go over that today. That’s kind of like
today we don’t really have anything laid out today. This is for anyone
in the chat room. Feel free to ask us questions. We can try and add some
clarity where we can, if you do have
questions like that. It’s really kind
of a discussion, because this is just kind of
historic times in the market right now. Yeah. And we’re trying to– we like talking about. We want to add clarity where
we can and just kind of get a pulse for what’s going on– Yeah, for sure. –at certain times. But you have something
you got to let us know. Yeah, well, for sure. I mean we want to
keep this forum open and especially with
everything’s happened today. We want to, like invite you
guys to you ask questions, but there are a few ground rules
when we go ahead and do that. The information
presented in this stream is for illustrative and
educational purposes only. It does not intended
to be investment advice or construed as a recommendation
of any particular investment or strategy. Bill and I are not analysts,
and we cannot provide opinions on specific stocks
or their performance. No ETFs. If we discuss ETFs, the
stream cannot be archived. Please follow the
chat guidelines located below the video
player on our Twitch page. And if you choose to shadow
trade us in your PaperMoney account, that is fine. However, any trade placed
in your real money account is your decision alone
and is your responsibility to evaluate or manage. Let’s get right back into it. We have a couple of– Yeah, hey, Laxmi Splunk
and Meme Reversion. Thanks for coming in today. And we have 500 followers. We do have 500 followers. And we’d like to thank our
500th follower who was– I think it was General Gaylord. It was General Gaylord. Yep. Thank you for the follow,
and thank you, Cooter, Tanning Sill, Daniel
Park 12, Martini Rita, and Bizlin Mick, The Nuch One. Did we– no, we didn’t. Katie Did XOXO, Snypronean
Gamer, Rolla Java, and Jessie Jerky. I think it was– It’s Jerky Jessie, actually. Oh, I”m sorry, Jerky Jessie. That’s my dyslexia
kicking in, I guess. Yeah, there you go. Couldn’t even deliver the– Hey, there’s General Gaylord. Hey, thanks for the follow. [INAUDIBLE],, because you
are our 500th follower. You were our 500th. Wow, there he is. Yeah, thanks to everyone
who’s following us, though. Much appreciated. And thanks for everyone
for coming in and watching and participating in the
chat, whatever you do. Only an hour show,
though, today, guys, because Bill and I do have
actual jobs that we kind of– this is our own
project that we kind of– and obviously,
producer [INAUDIBLE] project, but we’re all
part of it together. But we do have to get back
to our respective jobs, because look at the market. Let’s take a look at
what’s happening now. Yeah. I think we’re at the
middle of the day. We’ve been doing these. We went to an hour
and a half, and we’ve had to cut it to an hour because
of volatility and craziness. But hopefully, we will
get back to it eventually. I keep saying that, but
we just need the markets to cooperate just a little bit. But so we’ve got
a chart of the– And we’ll get to you
guys’ questions, too, in just a second. Absolutely. Yeah. So– We see you, Laxmi. Hey, Dow Kid. We got– we’ve got a
chart of the Dow up here. And as you can see, we’re
testing that bottom again. The– Oh, look at that. Yeah. That’s from yester– is that? No. That’s not yesterday, is it? No. I mean yeah. That’s yesterday. That was yesterday. We’ve tested this bottom
one, two, three times now. And it could be pretty hard
to hold a triple bottom. I hope it does. We’ll see. And maybe we’ll get a rally out
of this, but in my experience, triple bottoms have
a hard time holding. OK, Mr. Technician, if we
do break this triple bottom, what were we possibly
looking at there? Well, let’s go back and
maybe look at one year. I mean yeah, that’s not
adding much clarity. Let’s go back even further. You see, so that’s– this is a weekly now. Now here, this– I mean this
is kind of a positive thing. We’ve got a 200-day
moving average here. So this is actually–
we’re on a weekly, so this is a 200-week
moving average. That should tell you
how monumental this move is, that we’re testing the
200-week moving average. No bueno. Maybe that’s why
we’re holding it, and that could be an indication
that we will hold it, because those technicals, as
we’ve mentioned on here before, can be self-fulfilling
prophecies, and they can hold it. People look to buy
in those areas. On the flip side,
a lot of people probably have stops
right on the other side. So if we do make a somewhat
dramatic push through it, you could see those start
to kick in, and then go even further lower. Here comes the magic voice. And– There it is. –if you extend that out,
Bill, show like a 10-year week. The 200-week has
been support a number of times over the last decade. You can’t see him. Can’t see him, but
you can hear him. We can, unfortunately,
but you can’t. I’m glad we can see him. So just a couple history
reminders that 2015, 2016, that was Black Monday in China,
as well as the oil crash. And then Christmas Eve,
2018, we saw it near. You’re in the Dow. S&P 200-week hit right off– Let’s go to S&P. –right off that
200-week on the S&Ps. Well, this keyboard’s
not cooperating. Stand by. You can see– Just tapped right on it. And we’re almost
there on the 200-week. What did we tap? The– 200-week moving average, yep. Now– and this is
interesting, too. Look it. So we are not yet there. That’s [INAUDIBLE]
in the past 10 years. We’ve got some space between
the 200-week and the SPX. So we’ve been above the 200-week
moving average for how long? 11 years? Wow. What’s significant about that? I think it crossed over, if you
go back to that 10-year look. Meaning like if we did
break through the 200-week, what does that mean
for the market? Well, I mean that just
means you’re– so– look at 20-year week to
answer your question, Anthony. OK. The last time we
were below 200-week was 2008 financial crisis. So lose the sidebar,
if you would, too. You got it. You can see we crossed
over after the We stayed below through 9/11. We got back over in the lead-up
of the financial crisis, and then we broke it, and
then got back above it. And remember, 2011 was the fall
where S&P downgraded the United States, because
Congress wasn’t going to raise the debt ceiling. And those shenanigans had
caused that short term blip in the market. Plus, you had– Are you talking the two– The 2011, where we started
using that as support. Is that where you’re pointing? OK. And then, also,
that year, remember, we had the earthquake in
Japan because of the tsunami. Huge tsunami. The nuclear reaction–
reactor in Japan. And then from there, that’s
really when QE from the Fed kicked in. QE2 and 3, I believe, was right
near then in October of 2011, so– or 2010, I think it was. But then we’ve been
in this uptrend, and that has held once,
twice, and maybe three times. Yeah. Well, so I think– this is something that I
always find interesting when looking at these
kinds of things. So this is where the
real break happened, and look at that level. So that was– we’ll
call that 1,250. Now if you go– how long does it take
to get out there? So this is– looks like
September or October, and then it takes
us almost what? A year and a half, two years
to get back to that level. Yeah. So I think– And Mean Reversion actually
brings up an interesting point that I just– look at that candle. Look at the last– not the last very one that
we’re on, this one here. Yeah, that week. You don’t see any
other candle like that. Right, no not on here. On the whole chart. No, it’s the most dramatic drop. I mean we’ve had– we had just
