1 00:00:00,440 --> 00:00:03,840 Speaker 1: Strap on your parachute. It's time for What Goes Up 2 00:00:04,120 --> 00:00:12,640 Speaker 1: with Sarah Ponzick and Mike Reagan. Hello and welcome to 3 00:00:12,720 --> 00:00:16,239 Speaker 1: What goes Up, a Bloomberg Weekly Markets podcast. I'm Sarah 4 00:00:16,280 --> 00:00:19,520 Speaker 1: pons a reporter on the Cross Asset team, and Mike Reagan, 5 00:00:19,680 --> 00:00:22,319 Speaker 1: a senior editor at Bloomberg. This week on the show. 6 00:00:22,480 --> 00:00:25,000 Speaker 1: Over the last couple of weeks, a real spotline has 7 00:00:25,040 --> 00:00:28,840 Speaker 1: shown on the options market, but questions still remain. How 8 00:00:28,960 --> 00:00:33,560 Speaker 1: much can options actually wag the stock market dog? Who's 9 00:00:33,600 --> 00:00:36,720 Speaker 1: to blame retail traders or soft bank who's now been 10 00:00:36,760 --> 00:00:39,479 Speaker 1: deemed the Nazac whale? And of course what does this 11 00:00:39,560 --> 00:00:42,600 Speaker 1: mean for investor as well? Not to build any pressure 12 00:00:42,640 --> 00:00:45,559 Speaker 1: on our guest or anything, but he has all the answers. 13 00:00:46,080 --> 00:00:48,360 Speaker 1: I was gonna say, Sarah, all all the answers. You're 14 00:00:48,360 --> 00:00:50,760 Speaker 1: really uh, you're really putting this guy on the spot here. 15 00:00:51,040 --> 00:00:53,040 Speaker 1: Not to hype it up too much, but I really, 16 00:00:53,080 --> 00:00:55,400 Speaker 1: I really believe he does all the answers. I'm gonna 17 00:00:55,400 --> 00:00:57,720 Speaker 1: ask him where where do babies come from? Let's see 18 00:00:58,080 --> 00:01:01,600 Speaker 1: start with the most pressing of them. But as always, 19 00:01:01,600 --> 00:01:04,800 Speaker 1: will close out the episode with our tradition the craziest 20 00:01:04,840 --> 00:01:07,520 Speaker 1: thing I saw in markets this week. And please if 21 00:01:07,520 --> 00:01:10,280 Speaker 1: you saw something crazy, give us a call on the 22 00:01:10,280 --> 00:01:14,360 Speaker 1: Bloomberg Podcast hotline at six four or six three to 23 00:01:14,640 --> 00:01:17,759 Speaker 1: four three four nine, oh, and leave us a voicemail. 24 00:01:17,840 --> 00:01:19,720 Speaker 1: Maybe we'll play it on the show. And of course 25 00:01:19,760 --> 00:01:23,640 Speaker 1: you can always tweet us at podcasts Now. Sarah, before 26 00:01:23,840 --> 00:01:26,240 Speaker 1: I actually introduced this guest, you have to indulge me 27 00:01:26,319 --> 00:01:29,080 Speaker 1: with a little bit of an old man nostalgia story 28 00:01:29,120 --> 00:01:33,280 Speaker 1: here always always you like it when I wind up 29 00:01:33,280 --> 00:01:35,840 Speaker 1: with the old the Old Guys series. Yeah. So, as 30 00:01:35,840 --> 00:01:39,520 Speaker 1: you probably know, I grew up outside of Philadelphia, suburban Philadelphia, 31 00:01:39,560 --> 00:01:43,440 Speaker 1: but my parents are from a little town called Wilkes Barre, Pennsylvania, 32 00:01:43,760 --> 00:01:46,080 Speaker 1: which is further north in Pennsylvania, up in the mountains. 33 00:01:46,160 --> 00:01:49,200 Speaker 1: It's a river town. When we would go back to 34 00:01:49,360 --> 00:01:53,440 Speaker 1: visit my grandmother, my dad would always kind of revert 35 00:01:53,520 --> 00:01:55,600 Speaker 1: back to a twelve year old boy, I think, and 36 00:01:55,640 --> 00:01:58,680 Speaker 1: he'd take me and we'd go on little adventures around town. 37 00:01:59,560 --> 00:02:01,080 Speaker 1: One of the things we did one time was we 38 00:02:01,160 --> 00:02:03,960 Speaker 1: used to go throw rocks in the river um and 39 00:02:04,040 --> 00:02:06,639 Speaker 1: one time we were up on a cliff throwing rocks 40 00:02:06,680 --> 00:02:08,959 Speaker 1: out in the river right and all of a sudden, 41 00:02:08,960 --> 00:02:11,680 Speaker 1: there must have been guys down on the bank fishing 42 00:02:11,720 --> 00:02:13,919 Speaker 1: that we couldn't see. So they started winging the rocks 43 00:02:13,919 --> 00:02:16,880 Speaker 1: back at us, and we had to high tail it 44 00:02:16,919 --> 00:02:19,079 Speaker 1: back to my grandmother's house. We were all sweaty, and 45 00:02:19,720 --> 00:02:21,840 Speaker 1: you know, she was like, what the what is what happened? 46 00:02:21,840 --> 00:02:24,200 Speaker 1: And but I was like, nothing, nothing not, nothing's here? 47 00:02:24,880 --> 00:02:27,440 Speaker 1: How this is relevant? Okay, you're ready? Yeah, I'm waiting 48 00:02:27,440 --> 00:02:30,200 Speaker 1: for it. Could you name I bet you can't, but 49 00:02:30,280 --> 00:02:33,520 Speaker 1: can you name that river I was throwing rocks into me? 50 00:02:34,000 --> 00:02:39,320 Speaker 1: Named that river in Pennsylvania? Named that river? Uh, Susquehanna. 51 00:02:41,720 --> 00:02:44,400 Speaker 1: Say it again? Try say to it again. Am I right? 52 00:02:46,040 --> 00:02:50,320 Speaker 1: If we'll allow mispronunciations, you're you're correct, Susquehanna. Susquehanna. That 53 00:02:50,320 --> 00:02:52,919 Speaker 1: was pretty good. Right, that's better. And that's Ralevant because 54 00:02:53,360 --> 00:02:56,200 Speaker 1: obviously one of the biggest, most important firms in the 55 00:02:56,240 --> 00:03:01,040 Speaker 1: options market is Susquehanna International Group, and we are lucky 56 00:03:01,240 --> 00:03:04,960 Speaker 1: to have their co head of derivative Strategy on the 57 00:03:04,960 --> 00:03:07,720 Speaker 1: show this week. His name is Chris Murphy. Chris, welcome 58 00:03:07,720 --> 00:03:10,960 Speaker 1: to the show. It's great to be here. Thank you. Um. 59 00:03:11,000 --> 00:03:13,400 Speaker 1: I'm also from the suburbs of Philadelphia. So I might 60 00:03:13,440 --> 00:03:15,600 Speaker 1: not have I might have to not have all the answers, 61 00:03:15,600 --> 00:03:17,600 Speaker 1: but I definitely have answers. So let's let's do this. 62 00:03:18,840 --> 00:03:20,320 Speaker 1: You might have the answers to what happened to the 63 00:03:20,360 --> 00:03:23,160 Speaker 1: Eagles last week? I don't know. I was watching the 64 00:03:23,240 --> 00:03:25,760 Speaker 1: kids soccer. Luckily I missed it. Yeah you didn't, You 65 00:03:25,760 --> 00:03:28,840 Speaker 1: didn't miss You didn't miss that. But Mike claim to fame. 66 00:03:28,880 --> 00:03:30,799 Speaker 1: When I first got to Bloomberg a million years ago, 67 00:03:30,840 --> 00:03:35,480 Speaker 1: was the the options guy reporter realized I could I 68 00:03:35,520 --> 00:03:38,600 Speaker 1: could spell Susquehanna, And every time he was writing a story, 69 00:03:38,800 --> 00:03:40,800 Speaker 1: how do you spell Susquehanna again? And I'd tell him 70 00:03:40,800 --> 00:03:42,960 Speaker 1: and then he'd say, how do you spell balakin Wid 71 00:03:43,040 --> 00:03:46,360 Speaker 1: which is where Susquehanna is located? And I think everyone 72 00:03:46,400 --> 00:03:48,320 Speaker 1: else on the team thought I knew everything. It's like 73 00:03:48,360 --> 00:03:50,839 Speaker 1: this guy knows everything. Yeah, he quickly became the most 74 00:03:50,840 --> 00:03:54,440 Speaker 1: resourceful guy at Bloomberg. That's right, That's right. So so Chris, 75 00:03:54,520 --> 00:03:56,440 Speaker 1: first question is how long did it take you to 76 00:03:56,520 --> 00:04:00,560 Speaker 1: learn how to spell Susquehanna without looking twice? Well, I've 77 00:04:00,560 --> 00:04:03,440 Speaker 1: been here sixteen years, so I was I figured out 78 00:04:03,440 --> 00:04:07,000 Speaker 1: both of those before my headway point. So that's a 79 00:04:07,000 --> 00:04:09,640 Speaker 1: pretty good that's about a good learning curve, I would say, 80 00:04:09,640 --> 00:04:11,320 Speaker 1: I would say, they didn't make you try to spell 81 00:04:11,360 --> 00:04:14,640 Speaker 1: it in your start off interview. You know, they did not. 82 00:04:14,880 --> 00:04:17,520 Speaker 1: They did not. Luckily, Luckily I might not be here. 83 00:04:17,560 --> 00:04:20,520 Speaker 1: Who knows what I do? I can spell all the 84 00:04:20,560 --> 00:04:24,040 Speaker 1: tough filly area many on contrack and quiz me anytime. 