Trader: "It's Going To Zero"

Tyler Durden's picture

Authored by Peter Tchir via Brean Capital,

Momentum Trader: It’s going to zero!

 

Sales: Protection is worthless.  Why pay up for protection, it always turns out worthless?

 

Quant Trader: The skew and relative steepness makes timing critical on any purchase.  The theta decay is virtually impossible to overcome.

 

Desk Head: Why aren’t we selling more?

 

Bear Trader: Because we are at all-time tights and there is no #*#*!@$ value!  This is just #@*($& stupid.

 

Risk Management: I can’t let you sell more than you already have.  I’ve already increased limits and I’m extremely uncomfortable increasing them again.

 

All: Oh shut up!

 

Desk Head: You and your stupid risk limits are why we are all here in the first place! Had you let us sell more 2 months ago we wouldn’t all be here stuck trying to figure out what to do – we’d be sitting on great P&L and could relax, but no, now we are behind and have to sell as much as we can at the lows.

 

Bear Trader: This can’t possibly continue.  It’s already overdone and when it reverses, it is going to be UGLY!

 

Sales: All I’ve got is sellers.  No one wants or needs protection.

 

Quant Trader: It doesn’t even have to go lower, so long as it just sits here, the theta decay coupled with the funding arbitrage performs well.

 

Technical Trader: All support is broken, we are in uncharted territory.  This could continue.

 

Risk Management: I will concede that several new products seem to have changed the landscape and may have reset the boundary conditions.  I will review again.

 

Desk Head: Good!

 

Bear Trader: This is going to end badly.

 

All: It might, but not any time soon!

While this is a fictitious conversation, it is largely based on conversations I was part of in the spring of 2007 around CDS Indices.

Any similarity to conversations surrounding VIX yesterday are purely coincidental.

The sense that risk assets can only grind higher and that the value of any protection is useless, really seemed to reverberate throughout Wall Street yesterday as the S&P 500 hit all-time lows on 10 days realized volatility.

The types of conversations reminded me a lot of what was discussed in the Spring of 2007 – though who was right and who was wrong depended heavily on whether those conversations were had in late April or early June.

*  *  *

With stock turbulence evaporating further, betting on market swings has become cheap -- for real.

As Bloomberg details, for the first time since November, the S&P 500 Index’s one-month implied volatility has dipped below the gauge’s actual price moves from the previous 20 trading days, as VIX sank to its lowest close in more than two decades.

S&P 500 implied volatility was higher than realized for 108 straight days, the longest run since the 132 days ended Feb. 27, 2007... and most know what happened next.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Quantum Bunk's picture

Anyone else want to blow their brains out today ? It is hopeless. We are stuck in this slave system. The market will not help us. Gold means nothing.

BigFatUglyBubble's picture

I can think of some preferred brains besides my own...

yogibear's picture

Yes first time in history central banksters will push th VIX to 0!!!!!
Load up the longs. The will buy any dip. So should you.

Raffie's picture

Progressive Left Liberal Nazi's supporting President Trump.

Muzzies protecting Christian rights and helping them...

runswithscissors's picture

""I am terrified beyond the capacity for rational thought"

JRobby's picture

Passengers "Chimping Out" at FLL

Traders "Chimping Out"

Chicago is full on "Chimping Out" warfare

Do we see a trend?........................?

Erek's picture

Get the zoo director, quick! Curious George is on a rampage and the Man With the Yellow Hat is out to lunch.

Mr Pink's picture

Everything is going to zero...except Google, Amazon, Apple, Facebook and maybe IBM and Microsoft. 

The big players in A.I. will control the world

meditate_vigorously's picture

The only business IBM is in, is financial engineering.

Mr Pink's picture

Who the fuck do you think built Watson? Watson is already replacing doctors, radiologists and hundreds of other jobs. 

I suggest you were worry less about your 401k or your gold stack and look into what's coming....because it's happening right now

Doom Porn Star's picture

A.I. my ass.  Homo idiocracus can't manage it's own problems let alone engineer an intelligence superior to it own.

I've come to view all such talk as pseudo-religious phycho-babble.   It's nothing but think-tank and corporate techno-babble baffle 'em with bullshit at it's lamest designed to fleece investors and steal public services funding into black holes of endless code noodling, etc. etc..

 

The SNB is buying Apple hand over fist with counterfeits.

Just about everyone else that can pass phony fiat in their neighbors' markets are.  BOJ, BOE, ECB, The Fed...