crazy markets these last two years– up, up, up, new
highs, new highs, new highs, new highs, and just
these inflated values. And I think some of
that was correct. It was just corrective,
where we were probably overvalued at that point. And then this is a swing to
maybe fundamentally negative. And Meme Reversion
touched on the fact that Goldman says the word
the bull market is over. I mean I don’t know. That’s such– the bull
market, yeah, might be over. Now the question is, how
much is this pandemic now from the World
Health Organization– how much is this pandemic
going to draw out economically? So is this going to be a
blip like through flu season? Whether you believe that
it’s all hype or not, right? Right. It’s still affecting
the economy. Absolutely, absolutely. I mean there’s people
canceling trips. There’s canceling, you know– Conferences, hotels. Conferences, hotels. You’ve got March Madness. You’ve got all these
things that are on the– Wait, wait. Did anything get done
with March Madness here? Not yet, no. But there’s discussions. The City of Chicago canceled
st. Patrick’s Day Parade. Did they really? Boston, yep. So major– Wow. I’m behind in all this. Public events are being
considered to be canceled. One stat on the candle that
you mentioned, Anthony– fastest– in terms of
timing, the fastest we went from an all time
high to a 20% correction. This is it? Yes, in terms of trading days. And Meme Reversion, I think– and this is just my opinion. I don’t have any research
or anything by itself, but if you look at the way
the market is structured now, things are much more
interconnected electronically. There are more
market participants. Everyone on their phone– you know, back in the
’87 crash or 2000s, I heard stories from
the guys on the floor. They would be calling
brokers in ’87, and they wouldn’t get
a fill for six hours. Right? Yeah. Because everything was manual,
and humans did these things. Now it’s computers. Now it’s technology. But also the way that people
have invested over the last 10 years are much more geared
towards broad-based indexes and ETF products. So it’s easier to sell– Which ones? Well, we can’t name them. But it’s easier to
hit the selling– Way to keep him on his
toes there, Anthony. Just kidding. It’s easier to hit the Sell
button on a broad-based index ETF and push the
market down than it is to sell the individual
stocks within them. So it’s liquidity, right? There’s so much more
liquidity, and there’s so many more highly
leveraged products such as futures or things like
that, where people can get a hedge off like right away. OB, you brought up an
interesting point, though, when we were talking
the other day about the depth of the market
in something like the ES. I think that’s kind of an
interesting thing to look at, where we’re seeing kind of
not as much depth of market as we have seen or we
would expect, I should say, in a product like ES
that’s super, super liquid. Yeah, and you guys
have said this. I mean, Anthony, when volatility
increased and you were a market maker, you widened
your spreads, and you reduced what you were willing
to buy or sell at those levels, right? Yeah, absolutely. Well, in a normal– let’s say
we’re at back at the days of 16 VIX just from a month ago. Yeah. We were– if you
look at the bid size and ask size, so everyone
watching the active trader letter, that’s showing the
level to the depth of market for the S&P 500
[INAUDIBLE] future. To see only, we’ll call it a few
dozen contracts at every price level, now we’re
used to seeing that at closer to maybe the hundreds
or high tens, and 80s, 90s. Yeah, that would get close
to 100, sometimes over 100, and in certain time
periods, you could– I mean it’s not unusual– I mean it’s not unusual to
see like 300, 400 sitting on each side of that
market on a slow day, like people just trying to
get in or hedge or something. And so what does that mean
to seeing this increased volatility? Well, you’re going
to get big market orders that come
in to buy or sell on either side of the book. And let’s say someone comes
in and says, buy 5,000 or sell 5,000. Well, you look at all
those numbers, right? Let’s just do a quick– Yeah, [INAUDIBLE] to
do to get through it. Do a calculation of the– At least a 5-point move, right? At least, and that
could happen like that, because a market order
is going to buy all those offers or sell all
those bids automatically. And you’re going to see
those big flushes up or down in markets like this. So increased volume with less
liquidity at each price level will get you these price swings. Right, and then you
get the wide bid ask spreads and
the option markets, because those guys are
using what to hedge. They’re using the
[INAUDIBLE] 500, [INAUDIBLE] S&P 500 future. If they’re trading SPX
options, they’re using those. There’s a lot of
different vol products that you can hedge with that. You know, so it only
makes sense that they’re going to have a wider bid-ask
spread if the underlying is less liquid, and you’re
not– you may or may not be able to get the hedge off
at the price that you want. Yeah, and think about
the consequences of this. If ES goes down 10 points,
the ETFs have to reprice, the stocks have to reprice,
the options have to reprice, and this is the one
thing about the sell-off that I think everyone
is in agreement on. It’s been
extraordinarily orderly in terms of market structure. Markets haven’t disconnected. Markets haven’t seen
problems where exchanges are down of– you know what I mean? Yeah. It’s actually held
up pretty well. But you think of all these
interconnected parts, and everything’s moving so fast. That’s where you’re
seeing these big swings. Yeah. Right, and just to
take a step back, what is the point of
the market, right? What is the point of being
able to trade so quickly and everything? It’s price discovery, right? It’s like, what is
the actual price? And there is out there,
somewhere, a theoretical price that we should be at. And the market moves
around trying to find that. Now when there’s all these
inputs into the market, that’s when we see
markets spread out. There’s a lot of uncertainty. The markets stand out, and they
swing trying to get to a place where they think it should be. But if you don’t know
where that place is, you’re going to see
this thin market. And that’s why we’re seeing such
whipsaw moves with all this. It’s orderly but not
for the brokerage. Meme Reversion, what
do you mean by that? He said, it’s orderly but
not for the brokerages. We’ve been doing all right. Yeah, we’ve been doing OK. We haven’t gone down. We won’t mention– We won’t mention any names. Oh, I forgot about that one. Yeah. Did you? Did you? Yeah, robs from the rich,
then gives to the– yeah. All right, all right. But yeah, so this is– Gotcha, Meme Reversion. I gotcha, I gotcha. So it looks like– Let’s go back to Laxmi– [INAUDIBLE] –had a question way
at the top, and I don’t want to ignore
Laxmi, because Laxmi is a longtime loyal viewer. Yes. He is saying– I’m sorry. Got to scroll up. In the market there,
it’s over 10,000 stocks. Why trade the VIX? Anyhow, it’s good to
hear from you guys. I’m logged in to paperMoney now. And I would respond to Laxmi. That was my fault, Laxmi. I did not update the
stream info for today. So that was last week’s
title, so please ignore. Oh, yes, yes. I see. Yeah. I guess you could [INAUDIBLE]. Well, we’re making new lows. Let’s just take a look at
the indexes real quick, and then we’ll start getting
to some of these questions. We’ve got the Dow down 1360. Looks like we’re making
new lows right now. Dow down 1,367 to 23,650. We got the NASDAQ