85 00:04:24,080 --> 00:04:26,719 Speaker 1: But but anyway, Chris, let's get to the heart of 86 00:04:26,720 --> 00:04:30,960 Speaker 1: the matter here. As Sarah pointed out in the introductions, 87 00:04:31,400 --> 00:04:34,839 Speaker 1: everybody is talking about the options market again, trying to 88 00:04:35,760 --> 00:04:39,680 Speaker 1: suss out what role options trading may or may not 89 00:04:39,760 --> 00:04:43,880 Speaker 1: have played in this ferocious rally in the equity market 90 00:04:43,960 --> 00:04:46,120 Speaker 1: and now a little bit of a correction since the 91 00:04:46,120 --> 00:04:48,760 Speaker 1: beginning of September. You know, from your seat, what was 92 00:04:48,839 --> 00:04:52,120 Speaker 1: it look like watching the options market this year? I'm 93 00:04:52,160 --> 00:04:55,840 Speaker 1: guessing it was a very unusual environment. Was this almost 94 00:04:55,920 --> 00:04:58,719 Speaker 1: like nothing you've ever seen before? This much sort of 95 00:04:59,000 --> 00:05:03,080 Speaker 1: retail interest and now we're learning about even bigger institutional 96 00:05:03,120 --> 00:05:05,800 Speaker 1: interest from the likes of Soft Bank. I mean, what 97 00:05:05,920 --> 00:05:08,839 Speaker 1: was it like watching all this flow go by? Yeah? 98 00:05:08,839 --> 00:05:10,520 Speaker 1: I mean, I think you hit the nail on the 99 00:05:10,520 --> 00:05:14,359 Speaker 1: head the most notable change that we've seen this year 100 00:05:14,560 --> 00:05:19,480 Speaker 1: is just the explosion in the retail trading flow concentrated 101 00:05:19,520 --> 00:05:23,480 Speaker 1: in the front two weeks. We did some analysis recently 102 00:05:23,560 --> 00:05:27,520 Speaker 1: where we looked at what percentage of overall option trading 103 00:05:27,600 --> 00:05:31,480 Speaker 1: volume was in the front two weeks before coronavirus and 104 00:05:31,600 --> 00:05:35,360 Speaker 1: before all the brokerage houses we're starting to give out 105 00:05:36,279 --> 00:05:41,000 Speaker 1: no fee option trading. It was you know around UH. 106 00:05:41,120 --> 00:05:45,000 Speaker 1: Now it's closer to that's a huge difference, just UH 107 00:05:45,120 --> 00:05:48,920 Speaker 1: concentrated in the front two weeks. That trading is unique, 108 00:05:49,040 --> 00:05:50,880 Speaker 1: and I think you know, when you're reading about it 109 00:05:50,920 --> 00:05:53,760 Speaker 1: and looking at it, you see these giant volume numbers. 110 00:05:54,240 --> 00:05:56,359 Speaker 1: But what not a lot of people are are pointing 111 00:05:56,360 --> 00:06:00,240 Speaker 1: out is that the volume numbers at the end of 112 00:06:00,279 --> 00:06:02,640 Speaker 1: the day, when you compare them to the change in 113 00:06:02,720 --> 00:06:06,039 Speaker 1: open interest the next day, the change in open interest 114 00:06:06,360 --> 00:06:08,800 Speaker 1: is a fraction. For a lot of these what we 115 00:06:08,839 --> 00:06:11,680 Speaker 1: call message board trading stocks that we've been tracking here 116 00:06:12,440 --> 00:06:14,840 Speaker 1: is a fraction of the volume number. So what that 117 00:06:14,880 --> 00:06:18,080 Speaker 1: means is over the course of the day, these options 118 00:06:18,080 --> 00:06:20,760 Speaker 1: were as we are assuming um for your number of 119 00:06:20,760 --> 00:06:23,600 Speaker 1: ways that we track it are being bought early on, 120 00:06:23,680 --> 00:06:25,400 Speaker 1: but then a lot of them are closed by the 121 00:06:25,480 --> 00:06:29,000 Speaker 1: end of the day UM, So their long term impact, 122 00:06:29,320 --> 00:06:30,960 Speaker 1: you know, when they're open and closed the same day, 123 00:06:31,160 --> 00:06:33,839 Speaker 1: is not huge. But over time that open interest does 124 00:06:33,880 --> 00:06:36,960 Speaker 1: build up UM and by the time we get to expiration, 125 00:06:37,600 --> 00:06:40,120 Speaker 1: that's when you see a lot of a larger moves. 126 00:06:40,560 --> 00:06:43,040 Speaker 1: For example, we were looking at Apple and we looked 127 00:06:43,040 --> 00:06:46,279 Speaker 1: at the inter day trading range for Monday through Thursday, 128 00:06:46,880 --> 00:06:49,440 Speaker 1: UM pretty consistent across the board, and back in two 129 00:06:49,440 --> 00:06:52,960 Speaker 1: thousand nineteen the Friday was moving at a similar range. 130 00:06:53,480 --> 00:06:58,280 Speaker 1: But recently the moves on Fridays have been around wider UM, 131 00:06:58,320 --> 00:07:00,640 Speaker 1: and we think that's, you know, really due to a 132 00:07:00,680 --> 00:07:02,960 Speaker 1: build up in open interests from a lot of this 133 00:07:03,279 --> 00:07:07,080 Speaker 1: retail trading, so this message board trading. You mentioned that 134 00:07:07,120 --> 00:07:08,640 Speaker 1: if if a lot of this is being open and 135 00:07:08,680 --> 00:07:10,520 Speaker 1: closed in the same day, you said, the long term 136 00:07:10,560 --> 00:07:13,840 Speaker 1: impact isn't that large. However, I think it's come to 137 00:07:13,920 --> 00:07:17,880 Speaker 1: been well understood that options did play a role in 138 00:07:17,920 --> 00:07:20,080 Speaker 1: this run up, this massive run up that we had 139 00:07:20,120 --> 00:07:22,960 Speaker 1: in August, particularly in some of these stocks like Apple, 140 00:07:23,520 --> 00:07:26,560 Speaker 1: like Tesla. Can you walk us through the dynamics of that, 141 00:07:26,600 --> 00:07:29,040 Speaker 1: though I know a lot of Greek letters get thrown 142 00:07:29,080 --> 00:07:31,840 Speaker 1: out and about. But how is that actually possible that 143 00:07:31,880 --> 00:07:35,960 Speaker 1: you can almost have this army of small day traders 144 00:07:36,200 --> 00:07:40,000 Speaker 1: trading options in and out very quickly UM in small lots, 145 00:07:40,080 --> 00:07:46,080 Speaker 1: and that actually can somehow move prices, especially of large companies. 