11/25/2020 — Happy Tradesgiving

What a boring day. The days surrounding Thanksgiving tend to be snoozers and this one lived up to the anti-hype. The VIX sold down to what I consider to be a pandemic-flouting level of 21. I guess that the holiday doldrums factor into that anemic number, but with a mini-plague exploding again, and the U.S. Senate majority unsettled (Georgia runoffs) I would expect there to be stronger volatility support. Shows what I know.

It’s thanking time, and I do have a few trading-specific items that I truly am thankful for. Obviously, the volatility returning to the market brightened more than a few traders’ days, provided that it didn’t blow them out of the market entirely. The rollercoaster ride afforded me an excuse to get back into the trading waters, something that I swore I would never do again. I’m thankful for the year I’ve had up to this point and that I am fortunate enough to scrape out a few dollars from the confines of my office.

On a more personal level, I’m thankful that I struggled through the election only forfeiting larger gains when the market came close to handing me significant losses. In my infinite idiocy, I shorted the November 2nd — November 4th (Monday — Wednesday) put spread more than a few times. The options expiring Wednesday afternoon had an unusual amount of premium in them compared to the rest of the volatility curve. With all signs pointing to a drawn out ballot count, my assumption that there would be no clear resolution by 3:15 PM on Wednesday, and that the implied volatility was exaggerated, seemed a safe bet to me. The strategy imploded along with the market days before the big day. The timing couldn’t have been worse. The selloff was close enough to expiration for the market to declare my Monday longs dead, but far enough for Wednesday shorts to have a miniscule, but possible, potential for disaster.

After throwing a few thousand dollars to cover other short positions, Brad and Steve from my online brokerage were satisfied with my reduced risk level. Frankly, I was happy to reduce my position, even if it nullified a fortnight of trading.

I had traded as if I was too smart for the market and in an amount that was too large for my account. I’m thankful that I wasn’t handed my ass. Lesson learned. Hopefully…