down 396 to 7947, and the S&P is down 142 to 2739. So I mean monster down day. And we have another question
from the chat as a layperson, and this is our newest follower. He just started an
Ameritrade account to buy in now with plans to
save for the next five years. What signs or info
should I look for? Well if you don’t
mind us asking, what age demographic are you in? Because that matters. Right, and also,
there’s another– there’s another question in here
that I don’t want to skip over. Before I answer that,
I just want to know what age demographic you’re in. Yeah, no, that we’ll
get to as well, Cooter, but let’s take a look
at Psycho Sooner. Sorry. Option newbie during cash– doing cash secured
puts in an IRA. Got April options that
have been blown past. How should one manage them? So that is a very
interesting question. I think that there’s
a lot to go into that. So I– first off, I mean this is
going to be hindsight for you. I would never really
sell a cash secured put unless it’s at an area
where I’m comfortable in buying the stock in the first place. Now obviously, this market has
probably pushed your limits and made you second
guess everything. It almost sounds like,
from what he’s saying, he’s not comfortable taking
possession of the stock. Right. Now there’s a couple
of things you could do. You know, you could buy put,
buy a put like at the money or out in the wing to cut the
bleeding in case it goes down. To make it into a vertical. Make it into a vertical. While you are potentially
locking in a loss when you do that. You are, absolutely. And you could also– maybe you buy a put,
and this is the low, and then you spent that
extra money on that put that you didn’t need to. The question is like what it is. How volatile is the stock? Do you think it could
move another 10% down? Another 5%? And you know, you have to take
into account the premiums. The hard part is
right now is the VIX, which we have a trade on
that got just destroyed. And it’s probably our
worst trade ever near our– Oh, boy. –our call spreads, yeah. Oh. So I don’t know that– Bill, what have you done? I don’t know that
these are going to– Did you sneak in here
and start trading again? I did not. I don’t know that we’re
going to get those back. And on semiconductors,
I mean we’re– We need a big rally there. Yeah, I mean– How much are we down? $2,500? Yeah, this is– yeah, 2,500. We’re pretty close
to the max loss. I don’t think we’re going
to be able to wriggle out of this one. So yes, Psycho Soo– sorry, Psycho Sooner. So there’s a lot of– first of all, my
first recommendation would be to go and watch
some of our Twitch shows that we did previously, and
we talked about a lot of this, and we managed a lot of
those positions, where we sold cash secured puts. And we showed how to chip away
through rolling strategies. We’ve actually also
taken possession of stock on our short puts,
and then sold calls against it and managed it that way. I would definitely recommend not
to keep doing stuff like that. Right. I don’t think there’s
going to be– aside from buying a put right
now, which is probably going to be overpriced
because of the VIX, so that may not be your
best option right now. It’s a hard situation right now. There’s a lot of people doing
it because of this implied volatility. It’s just a difficult situation. So buying a put
could cut the losses, but you’re probably
paying up a lot, and that’s dependent on
downward move to stop it. I don’t think there’s
going to be a quick fix. I think maybe taking
possession of the stock and trying to get back
some of that premium by selling covered
calls could be it. But that’s also
dependent on an up move. There’s also this option,
too, and we’re just throwing out options. Close the position,
and just wait for the market to settle out,
and then make a decision then. Right. Yeah. That’s another option, too. I remember Kevin Hincks
saying, what is your opinion? Has your opinion changed? And clearly, this market
will change opinions quickly. Sounds like his
opinion changed, too. And the other variables– I don’t want to speak directly
just to Psycho Sooner, but if an investor or trader
who sold puts either prior to or during the start
of the sell-off is now– their puts are in the money. They’re essentially
making a decision, do I want to own this
stock at that strike? Well, there are
different factors. How much money do you
have in your account? What stock are we talking about? If you sold a put in
Amazon, for example, and you have a $5,000
account, or it’s cash secured, so he’s got to have the
cash in the account. But you know, where’s your
risk tolerance in your account based on that position? Are you willing
to own the stock? And then, like you
guys said, it’s about managing the
loss in that stock. Do you have more
bullets that you can deploy as the
stock price goes down, or are you simply stuck
at that cost basis? So there’s a lot of variables
in that particular situation. Yeah. Yeah, there are. That’s why I said that they
should go back and watch some of these. Right, because there’s no–
there’s no right answer there. We’ve [INAUDIBLE] a lot of
these positions from week one. Right. So go back and watch some
of the archived stuff. And we’ll even– we’ll even put
out positions like that, too. And you can watch us manage it. A lot of what we’ve done
is like rolling strategies, but if you’re really
uncomfortable with something, I’m a big fan of just getting
out, and then re-evaluating, and then figuring out a better
entry point once some time has passed, and you’ve gotten a
chance to process everything that has happened. And you can make a better
decision going forward. But I think– I agree entirely. –the most important
thing is to, A, use risk-defined
strategies are crucial, and B, don’t trade
above your means. Yeah, I would trade– try and
trade well above your means, because if you’re wrong,
which you probably will be, you probably will be, you
want to have some cushion to handle that
being wrong as well as some bullets for if
things do– if you do see a real opportunity
come by, you want to be able to take
advantage of that, too. And be pretty
discerning with what you consider an opportunity. Like, be a little bit more
mindful, and take your time. Unholy, thanks for the follow. I do want to circle
back to Coot’s question. And I– Coots. –I just want to stipulate that
we’re not financial advisors. We are not. We’re not providing
advice, so I really don’t want to necessarily
lay out a plan here for that particular question. But there are
resources you can use. You can talk to a
financial advisor. At TD Ameritrade,
we offer services that can help you deploy
money over the long run. I think, generally speaking,
what advice, just typical boilerplate investor
to investor advice, if someone has a 5 to
10-year time frame? So going back to
Coot’s question. Yeah, without
necessarily providing a specific plan of action here. You know, there’s clearly
things that investors can do. Absolutely. I’m a big fan of just
incremental investments into an IRA. I’m a big fan of that. Just going month
by month, dollar cost averaging over time. You’re not sitting there– if you’re doing that, and you
still have time to retirement, you’re not sitting here
freaking out and panicking that the S&P 500 futures
are down 132 points today. You’re actually looking
at this as an opportunity where you can dollar
cost average lower and lower and lower. And so it’s like
it’s almost like when you dollar cost average
over time incrementally into a– We haven’t touched on dollar
cost averaging in a while. Go ahead and explain
what that is, Anthony. So dollar cost averaging
kind of works like this. So let’s say you had– you’re selling widgets,