146 00:07:47,200 --> 00:07:48,840 Speaker 1: You know, even though a lot of it is open 147 00:07:48,840 --> 00:07:51,760 Speaker 1: and closed the same day, over time that open interest 148 00:07:51,800 --> 00:07:54,680 Speaker 1: builds up. So let's just stick with Apple for example, 149 00:07:54,920 --> 00:07:59,520 Speaker 1: UM and September expiration is on Friday, UH and last 150 00:07:59,640 --> 00:08:01,480 Speaker 1: I check, Apple was around a hundred and twelve and 151 00:08:01,480 --> 00:08:03,320 Speaker 1: a half bucks somewhere around there, maybe a little bit 152 00:08:03,320 --> 00:08:07,120 Speaker 1: lower UM and the strike with the most open interest 153 00:08:07,240 --> 00:08:09,000 Speaker 1: because of this, a lot of it due to the 154 00:08:09,040 --> 00:08:11,640 Speaker 1: retail trading adding up over the course of weeks and 155 00:08:11,680 --> 00:08:15,440 Speaker 1: weeks and weeks, UM had around seventy five thousand open 156 00:08:15,520 --> 00:08:19,560 Speaker 1: interest call contracts. So you know, let's say you're a 157 00:08:19,600 --> 00:08:24,240 Speaker 1: market maker and Apple is add ten dollars, so it's 158 00:08:24,320 --> 00:08:27,280 Speaker 1: below the strike. You have to buy some stock to 159 00:08:27,400 --> 00:08:30,520 Speaker 1: hedge your short call position, but not a lot, let's 160 00:08:30,520 --> 00:08:35,800 Speaker 1: say worth of how much UM culture short The next morning, 161 00:08:35,800 --> 00:08:37,640 Speaker 1: if Apples up at one fift, you have to go 162 00:08:37,679 --> 00:08:39,680 Speaker 1: back out there and buy some more stock. Now, there's 163 00:08:39,720 --> 00:08:42,600 Speaker 1: a lot of forces at play. But because these option 164 00:08:42,640 --> 00:08:45,880 Speaker 1: positions are getting so big, and because the market makers 165 00:08:45,920 --> 00:08:48,320 Speaker 1: being forced to go out and buy stock, that does 166 00:08:48,400 --> 00:08:51,320 Speaker 1: have an impact on the stock um and would move 167 00:08:51,360 --> 00:08:53,720 Speaker 1: the stock higher if they are out there buying another 168 00:08:53,800 --> 00:08:56,160 Speaker 1: day later stocks a hundred and twenty, the market maker 169 00:08:56,160 --> 00:08:58,040 Speaker 1: has to go out there and buy more. And this 170 00:08:58,080 --> 00:09:01,560 Speaker 1: works in both directions. Apple at twenty, these calls are 171 00:09:01,640 --> 00:09:04,080 Speaker 1: way in the money. All the market makers are hedged 172 00:09:04,120 --> 00:09:07,040 Speaker 1: pretty much the equivalent amount of stock to the calls 173 00:09:07,080 --> 00:09:09,440 Speaker 1: that they're short. And then we start selling off like 174 00:09:09,520 --> 00:09:12,400 Speaker 1: we did in in September, and all of a sudden, 175 00:09:12,400 --> 00:09:14,640 Speaker 1: those calls are out of the money. Well, they don't 176 00:09:14,640 --> 00:09:16,920 Speaker 1: need that long stock as a hedge anymore, so they 177 00:09:16,920 --> 00:09:18,559 Speaker 1: need to sell it as well. They're just looking to 178 00:09:18,640 --> 00:09:23,240 Speaker 1: stay flat. So this is gonna exacerbate moves in either direction. Um. 179 00:09:23,280 --> 00:09:25,560 Speaker 1: You know, as we saw this week, you know, the 180 00:09:25,640 --> 00:09:28,160 Speaker 1: FED things like that, that's still you know, the major 181 00:09:28,200 --> 00:09:33,160 Speaker 1: catalyst that is moving markets. But the increased trading and 182 00:09:33,200 --> 00:09:35,240 Speaker 1: open interest in the options is just going to work 183 00:09:35,280 --> 00:09:38,840 Speaker 1: to exacerbate moves in either direction. Um, if we are 184 00:09:38,880 --> 00:09:40,880 Speaker 1: working under the assumption, which I think is a good one, 185 00:09:40,920 --> 00:09:44,560 Speaker 1: that that retail is um, mostly net long a lot 186 00:09:44,559 --> 00:09:48,080 Speaker 1: of these options. Chris, did you notice any sort of 187 00:09:48,280 --> 00:09:51,400 Speaker 1: change in the complexion of the option markets right there 188 00:09:51,440 --> 00:09:54,040 Speaker 1: at the beginning of September when the market sort of 189 00:09:54,040 --> 00:09:57,000 Speaker 1: peaked and rolled over? You know, the jokes, I've got 190 00:09:57,040 --> 00:09:58,880 Speaker 1: a piece in Business Week to sort of plug my 191 00:09:58,880 --> 00:10:01,319 Speaker 1: own book here, you know, people joking about, well, the 192 00:10:01,640 --> 00:10:03,840 Speaker 1: Robin Hood traders had to go back to high school, 193 00:10:03,960 --> 00:10:06,880 Speaker 1: and you know, the the NFL Week one lines came 194 00:10:06,920 --> 00:10:09,400 Speaker 1: out and there was more interesting stuff to to bet on. 195 00:10:09,559 --> 00:10:12,760 Speaker 1: But I wonder there is there a little bit of 196 00:10:12,800 --> 00:10:15,760 Speaker 1: element of truth to that type of sort of humorous 197 00:10:16,440 --> 00:10:19,600 Speaker 1: summation of what happened. Does the changing of the calendar 198 00:10:19,760 --> 00:10:24,240 Speaker 1: to September the end of summer cause a different tone 199 00:10:24,440 --> 00:10:27,000 Speaker 1: in trading um? And is there anything in the in 200 00:10:27,000 --> 00:10:29,200 Speaker 1: the options data that you saw that to sort of 201 00:10:29,200 --> 00:10:32,280 Speaker 1: back up that idea? So now you know, in these 202 00:10:32,320 --> 00:10:34,520 Speaker 1: times two thousand twenty, I would not take anything off 203 00:10:34,600 --> 00:10:36,960 Speaker 1: the table. And you know, I'm sure there's a million 204 00:10:37,000 --> 00:10:40,680 Speaker 1: different parts to this story. To me, it seems like 205 00:10:40,840 --> 00:10:46,439 Speaker 1: these message board traders are just very reactive to market moves, 206 00:10:46,520 --> 00:10:49,720 Speaker 1: and to a great degree they're focused on the call options. 207 00:10:49,720 --> 00:10:52,720 Speaker 1: You can see that in UH, in the volume numbers, 208 00:10:53,000 --> 00:10:54,719 Speaker 1: in the put call ratios, you can see it in 209 00:10:54,760 --> 00:10:56,520 Speaker 1: a lot of different places. We have started to see 210 00:10:56,600 --> 00:11:00,760 Speaker 1: selective spots where we are seeing um of this similar 211 00:11:00,760 --> 00:11:03,360 Speaker 1: flow on the put side, but to a large degree, 212 00:11:03,720 --> 00:11:06,600 Speaker 1: these investors seem to be following momentum, and we have 213 00:11:06,840 --> 00:11:10,520 Speaker 1: certainly noticed when the market has had down days, we 214 00:11:10,559 --> 00:11:14,800 Speaker 1: see significantly less of the same trading flow. What was 215 00:11:14,840 --> 00:11:17,720 Speaker 1: the chicken, what was the egg? You know, not sure, 216 00:11:17,800 --> 00:11:20,760 Speaker 1: but it certainly is true from what we're seeing, we're 217 00:11:20,760 --> 00:11:22,839 Speaker 1: seeing less of this flow on the down days which 218 00:11:22,840 --> 00:11:24,760 Speaker 1: we saw in the beginning of September. You know, and 219 00:11:25,160 --> 00:11:27,199 Speaker 1: correct me if I'm wrong. That strikes me as a 220 00:11:27,240 --> 00:11:32,880 Speaker 1: different sort of paradigm than the way UH professional traders 221 00:11:33,040 --> 00:11:35,240 Speaker 1: use options. You know, they might use a call and 222 00:11:35,280 --> 00:11:37,880 Speaker 1: a put some sort of you know, complex multi legged 223 00:11:38,240 --> 00:11:41,120 Speaker 1: trade where the retail seems to have just been all 224 00:11:41,240 --> 00:11:43,760 Speaker 1: in on calls, you know, trying to use them to 225 00:11:43,960 --> 00:11:47,760 Speaker 1: hit home runs, whereas you're, you're more sophisticated hedge fund 226 00:11:47,800 --> 00:11:50,760 Speaker 1: trader might be looking at some you know, kind of 227 00:11:50,840 --> 00:11:54,080 Speaker 1: multi legged trades to to hit singles and doubles. Is 228 00:11:54,120 --> 00:11:58,840 Speaker 1: that a fair sort of analogy there, do you think, um, absolutely, 229 00:11:58,840 --> 00:12:01,240 Speaker 1: and I, you know, I do necessarily always think that 230 00:12:01,280 --> 00:12:03,920 Speaker 1: the most complicated trades are always the best ones. And 231 00:12:03,960 --> 00:12:06,760 Speaker 1: if you're looking at the retail traders that are just 232 00:12:06,840 --> 00:12:10,080 Speaker 1: buying calls, it's all about sizing it correctly. There's a 233 00:12:10,120 --> 00:12:12,200 Speaker 1: lot of value in a market like this where you 234 00:12:12,240 --> 00:12:15,559 Speaker 1: see such dramatic moves to going out there and buying 235 00:12:15,559 --> 00:12:17,520 Speaker 1: a call, where you know that max you can lose 236 00:12:17,800 --> 00:12:20,520 Speaker 1: is the amount that you paid, and you're getting exposure 237 00:12:20,559 --> 00:12:22,800 Speaker 1: to a stock that you want to get exposure to. 238 00:12:23,120 --> 00:12:25,080 Speaker 1: And in terms of you know, how much risk are 239 00:12:25,080 --> 00:12:27,040 Speaker 1: they taking? You know, if you're buying a stock at 240 00:12:27,080 --> 00:12:29,240 Speaker 1: the same size, you have a lot more downside risk 241 00:12:29,280 --> 00:12:32,440 Speaker 1: than a call, which has the embedded UH protection, you know. 242 00:12:32,520 --> 00:12:34,559 Speaker 1: And you know also you know, selling the pot, which 243 00:12:34,600 --> 00:12:37,200 Speaker 1: can definitely be a great strategy, but there's just more 244 00:12:37,360 --> 00:12:40,480 Speaker 1: risk in those other types of strategies when you're just 245 00:12:40,559 --> 00:12:43,360 Speaker 1: buying a call. You know, maybe that's related to the 246 00:12:43,400 --> 00:12:46,120 Speaker 1: amount of margin or what not you're able to get 247 00:12:46,200 --> 00:12:49,000 Speaker 1: from your brokerage. You know, maybe it's harder for um, 248 00:12:49,040 --> 00:12:51,960 Speaker 1: you know, retail traders to do those more sophisticated strategies 249 00:12:52,000 --> 00:12:54,079 Speaker 1: because maybe they have to put more to put more 250 00:12:54,120 --> 00:12:56,640 Speaker 1: money up. But I guess my my main point on 251 00:12:56,679 --> 00:12:59,120 Speaker 1: that is these calls it makes sense. There's a lot 252 00:12:59,160 --> 00:13:00,920 Speaker 1: of reasons that they do. Makes sense, you know, if 253 00:13:00,920 --> 00:13:02,760 Speaker 1: you're just looking to get exposure and you don't want 254 00:13:02,760 --> 00:13:18,600 Speaker 1: to open up a lot of downside. Alright, So Mike 255 00:13:18,720 --> 00:13:22,920 Speaker 1: mentioned quote unquote professional investors and the big name and 256 00:13:22,960 --> 00:13:24,600 Speaker 1: all of this that's really come out over the past 257 00:13:24,640 --> 00:13:27,720 Speaker 1: month after the Financial Times reported about soft Bank being 258 00:13:28,160 --> 00:13:32,560 Speaker 1: the Nasdaq whale that has evolved. So you had in 259 00:13:32,600 --> 00:13:35,680 Speaker 1: a recent report you spoke about these large so called 260 00:13:35,760 --> 00:13:39,000 Speaker 1: risk reversals that were being unwound. And I remember I 261 00:13:39,040 --> 00:13:41,680 Speaker 1: was speaking to you on a on a recent day, Um, 262 00:13:41,720 --> 00:13:44,080 Speaker 1: that stops her trading lower, and some of these big 263 00:13:44,120 --> 00:13:47,040 Speaker 1: trades look to be closing out. Is it at all 264 00:13:47,080 --> 00:13:51,520 Speaker 1: possible to really know, um being an outsider that yeah, 265 00:13:51,640 --> 00:13:54,800 Speaker 1: these were the trades that were being placed by soft 266 00:13:54,840 --> 00:13:57,720 Speaker 1: Bank potentially, And even if you can't know that for sure, 267 00:13:57,880 --> 00:14:00,480 Speaker 1: I mean, is it usual or is it posible that 268 00:14:00,559 --> 00:14:03,559 Speaker 1: if such trades like these are closed out that they 269 00:14:03,559 --> 00:14:06,720 Speaker 1: could have ripple effects through the market. Trades of those size, 270 00:14:06,920 --> 00:14:10,319 Speaker 1: the risk reversals certainly can impact the market. Uh, and 271 00:14:10,640 --> 00:14:14,600 Speaker 1: mostly those specific stocks, I think because of the speculation, 272 00:14:14,760 --> 00:14:18,559 Speaker 1: because of the timing of everything. You know, Um, that 273 00:14:18,720 --> 00:14:21,440 Speaker 1: was all has all been reported. Cash on the sidelines 274 00:14:22,000 --> 00:14:24,800 Speaker 1: deployed buying big tech stocks, swap out of those tech 275 00:14:24,800 --> 00:14:27,880 Speaker 1: stocks into call spreads, which is actually a risk reduction 276 00:14:28,120 --> 00:14:30,840 Speaker 1: type of a move. UM. And then after all that, 277 00:14:30,960 --> 00:14:34,200 Speaker 1: these bullish risk reversals, which are buying an upside call 278 00:14:34,360 --> 00:14:37,480 Speaker 1: and selling and downside put. And what the investor may 279 00:14:37,480 --> 00:14:40,480 Speaker 1: be trying to um look for there is these stocks 280 00:14:40,480 --> 00:14:42,800 Speaker 1: have made a big run. I'm not necessarily sure I 281 00:14:42,840 --> 00:14:45,680 Speaker 1: want to buy them right here, but if stock continues higher, 282 00:14:45,680 --> 00:14:48,080 Speaker 1: I want to get back involved. And if they sell off, 283 00:14:48,120 --> 00:14:49,960 Speaker 1: I'm gonna I'm gonna look to buy them on a tip. 284 00:14:50,520 --> 00:14:52,880 Speaker 1: That all makes sense. Um, they were big trades, and 285 00:14:52,880 --> 00:14:55,480 Speaker 1: they certainly had an impact. I think because of the reporting, 286 00:14:55,520 --> 00:14:58,880 Speaker 1: the psychological aspect, the fact that people were looking for 287 00:14:59,080 --> 00:15:02,800 Speaker 1: reasons um for market moves, I think that they probably 288 00:15:03,000 --> 00:15:05,800 Speaker 1: had a bigger impact, and maybe they normally would have 289 00:15:05,880 --> 00:15:09,360 Speaker 1: been if it was an unknown trade that was just large. Yeah, 290 00:15:09,400 --> 00:15:12,160 Speaker 1: that's that's the way we were looking at it. Chris All, 291 00:15:12,200 --> 00:15:15,480 Speaker 1: this is fascinating, but it's time for the really important question. 292 00:15:16,040 --> 00:15:17,640 Speaker 1: When it's time for a cheese steak. Are you a 293 00:15:17,720 --> 00:15:20,720 Speaker 1: Geno's guy or a Pat's guy. I've always been going 294 00:15:20,720 --> 00:15:23,120 Speaker 1: to Genos, so I'm gonna stick with Genos. I like 295 00:15:23,200 --> 00:15:24,800 Speaker 1: them both, though, I like them both all right. I'm 296 00:15:24,840 --> 00:15:30,080 Speaker 1: the shortest line guy myself. That's true though, that's Sarah. 297 00:15:30,120 --> 00:15:31,440 Speaker 1: We'll have to We'll have to get you there. I'm 298 00:15:31,440 --> 00:15:33,120 Speaker 1: gonna have Yeah, I'm gonna have to make a trip 299 00:15:33,120 --> 00:15:38,000 Speaker 1: out there. That's the most important reason for cheesecake. Chris, 300 00:15:38,000 --> 00:15:39,720 Speaker 1: what one thing I wanted to ask it? I'm gonna 301 00:15:39,760 --> 00:15:41,560 Speaker 1: warn you this might be one of my famous twelve 302 00:15:41,640 --> 00:15:45,880 Speaker 1: part questions. You know, Sarah's as a derivatives guy, you know, 303 00:15:46,000 --> 00:15:48,200 Speaker 1: who knows a lot about multi leg trades. I think 304 00:15:48,240 --> 00:15:49,800 Speaker 1: he can handle a twelve part or what do you 305 00:15:49,800 --> 00:15:51,480 Speaker 1: what do you think? Bring it on, Mike, I think 306 00:15:51,520 --> 00:15:54,600 Speaker 1: he can handle it. I'm getting used to answering multiple 307 00:15:54,640 --> 00:15:59,560 Speaker 1: questions at once with four young daughters. Oh wow, for 308 00:15:59,720 --> 00:16:01,960 Speaker 1: a little girls, Chris, you you have your hands fall. 309 00:16:03,240 --> 00:16:05,720 Speaker 1: How many of them are fixed? My WiFi? Now? Dad? 310 00:16:05,760 --> 00:16:11,400 Speaker 1: I'm ye, that's definitely an issue with virtual schooling. But Chris, 311 00:16:11,440 --> 00:16:15,920 Speaker 1: you know uh. Warren Buffett famously years ago how a 312 00:16:16,000 --> 00:16:21,600 Speaker 1: crack about derivatives being the weapons of financial mass destruction. 