Back Ratio Review
By Ernie Varitimos
March 9, 2022
0:00 / 33:46
Back Ratio Review

So what I wanted to do is talk about what the current situation is with the.

What we are doing, what our general strategy is, and, what the trade was today. And I don't think there really is another trade to put on today. I I've tried to conjure one up, but. The market for whatever reason, isn't cooperating with us. It's not giving us something really a value. And let me also explain what happened yesterday.

Unfortunately, had we stuck with this trade now? I didn't stick with it because some people were freaking out about. Worried that the PNL was sagging, so to speak. However, I think what's going to end up is that the market's going to go down now and had we stayed with the trade, we would have ended up with just a tiny, tiny little loss, which would have been whatever the debit was on the trade.

For me, it was like $15. Instead. I took about a $350 loss. To get out now, but let me just explain what's going on. So one of the complaints from one of the members was that, they signed up for these tiny little risks and big gains asymmetric and the butterflies. Okay. So I introduced the butterfly because you could very easily put on an asymmetric trade.

Almost guaranteed, not fully guaranteed, but almost guaranteed small risk. And you could make the, the potential profit, whatever you want. And they're a great trade sometimes. They're just not there. Sometimes you have markets that are trending almost every day. Like we've had of course today. Um, wasn't a huge trending day.

It was more of a distribution day. However, prior to us getting into today's market, it was a huge trend off of the bottom. And so it felt to me that we were going to continue that now, I guess an argument can be made that we did continue that, but we didn't really not. The move that we've made today is about one third.

The move that happened last night. So it really, and particularly with it being the open market, you would have thought it would be, would have been bigger. And with the expected move, being pretty high in volatility, being above 30 for every indication was that we were going to move very easily up into our T1 node.

And so that was the trade. All right. Now, if that was the analysis for the trade, how do we put on an asymmetric trade that would take advantage? Also keeping in mind that trade we could have just as easily moved way up there and then move straight back down or move straight through the T1 node.

In that particular case, a butterfly would have been very difficult to try to extract the kind of profit that I thought was potential, on a day, like today or in a market, like what we have right now with the very high volatility.

We talked about this yesterday in the waning minutes of the market, on online, obviously it wasn't a trading day. It was an off day, we talk on off days and I said that, well, we brought up the Batman trade as one possible solution that with the. With the Batman trade, you put two very large butterflies, flank them on, on where prices right now with the idea that price could move in either direction.