whatever it is. Sure. And you’re investing these
things over long term, and you buy some at $10,
and maybe they go down. And then you buy
some more at $5. Well, now you
bought some at $10. You bought some at $5. Your average price
is now 7 and 1/2. Now– exactly. Now but the thing is that
every time dollar cost average, you’re buying the
same dollar amount. So if it’s $10, and
you’re spending $100, you’re buying 10. And then it goes down to $5,
and you’re also spending $100, you’re buying 20. You’re buying more of it. You’re buying more at
the same dollar amount to lower your cost– lower your cost basis, which
is obviously advantageous, assuming that it
comes right back. So that’s the way
to kind of take advantage of this from
an investing standpoint, and we are, by no means,
through the storm. So we have to weather
the storm, but making small, incremental
entry points– Into a well-diversified
portfolio. Into a well-diversified
portfolio and taking your time, not using all your bullets. This can be a very
long term opportunity, especially with someone who’s
got a 10, 20, 30-year time horizon in their
retirement account. Yeah, and there’s studies
that have been done. If you had sold at the near lows
of ’08, and even just waited until 2010 to put your money
back in, the amount of gains you missed out on in just
that one year after the low, your annualized return would
have been much lower than someone who maintained– like,
let’s say this was an IRA or 401(k). If you’re just
maintaining your purchases and your contributions
through the lows of something like this, and then you
see the 10-year run we had, that person’s
retirement account would have so much more money
compared to the person that did not stay invested. And this goes back to time
frame, your economic position, what you can afford. But you know,
we’re in this room. We’re all in our 30s, right? Yes. [LAUGHING] We have 30-something
years until retirement. Yes. Yes, we do. So Warren Buffett said
this a couple weeks ago. He’s like, this is great
for a long term investor. You’re buying stuff
cheaper right now. Yeah. And if you have that– You’re almost hoping it goes
down a little bit, right? He’s like, the only time you
want stocks to be expensive is when you sell
them, is what he said. Yeah, or when you
go to retire, right? Yeah, and obviously,
for someone that’s 62, 63 right now, that’s
a different story. Hopefully, they’re in
a much safer portfolio. Well, they should’ve been
scaling back long before. Correct. And that’s modern
portfolio theory– how much versus
stocks versus bonds. Actually, if you have
a diversified portfolio right now, let’s say you’re
a 50/50 bonds-stocks, 60-40 stocks-bonds, the
bonds right now are basically holding up some
of those losses in your account. And if you’re planning– Yeah, because yields are down. Yeah. Yeah. So there’s so many
variables to this. I remember when I first– when I– I think it
was right around when I started being a clerk. You guys, keep the questions
coming in the chat. Q&A time. When I started being a clerk
on the floor for these two very experienced traders–
they’re older guys– and I think it
was right around– there was a market dip. I think it was a year
like this one or this one. And I was like, that was– I wasn’t watching markets every
day until probably just a year or two prior. And that was really dramatic. It was like a
dramatic down week. And I was like, wow,
what’s happening? And I remember, they
were cool as a cucumber. They’re like, yeah,
I think there’s going to be some real opportun– I was like, wow,
what’s happening? The markets are going down. And they’re like,
yeah, I think there’s going to be some real
opportunities here. You know, I’m just–
you know, they started reading more about stocks. These guys are predominantly
futures traders. They read all the time, just
trying to get everything. They’d start reading
about stocks. They found some
great opportunities. And then fast forward
two years later, I remember thinking, wow,
he killed it on this. He killed it on that. He killed it on that. You know, so just be– He wasn’t panicked. Right. He was not panicked. That was not the time
to necessarily panic. I mean if you have certain– if you have certain positions
on that need to be managed, I would handle them calmly but
quickly to take care of that. And you should have had
an exit strategy going in. You should’ve, but
let’s say you didn’t. And you should’ve had
defined risk going in. Right, right. But a lot of people don’t. But you do need to– if
there’s things going on in your account,
you have to address. Now’s not the time to close
your eyes and hope everything gets better. It’s time to make some
tough choices to make sure that you’re here tomorrow. You know, it’s
like on the floor, they’d always say, as long as
you still have a badge, right? If you don’t lose everything,
you’re still in the game. Well, in poker,
they use the term– Chip in a chair. As long as you’ve got a chip,
you’re still in the game. There’s still a chance. So make sure you’re still in the
game when it gets out of this. You may have to make
some tough choices, and you may have to do
some things that you really didn’t expect to have to or that
you’re really going to hate. But as long as you’re
sticking around, then you’re still around. You’ve got to make
some tough choices. Be calm about it, and make sure
that you’re going to have it tomorrow coming out of this. It’s not always
an easy situation, but those are the real
choices that you have to make. And survival is the
name of the game. And Coots, there’s
a lot of stuff out there talking about asset
allocation for your certain age demographic, meaning, where
should my money be invested? OK, well, you said how
much and how to invest in, but where does it go? There’s a lot of
stuff out there. There’s a couple of
things that I’ve read in the past where you can use– take the number 100,
subtract your age, and that’s how much you should
have in the stock market. But that’s like,
you know, that’s something you
probably want to talk to like a financial advisor for,
somebody to sit down with you and kind of go
through everything. See what your life situation is. But there’s a lot of
good information there. And I’ve always been an advocate
of incremental investing over the long term. A long term investor
looks at this market and says they’re not
worried about it. They’re not as worried about it. They’re looking at this as,
like you said, an opportunity. It could be an opportunity. I mean it’s always good to have
a healthy fear of the market. You don’t know what’s
coming tomorrow. So never be that guy who’s,
oh, I called the bottom. I’m going to be the
smartest guy in the room. Chances are you won’t be. So it’s better to be a
little wrong several times than really wrong once. So just let that sink in,
and kind of slowly scale in. And Meme– hey MS Mang,
thanks for the follow. Yeah, there you go. Miss Mang, probably. The Disher Woodman Math– Wood Mathman just answered,
that’s a great way to do it. Because he’s asking– Meme Reversion’s asking, OK,
it seems like in this sell-off, stocks have been more
correlated than usual, meaning they’re moving together. And my question’s
correlated to what? To themselves? Well, they could be
together to the market. Well, that’s– I think it’s to the market. I think portfolio theory says
that in a downward, a largely downward market, everything
should be highly correlated. So a comparison study,
if you wanted to like– That’s why you can’t totally
diversify against total market risk. If you owned Apple, you