313 00:16:22,320 --> 00:16:25,360 Speaker 1: And I think, you know, the reaction from most people 314 00:16:25,800 --> 00:16:27,920 Speaker 1: on Wall Street was like settled down war. And that's 315 00:16:28,000 --> 00:16:30,480 Speaker 1: that's a little ridiculous. I mean, maybe, okay, find maybe 316 00:16:30,520 --> 00:16:33,400 Speaker 1: the credit derivatives, but when it comes to you know, 317 00:16:33,520 --> 00:16:37,760 Speaker 1: your your equity puts and calls, uh, no need for panic. 318 00:16:38,400 --> 00:16:41,440 Speaker 1: But every now and then we do see an episode 319 00:16:41,760 --> 00:16:45,080 Speaker 1: like this where you know whether it be you know, 320 00:16:45,120 --> 00:16:48,040 Speaker 1: you remember when the t vix um e t F 321 00:16:48,200 --> 00:16:52,640 Speaker 1: blew up, when the the inverse x I V volatility 322 00:16:52,640 --> 00:16:54,920 Speaker 1: e t F blew up. I feel like the closer 323 00:16:55,000 --> 00:16:59,440 Speaker 1: you get derivatives, equity derivatives, even the closer you get 324 00:16:59,480 --> 00:17:04,520 Speaker 1: them to the the retail investor um, the more likelihood 325 00:17:04,560 --> 00:17:07,680 Speaker 1: there is for some drama um. And I wonder if 326 00:17:07,720 --> 00:17:11,440 Speaker 1: this episode that we saw this summer, is there any 327 00:17:11,440 --> 00:17:13,960 Speaker 1: concern And I realized again this might be a little 328 00:17:13,960 --> 00:17:15,760 Speaker 1: bit out of your wheelhouse about what you think about 329 00:17:15,760 --> 00:17:18,320 Speaker 1: every day. But I wonder is there a concern about 330 00:17:18,359 --> 00:17:22,240 Speaker 1: sort of some some scrutiny of the trading of options 331 00:17:22,240 --> 00:17:25,439 Speaker 1: this summer from especially the mom and pop type of 332 00:17:25,440 --> 00:17:29,919 Speaker 1: retail investors. UM, is that something that could be coming 333 00:17:30,200 --> 00:17:32,960 Speaker 1: and UM, if you got dragged in front of Congress, 334 00:17:33,000 --> 00:17:36,880 Speaker 1: I guess what would be your explanation on on what 335 00:17:36,960 --> 00:17:39,800 Speaker 1: retail investors need to know about put some calls? Do 336 00:17:39,840 --> 00:17:43,359 Speaker 1: they need some further regulatory scrutiny when it comes to 337 00:17:43,680 --> 00:17:47,679 Speaker 1: to sort of small fry individual traders or was just 338 00:17:47,880 --> 00:17:50,119 Speaker 1: this just a random anomaly that we can sort of 339 00:17:50,160 --> 00:17:53,760 Speaker 1: not worry about. Going back to talking about the UM 340 00:17:53,920 --> 00:17:57,480 Speaker 1: the risks of these trades. When you're buying calls, the 341 00:17:57,520 --> 00:17:59,679 Speaker 1: most you can lose is the amount you paid, So 342 00:17:59,720 --> 00:18:03,480 Speaker 1: that's so that's one thing. Sizing it is is critically important. 343 00:18:03,680 --> 00:18:05,800 Speaker 1: You know, you don't want to take all your all 344 00:18:05,840 --> 00:18:08,720 Speaker 1: your investment in Google stock, sell out of that and 345 00:18:08,800 --> 00:18:11,320 Speaker 1: buy an upside Google call because you know the odds 346 00:18:11,320 --> 00:18:12,600 Speaker 1: of it, you know, being if it's out of the 347 00:18:12,600 --> 00:18:15,080 Speaker 1: money less than fifty even hit, you could lose all 348 00:18:15,119 --> 00:18:17,840 Speaker 1: of your money. So you need to have the correct education. 349 00:18:17,920 --> 00:18:21,560 Speaker 1: You need to size everything correctly to protect yourself. Now, 350 00:18:21,600 --> 00:18:24,399 Speaker 1: in terms of this market, you know there's been statistics 351 00:18:24,400 --> 00:18:28,720 Speaker 1: out there. Option volume compared to even UM equity volume 352 00:18:29,040 --> 00:18:32,480 Speaker 1: has risen so much. These weekly options are typically all 353 00:18:32,680 --> 00:18:36,520 Speaker 1: a penny why they're incredibly tight, they're incredibly liquid. They're 354 00:18:36,520 --> 00:18:39,600 Speaker 1: not OTC products. They're not you know, murky things that 355 00:18:39,640 --> 00:18:42,520 Speaker 1: you don't really understand what you're getting into. They are 356 00:18:42,560 --> 00:18:44,960 Speaker 1: are really tracked well. So I actually really think that, 357 00:18:45,160 --> 00:18:47,000 Speaker 1: you know, so long as the education is there, so 358 00:18:47,080 --> 00:18:50,160 Speaker 1: long as investors understand, um, the bet that they're making 359 00:18:50,280 --> 00:18:52,280 Speaker 1: or the investment that they're making when they're getting evolved 360 00:18:52,280 --> 00:18:55,880 Speaker 1: in these options. UM, I don't think it's it's necessarily 361 00:18:55,960 --> 00:18:58,159 Speaker 1: something where you know, where it's eighteen pages long and 362 00:18:58,200 --> 00:18:59,679 Speaker 1: you're signing on something and you don't know what you 363 00:18:59,680 --> 00:19:02,560 Speaker 1: know what what you're getting yourself into. Uh, these are, 364 00:19:02,600 --> 00:19:04,679 Speaker 1: you know, like I said, the most liquid products probably 365 00:19:04,680 --> 00:19:07,399 Speaker 1: out there, UM, that investors are getting involved in. I 366 00:19:07,400 --> 00:19:09,359 Speaker 1: believe it was Goldmen Sacks who had a recent report 367 00:19:09,400 --> 00:19:11,800 Speaker 1: pointing out the fact that we actually saw more volume 368 00:19:11,800 --> 00:19:15,920 Speaker 1: in the options market than in the cash equity trading 369 00:19:16,560 --> 00:19:19,320 Speaker 1: UH market for the first time ever this year, which 370 00:19:19,359 --> 00:19:21,919 Speaker 1: is pretty just crazy to think about. The guys at 371 00:19:21,920 --> 00:19:28,639 Speaker 1: Susquehanna were popping champagne quirks. I think so so, Chris, 372 00:19:29,320 --> 00:19:30,680 Speaker 1: I have to put you on the spot. I mean, 373 00:19:30,680 --> 00:19:33,960 Speaker 1: I'm just curious what you think then comes next. Obviously, 374 00:19:34,000 --> 00:19:36,639 Speaker 1: there are so many other fundamental factors filtering into the 375 00:19:36,680 --> 00:19:40,960 Speaker 1: stock market, whether it is fed policy, the fiscal cliff, 376 00:19:40,960 --> 00:19:42,960 Speaker 1: because right now it still doesn't look like we have 377 00:19:43,640 --> 00:19:48,359 Speaker 1: an agreement in Congress right now for another stimulus spill um, 378 00:19:48,400 --> 00:19:51,720 Speaker 1: we're heading to the election, high valuations, whatever it might be. 379 00:19:52,400 --> 00:19:55,840 Speaker 1: But this entire month, we have seen such volatility in 380 00:19:55,840 --> 00:19:58,040 Speaker 1: the NASDAC. I mean, at least of the day that 381 00:19:58,080 --> 00:20:00,840 Speaker 1: we're recording, there's only been a single day a that 382 00:20:00,920 --> 00:20:04,000 Speaker 1: the Nasdaq hasn't moved more than one percent. It just 383 00:20:04,040 --> 00:20:07,720 Speaker 1: feels like every single day is all or nothing almost 384 00:20:08,880 --> 00:20:12,639 Speaker 1: With this continued, I guess I can call it froth 385 00:20:12,680 --> 00:20:14,840 Speaker 1: in the options market or just extreme activity in the 386 00:20:14,880 --> 00:20:18,200 Speaker 1: options market. Is this just the new normal as long 387 00:20:18,200 --> 00:20:22,000 Speaker 1: as that continues. It's a combination of two things. Technology 388 00:20:22,040 --> 00:20:24,520 Speaker 1: has just improved dramatically. You know, you used to have 389 00:20:24,600 --> 00:20:27,080 Speaker 1: to call on a call a broker and wait online 390 00:20:27,080 --> 00:20:29,280 Speaker 1: and pay a twenty five cent wide bid ask spread 391 00:20:29,320 --> 00:20:32,399 Speaker 1: to to get involved in um in the options market. 