OptionsJive

Brazil votes for president on October 4, and I noticed something in the options chain that doesn't normally happen.

Puts are supposed to be the expensive side. That's the whole point of election fear, it buys crash insurance. Not this time. Calls are the rich side right now.

Then I checked the IV Rank. 101, the scale caps at 100.

So I built a structure around it, which might be the cheapest way into an election-vol trade in the market.

Full trade and my exit plan are on Patreon, link's in the comments.

I was in Omaha last year when Warren Buffett announced he was stepping down as CEO. He dropped it at the very end of the meeting and said thanks for coming like it was any other year, and then the whole arena stood up. I can still hear the applause.

On Friday he stepped down as chairman too. His son Howard takes over and Warren stays on the board, so I know I'm being dramatic. But the line in his letter to shareholders got me: "Father Time always wins." If you trade options, you know that one already. We call it theta. Every day an option loses a little value, and if you sold it, that's your paycheck.

And yes, Buffett was one of us. Between 2004 and 2008 he sold roughly $37 billion notional of index puts with 15 and 20 years on the clock.

Thank you, Warren. I'd pay the premium for ten more years of you on that stage. Who else was there?

's IV Rank: 11, and its actual implied volatility: 63.6%. One of those numbers is FAKE.

I sold a Big Lizard on it for $675 again this morning. No upside risk, so it could double from here and I still get paid.

is 168 days old. It hit $6.5 billion in assets in its first 27 trading days, the fastest any ETF has ever grown. That's not enough history for a rank to mean anything.

Same trade I ran on it in August, back again for November. Full trade in today's article. Link in the first comment.

Most of trade ideas I post here runs 70-80% probability of profit. Boring, by design.

Then once in a while, one gets tested, and that's when the real learning happens. You can't learn real management from a trade that never goes against you.

Our current call ratio just got tested, deep in the money on the wrong side. Today I'm walking through the 7 chess moves we run inside the hedge fund for exactly this, the advanced side nobody really writes about.

One of them came out of a paper published this June, and it prices out 78% cheaper than the fix most of us reach for on instinct.

Real numbers off the live position are in the first comment.

Yesterday one of my positions was still inside its short strike. This morning's 6% gap took the stock clean through both strikes on that side. I left it open and sold more premium on the untested side.

Half the comments on that will say I am throwing good money after bad, and I understand why. It does not rescue anything. The new credit cuts that bill by about 50% and adds one risk, which I name in the article.

The other two are new. All three sit in the same expiry, and the reason has nothing to do with the premium. Article in the comments.

Only for advanced traders with large portfolios and hedge fund managers.

I spent the weekend going through a brand-new research paper. Six co-authors, hedging a short stock position, and one finding I could not put down.

They crippled their own hedge on purpose, capped it, and gave away the extreme tail. It still beat the uncapped version on 4 measures out of 5.

So I built the mirror of it for long equity, a new version of our famous Black Swan Hedge. We are researching it in the fund now.

Near-zero cost to put on. Inside the corridor the market falls another 20 points and your account does not move.

Link in the comments.

A trade with an 82% probability of profit and unlimited risk.

Both of those are true about the position I put on this morning. Most traders only ever read the first number.

What saves you is a management plan written before the trade goes against you, and mine was written before I clicked.

I also built a second version that caps the loss and cuts the buying power by 45%.

Both versions, all the numbers, and the exact plan, in today's article.

reported a week ago. IV Rank is still 41. Stop on that for a second. Earnings is normally the thing that kills IV Rank.

When it doesn't collapse, the market didn't just reprice an event. It repriced the whole volatility regime for the name.

Two things I check when I see it. Whether the rank is real or an artifact of a stretched annual range, because a single volatility spike months ago can flatter the number badly. And whether the next expiration cycle is genuinely clean of scheduled catalysts, because an elevated rank is only worth selling into if there's nothing left in the window that justifies it.

I did both checks myself before I put anything on. The position and the cycle I chose are in today's Patreon piece. Link in the first comment.

Cheap stocks come with cheap options. That's the tax on being patient.

One broke that rule today. Under 10x forward earnings. IV Rank 76. Two edges on one ticker, and that almost never happens.

Full trade on Patreon, including the scenario that hurts.

Every position in your options portfolio is the same bet.

Index, single names, whatever you're selling. One bad week and it all moves together.

Today I put on a trade with a beta-weighted delta of 0.00. Live Cattle.

The guy on the other side is a farmer protecting his herd. He needs a price floor. I sell him the floor. What he pays me has nothing to do with the stock market and never will.

Cattle take 18 to 22 months to grow. Nobody prints more of them by Friday, so this market moves in ranges instead of gaps. That's why I trade agriculture.

If you sell options only on stocks, you're leaving that premium on the table. Full trade in today's article.