The banksters are simply stealing everything via bank ledger conversion/confiscation exorcises.

No one wants to, or is too fucking terrified to: stop the rackets and work for a fucking living because there isn't much of anything left besides the damned rackets in the first place..

roddcarlson's picture

It appears the financial wizards are getting nervous. All the old white engineers are retiring, quiting, or dying. The friction they created all their lives is also probably increasing the rate of attrition out of big ugly Corporations they own. It also appears that the refugees that the financial elites have been letting into the U.S. are incapable of replacing them.

So Rothchilds and other Banker Jews and elite Goy Masons have came up with a plan to replace the long term time preferenced white goy man, in making a microchip implant into the brain that will add enough AI to the newcomers so they know how to peel a banana and thus continue to harvest the banker banana plantation. The only problems is they don't have enough white engineers to design the AI thing as that takes innovation. Real innovation and not the Einstein rip off kind of innovation where you look at Maxwell and Lorentz equations and then claim you invented something that everyone is talking about 20 years earlier. You see the press has done a great job making the irrelevant into geniuses, and stealing the fruits of the brilliant. They've inverted all logic, stole from the innovators, brought in the backwards, and pretty much convinced the remaining white women to breed with backwards low IQ beast. All they have is Indian theoretical H1B windbags that sit in meeting all day talking about the third eye and Hindi software prowness and how Indian philosophy created logic. Somehow however the Indian continent is still dirt poor even with all this world sourcing and intellect they have contributed and continue to contribute to our corporate masters.

It appears that Mystery Babylon and her dreams of building a technical powerhouse of financial wizardry has finally hit its rail. It takes goyim intelligence of caucassian genius to keep it going in wild eyed advancement, but goyim intelligence was a threat to banker control. The Jews loved the German rockets, but not the Germans who made them. So out of fear milk them of their invention and then bring in foreigners to dumb them down. So make the few goyim that could have done it wasteful welfare spawns on top of inverted entropotizers. So all they got now is third world windbags and think in the box Asian turn the knob thinkers. Good news is that Mystery Babylon continued research into longevity will be delayed by recycled concepts of drinking baby blood (Dr Dracula that their movies of mind concept keep regurgitating), and thus they will continue to die like everyone else. They will not reach their techinical world control through goyim corporate umbrella slavery.

With white out of the box genius engineers it was possible to have had AI just like advanced electronics and mathematics, but the white man had to be discouraged so that their women could be the bread winner and third world workers could go to college instead. Unfortunately as beautiful and smart as our white ladies are, they aren't geared for engineering nor maintaining western civilization. Sadly the white man is quite unique in the larger picture of things, I know this from experience. We just think different and have a different approach to solving problems. I like Asians but Caucaussion males just have a divergent way to solving the problem that I haven't seen in other cultures or races. As this thing goes total third world population I expect stagnation to eventually become the norm and the bankers to finally realize that exponential rate really doesn't occur without long term time preferenced people that were milked and death cowed. The microchip will die when the muslims start decapitating the Jews who organized this whole Shenanigan the few that managed to live through the nuclear NY holocaust they helped create by prodding Russia. Having control of the manipulation of money doesn't make one smart necessarily. Nor does it make the bankers long term time preferenced either. Kill the golden goose and even the bankers will starve, however don't tell them that it's fun for them to find out the hard way?

Best outcome on all this technology will be stagnation or maintenance. But I think exponential growth of knowledge is going to be soon a thing of the past just like the European heritage think out of the box engineer. If you don't believe it just visit any college in the US and you'll barely see 10% of the faculty as white men. In my day the white guys were about 60% of the teachers. Again, I've lived through the whole engineering experience to know that technical world doesn't behave as business people think in that an engineer is an engineer is an engineer. Nice try but financialization has destroyed the innovation goose and it isn't going to revitalize with the commodization financialization crap this country is and has been doing.

Giant Meteor's picture

I like the handle. Doom Porn is highly underated. It's the new "conspiracy theorists" tin foli hat narrative. Everyone, or most everyone, has "doom porn fatique" , poor dears.

Your assessment is spot on. The entire shit show is some hybrid of "musical chairs" and "circle jerking." Musical circle jerking, which I will add, the brief ditty above encapsulates quite well.

Taking in each other's dirty laundry, economies of scale don't make. Fraud and grifting is the model. 

"No one wants to, or is too fucking terrified to: stop the rackets and work for a fucking living because there isn't much of anything left besides the damned rackets in the first place.."