392 00:20:32,480 --> 00:20:34,679 Speaker 1: Now you can do it for free on your phone 393 00:20:34,920 --> 00:20:38,080 Speaker 1: from anywhere, and and everything is so incredibly tight now 394 00:20:38,080 --> 00:20:41,719 Speaker 1: in terms of the NASDAC volatility all through August, all 395 00:20:41,760 --> 00:20:43,840 Speaker 1: through the summer. Even a lot of people are saying, Wow, 396 00:20:43,880 --> 00:20:46,560 Speaker 1: this is crazy. This keep the NASDA keeps grinding higher. 397 00:20:46,560 --> 00:20:48,399 Speaker 1: This doesn't make any sense, This doesn't This is going 398 00:20:48,440 --> 00:20:51,560 Speaker 1: to have to sell off at some point. It's too frothy, etcetera, etcetera. 399 00:20:51,720 --> 00:20:54,640 Speaker 1: Now we're seeing that, we're basically seeing what's happening now 400 00:20:54,760 --> 00:20:57,240 Speaker 1: is what we're expecting to happen and talking about happening 401 00:20:57,600 --> 00:21:00,040 Speaker 1: for much of the summer um now looking for it 402 00:21:00,160 --> 00:21:03,480 Speaker 1: along the calendar, we're getting pretty close to a giant 403 00:21:03,480 --> 00:21:05,480 Speaker 1: event in the US election, and so I don't think 404 00:21:05,720 --> 00:21:09,720 Speaker 1: volatility is going to be slowing down anytime soon. We 405 00:21:09,800 --> 00:21:13,080 Speaker 1: have looked at this election, the the amount of alatility 406 00:21:13,080 --> 00:21:15,760 Speaker 1: price into this election compared to other elections, you know, 407 00:21:15,800 --> 00:21:19,320 Speaker 1: by looking at non election volatility month of the VIX 408 00:21:19,400 --> 00:21:23,000 Speaker 1: compared to the election volatility month, and it's price again 409 00:21:23,080 --> 00:21:25,480 Speaker 1: more for this election than it hasn't in a number 410 00:21:25,520 --> 00:21:28,800 Speaker 1: of years. Um. And then another interesting phenomenon that's just 411 00:21:28,840 --> 00:21:32,399 Speaker 1: been happening very recently, so for the entire year. If 412 00:21:32,440 --> 00:21:34,400 Speaker 1: you're looking at we're talking about the VIX now, the 413 00:21:34,480 --> 00:21:38,240 Speaker 1: VIX October futures. They look at the implied volatility a 414 00:21:38,359 --> 00:21:41,920 Speaker 1: month out from October expiration that includes the election. Those 415 00:21:41,960 --> 00:21:44,399 Speaker 1: have been the highest option on the board, and higher 416 00:21:44,440 --> 00:21:47,320 Speaker 1: than the November which comes the following month for the 417 00:21:47,480 --> 00:21:51,840 Speaker 1: entire year. Just recently now, uh, the November futures have 418 00:21:51,960 --> 00:21:54,760 Speaker 1: moved above the October futures. You know, I have really 419 00:21:54,800 --> 00:21:57,359 Speaker 1: no opinion on the odds of a contested election and 420 00:21:57,400 --> 00:22:00,159 Speaker 1: try to stay out of politics in general. But that 421 00:22:00,240 --> 00:22:02,960 Speaker 1: is the thing that people are pointing at most as why, 422 00:22:03,080 --> 00:22:04,840 Speaker 1: all of a sudden, after a full year of this 423 00:22:04,920 --> 00:22:09,080 Speaker 1: not happening, are we expecting um more volatility in the 424 00:22:09,119 --> 00:22:13,439 Speaker 1: month after the election than the actual election. So with 425 00:22:13,560 --> 00:22:17,200 Speaker 1: that overhang, um, with all, with the nasdak um moving 426 00:22:17,240 --> 00:22:19,680 Speaker 1: around so much, I don't expect volatility to be coming 427 00:22:19,680 --> 00:22:41,879 Speaker 1: in anytime soon. You know. It's it's kind of chilling 428 00:22:41,920 --> 00:22:44,120 Speaker 1: it away when if you know, if you believe that 429 00:22:44,320 --> 00:22:48,240 Speaker 1: sort of the hive mind of of the markets has 430 00:22:48,280 --> 00:22:51,000 Speaker 1: a lot of sort of you know, the intelligence of crowds, 431 00:22:51,040 --> 00:22:54,000 Speaker 1: the wisdom of crowds. That's that's kind of an alarming 432 00:22:54,200 --> 00:22:56,800 Speaker 1: prospect to think about what the election coming up. You know, 433 00:22:56,880 --> 00:22:59,040 Speaker 1: Chris that for a while there. To me, it looked 434 00:22:59,040 --> 00:23:01,600 Speaker 1: like it would have been really tempting to play that 435 00:23:01,720 --> 00:23:04,119 Speaker 1: tink in the vix curve that you mentioned, you know, 436 00:23:04,320 --> 00:23:08,240 Speaker 1: maybe sell October and by November. I guess that doesn't 437 00:23:08,280 --> 00:23:11,960 Speaker 1: really make as much sense anymore, if if it ever 438 00:23:12,000 --> 00:23:14,320 Speaker 1: really did. You know, what what would you you know, 439 00:23:14,400 --> 00:23:16,040 Speaker 1: if I'm coming to you as a client saying I 440 00:23:16,080 --> 00:23:18,280 Speaker 1: wanna I want to do something with this vixed curve 441 00:23:19,160 --> 00:23:21,320 Speaker 1: for the rest of year, What's what's looking good to you? 442 00:23:21,359 --> 00:23:24,440 Speaker 1: What what type of trade would you want to get into? Well, yeah, 443 00:23:24,520 --> 00:23:26,840 Speaker 1: we looked at the exact trade that you are talking about, 444 00:23:27,080 --> 00:23:31,120 Speaker 1: um a few months back, and when October was way 445 00:23:31,240 --> 00:23:33,320 Speaker 1: higher than November, and we said November might be a 446 00:23:33,359 --> 00:23:36,320 Speaker 1: little bit under under priced here. Uh, now that that 447 00:23:36,560 --> 00:23:39,879 Speaker 1: has flipped, it is really hard to have a strong 448 00:23:39,960 --> 00:23:42,840 Speaker 1: opinion on on what's going to happen with the election 449 00:23:42,880 --> 00:23:45,360 Speaker 1: and a contested election. I mean, I will say two 450 00:23:45,400 --> 00:23:47,480 Speaker 1: thousand twenty, the year that it has been, you know, 451 00:23:47,480 --> 00:23:49,879 Speaker 1: a contested election seems to be pretty fit for everything 452 00:23:49,880 --> 00:23:51,720 Speaker 1: else that that's been going on. You know, I don't, 453 00:23:51,760 --> 00:23:54,400 Speaker 1: like I said, I don't really have a strong opinion 454 00:23:54,400 --> 00:23:57,000 Speaker 1: on how I would take advantage of that right here. 455 00:23:57,080 --> 00:23:59,280 Speaker 1: You know, if I was looking to hedge the election 456 00:23:59,400 --> 00:24:01,399 Speaker 1: in general, um, you know, like I said, I think 457 00:24:01,440 --> 00:24:05,480 Speaker 1: volatility is gonna stay relatively high heading into the election. Uh. 458 00:24:05,480 --> 00:24:09,160 Speaker 1: And you have a lot of tech earnings in October UM, 459 00:24:09,200 --> 00:24:11,960 Speaker 1: So if I were to try to um position for 460 00:24:12,000 --> 00:24:14,280 Speaker 1: the election, I think that with the tech earnings, and 461 00:24:14,280 --> 00:24:17,320 Speaker 1: you're probably gonna see less correlation in those earnings. So 462 00:24:17,400 --> 00:24:19,760 Speaker 1: maybe the stoction moving in different directions. Maybe the market 463 00:24:19,760 --> 00:24:22,800 Speaker 1: doesn't actually move quite as much UM as it does 464 00:24:22,840 --> 00:24:25,920 Speaker 1: now without those different catalysts pulling it in different directions. 