could come into here, and it’s real easy. You can just come into here. I’ll do it again. Go to Studies. I always do that. Hit Studies. I don’t know. I just like it better. And then you could just come
into here in this little search field and type in COMP,
and it should come up with a comparison study. You could double click on
it or hit Add Selected, and move it over. And right away,
you could see it is going to compare whatever
we’re comparing to the SPX. So we already have
the SPX in there. So let’s say you
wanted to compare it, and you own some
Apple stock, and you want to see how well correlated
Apple is to the market right now. You could just come in there
and type in the symbol. Hit OK, and that
should populate for us. Let’s see how that looks. No, we don’t, General Gaylord. So there it is. This is over the past I
don’t know how many years. So if my studies are not failing
me, if I remember correctly, there’s two types
of risk, right? There’s portfolio risk, and
then there’s total market risk. So you can diversify
out of portfolio risk, but total market risk is kind
of hard to diversify out of, unless you’re doing
something that should be highly
uncorrelated with the market, maybe like alternative assets
or commodities sometimes. So that’s the kind of
thing that you can’t get– you cannot really
diversify out of. So when the market does this,
and pretty much everything is down, the correlation
between all stocks is going to slightly increase. And the correlation between
the beta or the correlation between the market and
most individual stocks will become more correlated. I don’t think there’s
a way to show, though, on the chart to show like
is this a more heavily correlated time? Are stocks more moving
in unison now than they– I don’t think there’s a
way that you can show that. I mean I think you
just have to look at the beta of more stocks. I mean there’s some– I don’t think there’s
a way to do that. There might be
something that could be custom scripted if you knew
the variables that you wanted to do. There’s probably
some studies that look at the overall breadth
and some of those correlations like 52-week highs versus
52-week lows, stuff like that. Yeah, but I don’t know. I’ll just go back to SPX. I was just– But you guys have been
through some sell-offs not only on a desk
but on the floor. And generally– and
correct me if I’m wrong– when people are selling,
and maybe it’s panic selling. Maybe it’s tactical selling– they kind of throw the baby
out with the bathwater. They kind of say, get me
out, and like you said, you’ll reassess when
things settle down. And that’s maybe
why we’re seeing such a breadth of all stocks. I mean, Mike McKerr has
quoted this a few times. The breadth of market– we’re
seeing 90% down days on the New York Stock Exchange, meaning
the amount of selling is at historical levels. So– Yeah. What I think, too, is you don’t
really know how all of this is going to shake out. And maybe people are
just selling everything. And sometimes you have– in times like this,
too, let’s say you were to get a
margin call, and you’re losing money in XYZ stock. You might sell ABC stock
and keep XYZ stock, even though XYZ stock has
been performing horribly. You might have to sell other
stocks in your portfolio to cover the losses
generated from one. That could also be
what’s attribulating– attribulating– that’s a
new word I just made up. That’s good stuff. Attributing to just
a global sell-off, and I think maybe just the
uncertainty of what’s to come. But then there’s
these certain stocks where I like to call them safe
havens that people run to. Bring up CLX. I mean, you want to talk about– Wait. That’s Clorox. OK. Clorox is, obviously,
Clorox wipes. You know, people are running
like heck to this thing. And every time we hear
any coronavirus news– now it’s down. But you could see what
the stock is doing. Yeah, it’s held up pretty well
in comparison to the market, I’d say. It’s at an all time
high, so this is now– because of the
situation that we’re in, this is considered maybe a
safe haven for your money. Yeah, Zoom has been one,
videoconferencing, Teladoc, kind of thinking ahead of
what’s the new normal if we’re in an extended period
of no public activities and not going to
work, not going– Yeah! Right. We’re still working. Well, we’ll be working. We just won’t be doing it here. Yeah, just be doing
it somewhere else. We’ll have to up with a
way to stream from home. [LAUGHING] We can. We can it. We’ll figure it out. [INTERPOSING VOICES] Hopefully, we don’t have
to cross that bridge. I don’t know. We’ll see. We’ll see. We might be doing this stream
one time in OB’s basement. Yeah, we could pull this
off at my apartment. We can make it work. We’ve got about 23
minutes left, guys. Yeah, so whatever questions you
have, throw them in the chat. Miss Mang, thanks
for the follow. I don’t know if
we mentioned that. We did. We did. Yep. Yeah, let us know if
you’ve got anything else. I mean let’s take a look
at the indexes right now. Yeah. So– Most of the day. [INAUDIBLE] The other thing I
wanted to point out– Let’s bring up the Dow
while you– yeah, go ahead. We’re flirting with
limit down again. Yeah. 7%, is it? Yep. So maybe you guys
want to explain. If anyone has
questions about what happened on Monday
with the limit down. That’s a [INAUDIBLE] question,
because he’s a futures guy. And that’s where the
limit actually is. Is that the CME,
or is it the NYSE? Well, I don’t know. I’ve never seen– It’s equities. Equities. That was the first I’ve
ever seen equities halt. I’ve never seen it halt. I heard they did it in 2008. I mean after 9/11, they did. Oh, was it 9/11? Yeah, but, like,
they halted for days. We just didn’t open. So on 9/11, all that
stuff when the two planes hit the towers, that happened
before the market opened. And we just never
opened that day. Right. Well– Futures were trading, but the
equities markets never opened. They didn’t open, I believe,
until the following, like, September– It was the following Monday. No, it was the following
Monday, I think. Was it? Yeah. So that the 11th
was on a Tuesday. So that was Thursday. Oh, you’re right. It was Tuesday,
Tuesday, September 11th. We didn’t open until
the following Monday. So 12, 13, 14, 15, I think
it was the 17th it reopened. It could be. That’s the longest
the NYSE has ever been closed since it was opened,
ever, because it’s not allowed to be closed more than– I think it’s– you
can’t have four. So if you look at
Thanksgiving weekend, where you get 3 and 1/2
days, it cannot be four. It can’t be more than 3 and 1/2. The only other time
I think we breached that was Hurricane Sandy, when
Lower Manhattan was underwater. I’ve checked the dates, but– We were closed for
how long for that? We can check, but– So limit down is where
you stop trading. It’s a halt. It’s a halt, right? It’s this– it
can go no further. Now certain
products– crude, S&P, they’ll halt only for
a certain time frame. I believe the S&P is 20 minutes. We halted equities for 15. Yeah. But the limit down– so General Gaylord
is asking, what if it happens after the market? But it can’t. It has to be intraday, right? Well, it depends. In futures– Do they halt the futures market? Yeah, you can be
halted overnight. I think that happened
during Brexit. Well, actually– Do you know the limits? Or maybe the elections. Actually– I’m sure they’re on
the CME’s website. We’ll have to look them up. Bill, If you bring up
an ES five-day 10-minute or something, you’ll see
it happened Sunday night of this week. Essentially– Let’s do [INAUDIBLE] 15. For those of you at home– And close the
sidebar, if you would. –we saw it happen
right on Wednesday. See that flat line overnight? Yeah. It’ll happen overnight,
