Morons Massacred As Short Vol. Double Down Goes Horribly Wrong

Earlier today, I noted the obvious, which is this:

Everyone knows you people are morons.

I know that for sure, because I personally guarantee you that it’s the same people who were wiped out in XIV on Monday that were reading “buy the dip” stories on Wednesday. Wednesday would be yesterday and yesterday would be the day when the number of news stories featuring the phrase “buy the dip” hit an all-time record:

And here’s what else I said in the piece linked above:

Now you could argue that this isn’t the fault of investors, but rather represents journalists’ propensity to write stories that amount to click bait. But see that’s the point. Click bait is click bait precisely because it is designed to capitalize on reader stupidity.

What is “click bait”? It’s “news” designed to attract the maximum possible number of morons by catering to what journalists know morons are likely to click on.

Well in case you needed any more evidence, note this:

$SVXY traded nearly half a billion today like nothing happened, that's right back to its avg volume.. altho a huge drop from Mon's $4.7b..

— Eric Balchunas (@EricBalchunas) February 7, 2018

That’s right, people were trading SVXY “like nothing happened.” Or, as Bloomberg’s Luke Kawa puts it, “once bitten, twice not shy.” Here’s the chart:

So how’s that working out? Well, not great. Because stocks are selling off again, the VIX is spiking, and SVXY is down a cool 15% on the day:

As we noted first thing Wednesday morning, Seth Golden doubled down after Monday’s mayhem, betting $600,000 that vol. would come back in.

VIX RISES BACK ABOVE 30; HAD FALLEN AS LOW AS 24.41 EARLIER

Seth Golden… pic.twitter.com/7THi4xz6JG

— Heisenberg Report (@heisenbergrpt) February 8, 2018

Assuming these home gamers are panic-refreshing the CNBC home page, this is what they’re seeing:

We said it yesterday and we’ll say it again: “there’s always Target.”

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3 thoughts on “Morons Massacred As Short Vol. Double Down Goes Horribly Wrong”

I’ve been so set for this trade for over five years!! Especially the rise in rates (long TTT) and the short VIX squeeze (long 18 APR 20 Calls – short the 30s). You could just see it waiting to burst!

Figured that I had just a little more time left to put on some more APR 18 20s so did a FEB 7 20/APR 18 20 “Calendar Spread” for a credit (??). Hmmmmm…

Do the words European Style mean anything here? 🙁 Totally f-ed this up with a stupid rookie mistake and busted out on the short FEB 7 20s (sold @~$1.00 – bot(to close) @~$16). What I thought was a covered calendar spread was actually a naked position 30 points below the market for about 10 minutes. Had to sell TTTs & the bull call spread to cover margin. If I could have waited 30 minutes I’d be singing a different tune. AND… with the price action over the last couple of days would have been a total hero. Sorry to ramble but just had to get this off my chest. DOT YOUR “i’s”!!

#ArmpitOfTheUniverse

That’s “The Retail” for you. Enjoy the profits all and take this trade forward for me so maybe I can enjoy some vicarious joy in market behavior!

Good luck.