465 00:24:26,440 --> 00:24:29,679 Speaker 1: Maybe I would look to sell some some October volatility, 466 00:24:29,720 --> 00:24:33,359 Speaker 1: take advantage of some lower correlation activity in October, and 467 00:24:33,400 --> 00:24:36,280 Speaker 1: just position for the November election. And and like I said, 468 00:24:36,520 --> 00:24:38,400 Speaker 1: this is gonna be a real hard one to handicapped, 469 00:24:38,440 --> 00:24:40,399 Speaker 1: and not really one that I have a strong opinion on. 470 00:24:41,240 --> 00:24:44,240 Speaker 1: So I mean, it does seem very widely believed that 471 00:24:44,400 --> 00:24:47,000 Speaker 1: we're going to have increased volatility heading into the election. 472 00:24:47,400 --> 00:24:50,359 Speaker 1: Something I noticed, Chris that I don't really understand. This week, 473 00:24:50,600 --> 00:24:53,600 Speaker 1: I was looking at the v vix so volatility of volatility, 474 00:24:54,080 --> 00:24:56,760 Speaker 1: and noticed that it fell to the lowest levels since February, 475 00:24:56,880 --> 00:25:01,920 Speaker 1: so before all of this really began. How was that 476 00:25:02,240 --> 00:25:08,520 Speaker 1: possible when expectations for volatility going forwards are high. That's 477 00:25:08,520 --> 00:25:10,560 Speaker 1: a that's a great observation, you know. The only thing 478 00:25:10,600 --> 00:25:12,480 Speaker 1: that I can think of, because I really haven't looked 479 00:25:12,480 --> 00:25:16,240 Speaker 1: at that this week, is the election event is such 480 00:25:16,320 --> 00:25:20,680 Speaker 1: a sticky event that's going to keep because volatility works 481 00:25:20,680 --> 00:25:23,159 Speaker 1: in both ways, volatility of the VIX, whether it's going 482 00:25:23,240 --> 00:25:25,200 Speaker 1: to go lower or whether it's going to go higher. 483 00:25:25,560 --> 00:25:29,359 Speaker 1: You have this election event that has pretty consistently been 484 00:25:29,400 --> 00:25:33,879 Speaker 1: around thirty one thirty two for those October VIX futures. 485 00:25:33,920 --> 00:25:35,520 Speaker 1: If you were to look at a lot of different 486 00:25:35,560 --> 00:25:37,919 Speaker 1: time frames, it's kind of been around there. So if 487 00:25:37,920 --> 00:25:40,680 Speaker 1: you think it's gonna hold around there for the next 488 00:25:40,840 --> 00:25:43,880 Speaker 1: month and a half, maybe it makes sense that the 489 00:25:43,960 --> 00:25:46,600 Speaker 1: actual VIX is not going to be moving around quite 490 00:25:46,640 --> 00:25:49,159 Speaker 1: as much because that's the volatility of the VIX. And 491 00:25:49,200 --> 00:25:52,240 Speaker 1: if you have a sticky maturity out there for the election, 492 00:25:52,520 --> 00:25:55,600 Speaker 1: maybe that could actually work to suppress the VIX. The 493 00:25:55,680 --> 00:25:57,960 Speaker 1: VIX volatility, all right, sir, that's not bad for a 494 00:25:58,040 --> 00:26:02,360 Speaker 1: Genos guy. I gotta say, I'll give it him. I'll 495 00:26:02,359 --> 00:26:04,280 Speaker 1: give it to him. Yeah, although I'm more of I'm 496 00:26:04,359 --> 00:26:07,280 Speaker 1: I'm a local. I'm a local pizza place. Cheese steak guy, 497 00:26:07,600 --> 00:26:10,280 Speaker 1: there's a good balanquin would was it just ballat pizzas 498 00:26:10,359 --> 00:26:12,520 Speaker 1: or what it's called. That's a pretty good, pretty good 499 00:26:12,560 --> 00:26:14,240 Speaker 1: to tell you what. I think. Guys are gonna kill 500 00:26:14,280 --> 00:26:15,800 Speaker 1: me for not remembering. It's in the tip of my 501 00:26:15,840 --> 00:26:17,960 Speaker 1: tongue and I just can't. I just can't. It's gonna 502 00:26:17,960 --> 00:26:20,560 Speaker 1: come to me right when it's open the podcast. You know, 503 00:26:20,720 --> 00:26:23,960 Speaker 1: I'm so embarrassed now because I just realized you said 504 00:26:24,040 --> 00:26:26,280 Speaker 1: cheese steak, which I should have understood with Philly and 505 00:26:26,400 --> 00:26:31,360 Speaker 1: rather than cheesecake. She's really missing you through the zoom cheesecake. Okay, 506 00:26:31,400 --> 00:26:34,000 Speaker 1: all right, Sarah. I was like, I didn't know cheesecake 507 00:26:34,119 --> 00:26:39,160 Speaker 1: was a Philly thing, but I'll go with it. Maybe 508 00:26:39,200 --> 00:26:41,840 Speaker 1: it is. I don't know. I'll you'll, I'll have a cheesecake. 509 00:26:41,880 --> 00:26:44,080 Speaker 1: I don't know if there's any good Philly cheesecake places, 510 00:26:44,160 --> 00:26:49,439 Speaker 1: but anyway, I think that's good assign as any that 511 00:26:49,560 --> 00:26:52,680 Speaker 1: it's that time. Charlie Pellett will tell us what time 512 00:26:52,720 --> 00:26:56,480 Speaker 1: it is. Stand clear of the craziest things we saw 513 00:26:56,520 --> 00:27:01,520 Speaker 1: in markets this week Sarah Um, I don't know how 514 00:27:01,520 --> 00:27:05,199 Speaker 1: well prepared you are for for this particular episode of 515 00:27:05,200 --> 00:27:07,960 Speaker 1: the Craziest Things we Saw on Markets. I'm gonna warn 516 00:27:08,000 --> 00:27:10,480 Speaker 1: you though, I came. I came packing some heat. See 517 00:27:10,520 --> 00:27:12,640 Speaker 1: him coming big. I don't know if you did, though, 518 00:27:12,680 --> 00:27:15,520 Speaker 1: because I heard from our Crazy Things correspondent that you 519 00:27:15,560 --> 00:27:18,640 Speaker 1: may have asked for some help. So I did. I did. 520 00:27:18,640 --> 00:27:21,639 Speaker 1: I asked Phil Donna. She totally let me down. Nothing 521 00:27:21,680 --> 00:27:24,439 Speaker 1: worth it. And then I found my own. And Uh, 522 00:27:25,240 --> 00:27:27,760 Speaker 1: I'll let Chris go, and I'll let you go. I'm 523 00:27:27,760 --> 00:27:30,639 Speaker 1: not going to predict that I won just yet. Okay, 524 00:27:30,800 --> 00:27:34,160 Speaker 1: I'll wait, I'll wait. Go ahead. First, I'll say, well, 525 00:27:34,200 --> 00:27:36,240 Speaker 1: I expect Chris Is to be strong too, because I 526 00:27:36,280 --> 00:27:39,119 Speaker 1: know he's a listener of the podcast, so he knows 527 00:27:39,200 --> 00:27:42,600 Speaker 1: what we expect every week from our guests. You've already 528 00:27:42,640 --> 00:27:46,240 Speaker 1: put enough pressure on him. Uh. With all the answers, 529 00:27:46,240 --> 00:27:48,200 Speaker 1: all right, let's start with you, Chris. What's the craziest 530 00:27:48,200 --> 00:27:50,439 Speaker 1: thing you saw in markets this week? So I was 531 00:27:50,440 --> 00:27:52,640 Speaker 1: waiting all week for Tesla to do something crazy, because 532 00:27:52,640 --> 00:27:54,159 Speaker 1: I'm sure you don't have too many of those, and 533 00:27:55,160 --> 00:27:57,359 Speaker 1: nothing ever happened. It's been pretty boring. In Tesla this 534 00:27:57,400 --> 00:28:01,919 Speaker 1: week we talked about the vix Um contested election future situation. 