and then it– So that did? So that was limit down. Now what that means is that you
can’t transact lower than 5%, so they were basically
trading around down 4.9%, and you can see there’s
some ticks above it throughout the night. But you can’t
transact below that. Once the– in the overnight
session, that that limit down percentage is hit, then prices
can’t go lower than that. And then we saw the gap down
on the open of equities, and we stopped again. And then the third time,
they closed the market. Right. So at 7% down, you
halted for what? 15 minutes? It’s 7, 13, and 20, I think. 7% halts for what was it? 15, 20 minutes? About 15, yeah. And then halt again at 13%. And that was for
another 15 minutes. And then if it hits 20% down– 30 minutes or something. They close for the day, I think. So you can si– so basically, what it’s doing,
that you can sit offers on it. On a limit down, you can
sit offers on the limit, and right there. But there no one can
reach the next bid, so there can’t be
trade below that. Just the same like
on the upside. You can sit bids up
at the top, but you can’t lift the offer up there. So it pauses out. It kind of gives
everyone a second to cool out and see
what’s going on. Usually, it’s in a really
more volatile time. And you know, I think it’s
a pretty effective tool. I think it works pretty
well for the most part, but if, fundamentally,
you’ve got to go lower, you’re going to go lower. And what I would
point about right now, we’re down just about 5% on
the Dow, 4 and 1/2 on the S&P. If you look at Sunday night’s
action, we ended at the highs Friday, but the week before. Oil crashed– No, go ahead. Do you want to do a Sunday? Yeah. So that– keep
going to your right. No, stay on this chart. Stay on this chart. OK. Right there. If you look, that Friday
close, we closed on the highs. Is this it? This Friday here? Yeah. It should be that big
last like 20 minutes. We close on the highs. Yeah, this area I think, right? Yep. And then oil crashed. And you can unzoom so it
looks a little bit more– yeah, there. That was a big, sudden
move, because oil– the news came out from Russia and
OPEC that they weren’t going to do production cuts. So oil’s down 10
bucks on the open. S&Ps follow. We hit that limit
down all night. If you look at today’s
action, we finished, again, on the highs last
night, but we’ve had this gradual drift down as
opposed to that hard landing that we saw on Sunday. And then midday today,
we get the announcement, it’s a worldwide pandemic. Nobody knows what
Washington’s planning, so it’s much more gradual. It’s less of a sudden shock
like the oil drop, where this– it’s much more of just
people– like algos, people, they’re just selling
any kind of rally right. Any rally is an
opportunity to sell. Yeah. Got a bid? Sold. Got a bid? Sold. Crazy, crazy stuff. Well, one thing that I wanted
to go through, because– Are we rallying a
little bit here? We are. It looks like we popped. Meme Reversion was saying we’re
getting a little buy-up right now, I think it– well, yeah– It’s coming back a little. I think we got 1400
in the Dow before. Right. Let’s just go back
to a one-minute– I think we popped up probably
about 12 S&P points-ish. [INAUDIBLE] Yeah, there’s too
much going on here. Let’s clean this up. No, it’s fine. Looks like my
heart rate monitor. Well, I think we’re getting
a little slow-down here. Hang on. I’m just going to clean it up. Yeah, yeah. Meme Reversion’s saying,
yeah, it popped up, but it’s going back. It got rejected pretty quick. Yeah. Sell anywhere. Yeah, this is what’s
going to happen. Do you want to keep the moving? We’ll keep the
moving averages up. I do feel like, but I think– OK, so we talked
about– was it Friday that we had that big rally
at the end of the day? Was that what it was? Was it Friday? Yes. Many people thought
it was just– So that’s a short covering. Shorts covering. Yeah. Yeah. Yeah, that’s what that is. That’s speculators
saying, OK, let’s– and then they start
to get out, and then they all start chasing
at the end of the day. Yeah, and Bill,
you could probably explain this, because you were
on the futures floor, right? If people over the
week are accumulating those short open positions,
plus if your account’s at a certain level, you
get extra buying power during the intraday session. You’ve got to take that risk
off, and going into a weekend, you don’t know what’s going to
happen on Saturday or Sunday at this point. So explain the
dynamics of the last, like, 40 minutes of an intraday
session when everyone’s short. Yeah, I mean that was– Friday was very dramatic. I think we came back like
something like 800 in the Dow, something like over 60– Yeah, it was pretty aggressive. –in the S&P futures. So I mean if you’re going
into a position short, I mean if you’ve got
a position all week, and you’ve been
short, and you’ve been accumulating
that through the day, you don’t want to have
that risk on the weekend, just like you said, OB. So you’ve got to buy it. So– Even intraday, right? Even if you sold
it in the morning, you were killing it all day. Right. You know? And at the end, you start to
see it perk up a little bit like, eh, I’m going to get out. And that guy’s going to get out. And all of a sudden– And a lot of people– I mean speaking from a stamp– a lot of people watch
for a strong close. They think that could be a
signal of a good day going into the next day. And then what
happened right at 230. That was a strong close. Yeah, it was right at 230. But that didn’t carry
through the next day. I mean it– it did, did it? Well, it dropped,
like, immediately right after [INAUDIBLE]. Because it opened lower. Then we gapped down
on Sunday with oil. Yeah, but it kept
down like almost like when the market
closed, [INAUDIBLE] were down 20, or right after. Yeah. Within seconds. And just mechanically, if
you have a certain amount of money in your account,
you get intraday buying power as a futures trader. So your margin requirement
is less than the standard– Well, you’d have to close any
day if you’re in [INAUDIBLE].. Correct. Either way. So if you have– let’s say you have
$100,000 account. You can now trade,
let’s say, 50 spoos. I don’t know if my math’s right. 50. Yeah, that’s right. It would be about
3,000 a contract. More than that now. What is it? 7920 or 7020, was it 7260? I think that’s conservative. Let’s see what
it’s at right now. I thought it was 7260. It was 9150 before
this, so 9150. That’s the normal– that’s
the normal overnight margin. You might see– I don’t know what it’d be– It used to be 600,
900, 6,930 forever. So, well, it’s based on the
movement in the [INAUDIBLE],, and if you get more, you’re
going to see that go up. So if you’re an
intraday futures trader with buying power
relief, you’re going to have less of a
margin requirement. But to your point,
Anthony and Bill, you’ve got to be able
to hold your position in the overnight
margin requirement. So let’s just say, for sake
of argument, it’s half. So it’s 5,000 for intraday. So you could have 20
contracts on intraday, if you had $100,000 account,
but overnight, that margin requirement is now $200,000. So you have to cut your
position by half at least. And so whatever your
open position is, you have to do the opposite
to take that off the table. And that adds to
that short covering or you see big sell-offs
at the end of the day. Yeah, and that goes
back to what we were talking about in the beginning. If you’re having thinner
depth of market– Exactly. –then in order to achieve
buying back that same amount, you’re going to push
the market much further. Exactly. So that’s– I mean that’s part
of why we’ve seen such whipsaw days. But this– I was going to