This

Mr. Universe's picture

The full realization is indeed sobering. Our choices are to be happy slaves using the system and selling our souls in the process, or to reject it. There is no place you can go to hide away from the grasp of the taxman and his usurious buddies. Nothing means what it used to mean, it only means what we tell you it means.

War is Peace

Freedom is Slavery

Ignorance is Strength

bshirley1968's picture

Our choice is to champion truth or follow the lie. ".....And ye shall know the Truth and the Truth shall make you free."

Freedom is and always has been a state of mind.  Freedom is to have access to, see, and understand the truth.  Apart from the truth there is only lie, and the lie will imprison and enslave......everytime.  The Lie makes freedom an illusion, the Truth makes freedom real.

The truth is hard. The truth will cost you.....in this life.  The truth is dangerous.  The truth NEVER changes. Any pussy can look like Dewayne Johnson and follow the lie, but a real man stands with and for the truth.

NEVER.....EVER......give up on Truth.

Mongoose's picture

Why we dis'in' da Rock!?!
(Full disclure, I know nuttin' about the man (assuming that's how he presently gender identifies) just wondering.
Back to killin' snakes

Joe Davola's picture

Just leave Plisskin alone.

armageddon addahere's picture

Notice it says the truth will make you free, it doesn't say it will make you happy. Hmmmm

JRobby's picture

Lobster & Cracked Crab?

bshirley1968's picture

No.  Hold fast and stay the course.  If nothing else, you will be a better man for it and those around you will be better.  "Iron sharpeneth iron, so a man sharpeneth the countenance of his friend."

The night is darkest just before the dawn.  History is full of those who got their comeuppance just when they thought they were untouchable.  

OpTwoMistic's picture

Gold is not a useless relic. It is protection when the fiat fails or the bankster inflate.

Xena fobe's picture

Long term gold looks good. 

Bill of Rights's picture

That would put the shiny @ $800 and $10 respectively....Keep stacking they said.

Quantum Bunk's picture

How long have you been doing this ? I have hundreds of 1000's of physical gold. And meh.

Bill of Rights's picture

22 years...and sure you do. Do you also posses a castle and a moat. First of all you don't know me from squat so why you would be bragging to me about you ( fictional ) stash is beyond me. Second of all....Prove it.

Quantum Bunk's picture

Not bragging. I was just curious if you weere a new gold bug or someone whos been doing this for years. Its all exciting when you educate yourself about the markets and how fuct everything is. But then nothing happens

LawsofPhysics's picture

Paper or physical?

The "price" of paper gold can (and will) go to $1 per ounce...

taking delivery will be something else altogether.

booboo's picture

I'm pretty sure they will be happy to deliver a box of paper gold to your doorsteps no signature required.

OpTwoMistic's picture

Gold is real, oil is the farce.  You will see before Dec.

Osmium's picture

The sense that risk assets can only grind higher and that the value of any protection is useless

If CB's are buying them to prop up the "Markets", are they really "risk" assets?

rmopf2010's picture

Haven't all readers from ZH noticed that there is no such thing as risk in the stawk markets anymore. CBs won't let !!!!!!!!!

You can buy moar moar moar moar stawks CBs has your backs ;) otherwise finantial armagedon

Doom Porn Star's picture

^^^A relevant question^^^

Gilnut's picture

When everybody is on one side of the boat, bad things happen.  I disembarked months ago.

rmopf2010's picture

 

 

That is so 20th century !!!

You're outdated! We live in 21th Era of CB cartel free conterfeit money.

Buy stawks Buy stawks Buy stawks Buy stawks Buy stawks Buy stawks Buy stawks Buy stawks

 

 

CJgipper's picture

Not if the central bank has the boat dry docked.

Vlad the Inhaler's picture

$VIX hit all time record low in late 1993, market stayed propped up for a good month before it started reverting.

Sweet Cheeks's picture

"It is going to zero "

What is IT?

Doom Porn Star's picture

Everything that is a merely a representation of something else and not the actual item/asset/collateral.

LawsofPhysics's picture

When fraud is the status quo, possession is the only "law".  Of course maintaining possession is something else altogether...

hedge accordingly.

Dr. Engali's picture

That was then, now we have Janet and her magical digital printer to save us, and she'll even bake us a cookie to calm our nerves.

Winston Churchill's picture

So you're faith is in a mumbling idiot who couldn't get a job as a wally world greeter ?

Whatever turns you on.