address a question here, but I forgot what it was. But– That doesn’t make for a real
good airtime play, Bill. It does not. My brain isn’t working
right today, I guess. But there was something I
wanted to address with– here’s– this area right here
is going to be one of your best friends when, especially
if you’re trading options. You’re going to– What do we got in there? We got something in there. Well, we’ve got VIX in there. But– You mean our VIX trade
that was not, you know– Oh, yeah, no. We’ve got a few things. Could you close that sidebar? Yeah. Well, actually, I want to–
let’s take a look at this. This number here is going to
be pretty important right now, so this vega number,
because the VIX is so high for your
portfolio, so essentially, what that means
for your portfolio, this one will gain
$16 every time the VIX goes up by one point. That’s what that vega number is. And that can be a
very large number, and if you’re short
option premium, where you’re selling a lot,
you’ll see that be negative. Now VIX is approaching what? Is it six-year highs? At least. Yeah, this is– So with VIX up this high
and market going down, I– What’s the highest
it’s ever been? I think it’s like 80s, 90s. Technically, intraday–
the answer to that is– Like sustained. Like I want to see like– I would rather see a sustained–
at least for a day or two. I think the financial crisis,
we got to 80 or 90 intraday. So 2008? Yeah. I mean look at that. So if you go like
a 20-year, month– Choss Lazang, thanks
for the follow. Let’s go back, max available. Thank you. Change that from day to weekly
or quarter or something. 495 more followers, Bill. That’s what’s up. We’re at 1,000. That’s right. All right, one week. How many more rubies
have we got to sign up? I don’t know. We’re running low
on rubies, I think. Yeah, we got 90. We got– what is that? The high was 89.53. Yeah, that was a
month after Lehman. Right, so I mean
you could go more. This is a very high
VIX level, very high. But you could certainly do more. If you’re looking
at your portfolio, and you want to realize how
much risk you’ve got on, you’ve got to take a
look at that vega number, because vega is going to be
a really important indicator, especially if you’re
short premium, because you might eventually be right. You might even have calls on
when the market’s going down, and those calls go up in value
while the market’s going down because of that
volatility spike. Talk to a few [INAUDIBLE]. Yeah, that happens– it
happens all the time, and people don’t realize,
oh, I’m short a call. This is great. No, volatility went up by 10%. You’re still losing
money on those calls. Yeah. Right, so you’ve got to be
very aware of that number if you’re trading options,
because that can be a thing. That’s when you may
have to lighten up. That’s where–
because you probably will be right eventually,
especially if you’re holding calls, and they’re fairly
short dated or something. But your account may not be
able to take the heat right now. There’s too much volatility
being pumped in there. You have to be
watching that number to make sure that that
is in a reasonable level, and if VIX does pop up to
those highs that we’ve seen, we could go another
20 or 30 points. Wizard Shot the Food,
thanks for the follow. If your account,
if this number– you only have $20,000
in buying power, or let’s say you
have– let’s say you have $5,000 of buying
power, and your vega right now is sitting at 1,000. That’s probably too much. It could go up 5% pretty easily. It could go up
another 10%, 20%, 30%, and then you’re on a margin
call for a position that may be right. It’s better to take
it off now than have everything taken away. So just make sure you’re
watching your risk. Yeah, this is the time when
you really learn about vega. You’re like, oh,
well, with that– you never had to pay
attention to it before. And all of a sudden,
you have maybe– maybe you have a covered call
strategy where you’re long stock and short calls. I think that would be a pretty
common strategy that would happen, where– Sure, and you’re losing money. You could be losing money
on both [INAUDIBLE].. My stock’s down, but OK, fine,
I’m losing money on my stock, but how come my calls
aren’t offsetting? Because now the call
values are higher, and your short them, and
everything just went like this, where your stock went down,
your call values went up, and you’re on the
wrong side of both. And this is when implied
volatility and vega are coming in, especially in
those backdated options that are farther out. And that’s what vega really is. It is a supply demand factor
basically for high premium backdated options. Right, and the hard
part is sometimes your vega may be going
against you just because of wide markets. I mean these are
all going to be– all options like industry
standard, thinkorswim is no different. All options are valued
off of the midpoint. And if you have a
really wide market, I mean what’s something that’s– I don’t know. Let’s just do like Amazon. It’s going to be
pretty dramatic there, I assume, especially
in the wings. So if you’ve got a very volatile
market, especially inexpensive options, you could see very
wide markets on something that you wouldn’t expect to see. These aren’t actually as
bad as I thought, but still. They’re actually not
bad, because you are dealing with an $1,800 stock. Right, right. But remember when we went
to limit down the other day? You could have looked
at [INAUDIBLE] options– Or anything. And those are usually
highly liquid, and you could have driven
a truck through them. Yeah, they’re $3 wide. And they’re being
valued off the midpoint. It’s not even
necessarily add value. That’s just the
theoretical midpoint. You don’t know. But it’s still going to get– Some have price discovery. Right, exactly. And no one wants to
take that chance. The market makers
aren’t going to be selling these things for what
theoretical value would be. They’re putting their
offer way up there– Yeah, they’re still trying
to get a feel for it. –and hoping that someone
needs to scoop it. Yeah, they don’t– Yeah, they’re still trying
to get a feel for it. Yeah, they don’t know. As a market maker, I’ll
tell you right now, like with fast market
trading conditions, like what we’ve been
seeing, I didn’t know where the value was. If XYZ stock was down 10%, I’m
just trying to figure out, OK, what’s your market? OK, I’m just a little bit wider. Yeah, exactly. Just in case something
nasty comes in, and some big call
buyer comes in. Right, you don’t want to be
the guy that gets run over. [INAUDIBLE] wants to get
picked up, you go first. Oh, we’re going down another 3%? I’m going to buy
all your puts there. Now what’s here? And the way the market
is now, all these algos, if there’s an
inefficiency somewhere, and you’re a market
maker, you’re going to get buried with a bunch
of stuff that you don’t want. So in order to protect that,
the only thing that you can do is widen out your
bid ask spreads. Yep, and I think to
put this in context of what clients would see
on their trading platform, you may come in and be up
a bunch or down a bunch, but that’s not necessarily the
real value of the position, because like you said, Bill– Especially before
the open [INAUDIBLE].. Correct. Like, you’re going to see a
mark on an option position that you had in your account. Maybe it was worthless,
and it is worthless. But all of a sudden,
you’re like, oh, my god, I’m up a few hundred
bucks on this. What just happened? You just look at the bid
and the ask of that option. It’s probably– No bid at $5. No bid at $5, right? So you’re marked at 250. And you bought the calls for $1. Now you’re up $1.50,
but it’s not really. You can’t sell them. You can’t sell them to anyone. Yeah, right. So I mean that’s why
keeping an eye on these, I mean when I started trading,
my bosses made the joke, you’re going to lose– you’re going to lose $10,000
on every single one of these. You’re going to lose
$10,000 on Delta. You’re going to lose $10,000
on gamma, theta, vega. Before you learn
what they really are. Before you learn
what they really are. You’re kind of
paying your tuition, is what they always said. So this is that time where
you’re probably feeling vega. You may not even know
you’re feeling vega. You could be like,
OK, this stock hasn’t moved that I’ve
got it, but my options are all going against me. Why is that happening? It’s probably, right now,
this number right there, your vega number. So it’s important to do that. And you can find that
under the Analyze tab. You can do it for an
individual symbol. It’ll show you
your vega position for that symbol, if you
have a lot of options on. If you want to look at it for
your entire portfolio, which I think is important, you’d put
like SPX up in this top right– the top left, excuse me. And then you would have
portfolio beta weighted here, and you can see it for
your entire portfolio. We don’t have a very large vega
position in this portfolio, even with the analyze trades. We do risk– we do risk cover– we do– risk-defined strategy
spreads will have a lower vega than outright
options, obviously, because you’re short one, but
you’re also long the other. [INAUDIBLE] I used to trade
when I was making markets. Like the farther
out in the future the option was, the
less size I did. Right, because– So if it was a
front month option, they might ask me for a
market at the money call. And I’d say, $1.20, a buck
and a quarter, 500 up. And what that means,
I’ll buy it at $1, I’ll sell it at
$1 and a quarter, and I’ll take 500 on
the bid or the offer. I’ll do it like that. But when somebody came
in for some leaps that don’t expire for two
years, 5 or 10 up maybe, meaning like I’ll only
buy five or sell five. And then you can pay
the offer, sell the bid and then my next market will be
a price increment farther out. And that’s a good point. So vega– That’s the vega risk. Vega is much bigger in
the back months, vega. So if you’ve got
long dated options, your vega is going to be much
higher the further out you go. Yes. Now it– especially
in the wings, it kind of decays and goes
down to the front month. But if you have an at the
money front month option, that’s still going to have
a lot of vega in there. So that’s something– if you’re
dealing with at the money options, those are going
to have a lot of vega, and that could be
something to watch. Well, not a lot relative to
a back month [INAUDIBLE].. Correct, but they will
still have a vega position. On that particular– you’re
saying like here for Amazon, these options right here– These probably have a lot– More– ooh, what happened? Those have probably
a lot of vega. What the heck just happened? I’m not sure. I think it switched. Why don’t you– I think it’s
because we have it linked. It just lagged on the link. OK. So like these ones [INAUDIBLE]. Yeah, why don’t
you pull up vega? Open interest [INAUDIBLE]. And just a time
structure, you guys, we’ve got about
two minutes left. Stop fighting with me, Bill. You just changed the layout. It’ll have the Greeks one. Oh, jeez. OK, where is it? This one here? [INTERPOSING VOICES] There it is. And this is what Bill is
talking about right here. So let’s go the front
month, because that’s kind of what we were talking. And we’ll just go to March 20th. Yeah, so nine days. So this says 120 and vega,
and if you were to sell that, that’s be negative. Yeah. Now if we go to the
same– let’s look at– 1830 is 121. Let’s go out to, like,
January of next year and take a look at
the vega on that. This is 120, 121 vega. OK. Sorry, go ahead. You take it. Here, let’s go to
January of next year. OK, come on, Billy. That same option– oh, god. Yeah, Anthony put all– Well, let’s just do this. We were looking at
the money anyways. Look at that vega on there. 660. 660 for the same option. Obviously, this has
310 days expiration. The other one was nine. So that’s what we’d expect. But we could also– Anthony, I mean Anthony
was putting it up at all, and I think he was
trying to take a look. The wings on here,
even out there, are going to have a much
smaller vega position. Now so, like, look. This 1920 has the same vegas
position out in the front– out in the January of 2010,
essentially, as the front month at the money did. So these, way out, still are
going to have a ton of vega throughout the
entire option chain. Now up in the front, if we were
going to do the same thing, we’re looking at all. Out in the wings, you’re
going to have no vega. You’re just going
to have nothing. It’s 0.04 or 0.05,
and this is 400 away. I mean and look at it swing. This is because of the wide
markets and the craziness. That should be close to zero
under usual circumstances. Obviously, I mean
it is close to zero, but I think it probably would
be right up against zero, if not zero. It would be 0.01. So– Thank you, [INAUDIBLE] Kid. We appreciate you guys
all watching and listening and asking questions
in the chat. It’s becoming more active
and more [INAUDIBLE].. Yeah, thanks for
participating, guys. We really appreciate it. Hopefully– Up to 507 followers. –we’re getting to
a few questions. Yeah. Yeah, for sure. So again, we try to do this
show an hour and a half a week, but again, obviously,
Bill and I have to jump back to our real
jobs right now because of all this market volatility. So let’s take one last
look at the market to see where we’re at. Yeah, let’s see. So just going away, let’s
see what we’re working with. The Dow is back down. This is right down to
the lows [INAUDIBLE].. Yeah, 14, down 1433
right now to 23,587. NASDAQ down 402 to 7941– excuse me. And the S&P is down 146 to 2736. So big down day. You know, be smart out there. Don’t lose your cool. Just if you’re in
a hard situation– Be cool like Bill. Yeah. No, you’ve got to relax. There’s nothing that
helps with panicking. What you gotta do is
just look at everything. If you’re having a bad
thing, look at everything that’s going wrong. Prioritize. Fix it. Go to the next one. Prioritize. Fix it. Go to the next one. And then watch us next week. Just be smart. Be methodical. Yeah, and do it. We’re going to try to maybe do
an hour and a half next week. But if it’s like this again,
it might be only be an hour. We want to thank
everybody for watching, and check out our great
educational material on the website and
on the platform. You can always catch us
every week 2:00 to 3:30. It’s going to be tentative. It might be 2:00 to 3:00– Hopefully. –Central next week. Producer OB, what’s up? Eastern. Eastern. 2:00 to 3:00– is that 2:00– yeah, you’re right. Yeah. That’s how it works, Anthony. 2:00 to 3:30 Eastern,
1:00 to 2:30– 1:00 to 2:30 Central time. –Central. Follow us on Twitter. John Tart, thanks– Tar, John Tar 12, excuse me. Follow Bill on Twitter. What is it? WRuby_TDA. I’m APanzeca_TDA. Did I miss anything? I don’t think I did. Until next week, guys,
I’m Anthony Panzeca. That’s– Bill Ruby. So long, guys. Happy trading. Thanks for watching. Thanks for watching. See you next week. Have a good one. [MUSIC PLAYING]

5 thoughts on “Market Selloff Q&A | Twitch #29


  2. What? They talked a lot about the past and stock performance like it's a predictor of ANYTHING. First time watcher, not impressed at all. Are there any better TD shows out there???

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