535 00:28:02,480 --> 00:28:04,040 Speaker 1: So I still have a couple more. I had a 536 00:28:04,080 --> 00:28:07,879 Speaker 1: serious one and a not serious one. Um First, on Wednesday, 537 00:28:08,040 --> 00:28:10,600 Speaker 1: Kim Kardashian mentioned that she was going to shut down 538 00:28:10,600 --> 00:28:14,200 Speaker 1: her Facebook for twenty four hours. Stock immediately dropped four 539 00:28:14,240 --> 00:28:16,760 Speaker 1: dollars on the news down to round two and seventy 540 00:28:16,760 --> 00:28:19,399 Speaker 1: bucks on the announcement, which equates almost a ten billion 541 00:28:19,440 --> 00:28:22,800 Speaker 1: dollar drop in market cap. You know, stock was down 542 00:28:22,840 --> 00:28:25,239 Speaker 1: almost twenty billion over twenty four hours after that. You know, 543 00:28:25,480 --> 00:28:27,480 Speaker 1: there was a rotation at a large cap tech. There 544 00:28:27,520 --> 00:28:30,320 Speaker 1: was an FTC probe announcement, the FED announcement, but I 545 00:28:30,320 --> 00:28:32,800 Speaker 1: have to imagine a lot of it was due to Kim. Sir, 546 00:28:32,880 --> 00:28:35,280 Speaker 1: this guy is pretty good. I I I thought I 547 00:28:35,359 --> 00:28:37,399 Speaker 1: had it in the bag this week, but that that 548 00:28:37,520 --> 00:28:39,800 Speaker 1: is a good one. I remember you in the chat 549 00:28:39,920 --> 00:28:42,800 Speaker 1: saying this can't really be happening. Kind of Well, I 550 00:28:42,840 --> 00:28:45,560 Speaker 1: couldn't believe it because not only it did, I mean 551 00:28:45,640 --> 00:28:49,520 Speaker 1: Facebooks a very large company with a very big waiting 552 00:28:49,760 --> 00:28:52,320 Speaker 1: in all the benchmarks, but I mean you saw the 553 00:28:52,400 --> 00:28:55,120 Speaker 1: SMP saw that AzaC. I'll take a hit too, and 554 00:28:55,240 --> 00:28:59,040 Speaker 1: it was just Kim Kardashian. That's just Kim being Kim, 555 00:28:59,080 --> 00:29:03,920 Speaker 1: just Kim being Kim. Yeah, Chris, bravo, that was well done. 556 00:29:04,040 --> 00:29:06,080 Speaker 1: Well done. That is I forgot about that too. I 557 00:29:06,080 --> 00:29:09,080 Speaker 1: can't believe I forgot about that one. Alright, sir, that's 558 00:29:09,120 --> 00:29:11,880 Speaker 1: the tough fact to follow. But what do you got? So? 559 00:29:12,000 --> 00:29:14,840 Speaker 1: I feel like Kim Kardashian being able to move the 560 00:29:14,840 --> 00:29:19,560 Speaker 1: stock market in is just very so. I also have 561 00:29:19,640 --> 00:29:23,680 Speaker 1: a statistic that is quintessential um kind of in the 562 00:29:23,680 --> 00:29:27,200 Speaker 1: realm of the saying that stocks only go up. So 563 00:29:27,640 --> 00:29:31,880 Speaker 1: Golden Sacks has an index that tracks the most heavily 564 00:29:31,920 --> 00:29:36,280 Speaker 1: shorted stocks, and in the middle of this week, uh, 565 00:29:36,440 --> 00:29:42,000 Speaker 1: that index hit a record So um one some pretty 566 00:29:42,000 --> 00:29:47,080 Speaker 1: bad shorts. I may feel bad for anyone who has 567 00:29:47,120 --> 00:29:49,040 Speaker 1: tried to short those names this year. I mean the 568 00:29:49,080 --> 00:29:52,320 Speaker 1: fact that you have an index of the most shorted 569 00:29:52,320 --> 00:29:55,000 Speaker 1: stocks and it's trading out a record high. I mean, 570 00:29:55,120 --> 00:29:58,400 Speaker 1: come on out, Maybe we need we need an e 571 00:29:58,480 --> 00:30:01,200 Speaker 1: t F that goes long all the most shorted stocks. 572 00:30:01,240 --> 00:30:03,400 Speaker 1: That that uh, then you can just short the whole 573 00:30:03,440 --> 00:30:04,840 Speaker 1: thing if you want to, If you want to be 574 00:30:04,880 --> 00:30:07,760 Speaker 1: short the most contrarian trade. That's pretty good. That's a 575 00:30:07,760 --> 00:30:11,680 Speaker 1: pretty good one. All right. Well I'll give you mine. Um, Sarah, 576 00:30:12,000 --> 00:30:14,800 Speaker 1: did you ever have a birthday party at Chuck E Cheese? 577 00:30:15,400 --> 00:30:17,240 Speaker 1: I think I did. It may have been one of 578 00:30:17,280 --> 00:30:19,520 Speaker 1: my siblings, but I remember it as if it was 579 00:30:19,560 --> 00:30:22,239 Speaker 1: my own. Chris, something tells me you've you've had a 580 00:30:22,240 --> 00:30:24,800 Speaker 1: few birthday You've at least spend a few birthday parties 581 00:30:24,800 --> 00:30:26,760 Speaker 1: at Chuck E Cheese. Is all right? I've probably been 582 00:30:26,800 --> 00:30:28,160 Speaker 1: to about six and a half a year for the 583 00:30:28,160 --> 00:30:32,200 Speaker 1: past ninety but not this year. All right, Well, nope, 584 00:30:32,560 --> 00:30:35,320 Speaker 1: tell your kids about this story and watch their eyes 585 00:30:35,400 --> 00:30:39,440 Speaker 1: go go googly. So Chuck E Cheese is in bankruptcy 586 00:30:39,480 --> 00:30:42,760 Speaker 1: court right now, and they had to go to the 587 00:30:42,800 --> 00:30:48,480 Speaker 1: court to get approval to destroy seven billion with a 588 00:30:48,600 --> 00:30:51,960 Speaker 1: B seven billion of those prize tickets that they give 589 00:30:52,000 --> 00:30:54,640 Speaker 1: out that you can get, you know, stuffed animal or 590 00:30:55,440 --> 00:31:00,280 Speaker 1: pencil eraser or whatever, with seven billion prize tickets. And 591 00:31:00,520 --> 00:31:04,080 Speaker 1: they told the judge that it's enough tickets to a 592 00:31:04,200 --> 00:31:11,560 Speaker 1: fill approximately six cargo shipping containers. And the cost to 593 00:31:11,600 --> 00:31:15,360 Speaker 1: destroy all these is like two point three million dollars 594 00:31:16,360 --> 00:31:22,320 Speaker 1: just to destroy these tickets. I can't be recycled I'm dumbfounded. Yeah, 595 00:31:22,320 --> 00:31:23,840 Speaker 1: I don't know. The story doesn't get into that. I 596 00:31:23,880 --> 00:31:26,240 Speaker 1: don't know how you destroy well, how do you recycle. 597 00:31:26,480 --> 00:31:28,640 Speaker 1: I guess you recycle the paper, but I don't know. 598 00:31:29,200 --> 00:31:31,880 Speaker 1: You'd have some kids, you know, picking the trash, showing 599 00:31:31,960 --> 00:31:35,480 Speaker 1: up at your Chucky Cheese with seven billion tickets wanting 600 00:31:35,920 --> 00:31:38,960 Speaker 1: give me everything, give me the whole company. It's gonna 601 00:31:38,960 --> 00:31:44,000 Speaker 1: be one lucky guy, lucky, one lucky eight year old Chris. 602 00:31:44,160 --> 00:31:45,840 Speaker 1: If you got any of those tickets, you better cash 603 00:31:45,920 --> 00:31:49,280 Speaker 1: mean while you can, might get you the robot at 604 00:31:49,280 --> 00:31:54,160 Speaker 1: the top right, get you. That's right, you can have 605 00:31:54,200 --> 00:31:56,760 Speaker 1: the guy in the Chucky Cheese costume come and cut 606 00:31:56,800 --> 00:31:59,240 Speaker 1: your lawn or something. Every prize in the store. I 607 00:31:59,240 --> 00:32:01,760 Speaker 1: remember when I was younger, I I always only found 608 00:32:01,840 --> 00:32:04,960 Speaker 1: enough prize tickets to get one of those. I don't 609 00:32:04,960 --> 00:32:07,000 Speaker 1: know how to explain it. It's one of those half 610 00:32:07,000 --> 00:32:09,080 Speaker 1: moon looking rubber things where you turn them inside out 611 00:32:09,080 --> 00:32:11,880 Speaker 1: and they pop. When you're younger, they're really exciting. That 612 00:32:12,000 --> 00:32:13,600 Speaker 1: was about the most exciting thing I could ever win 613 00:32:13,680 --> 00:32:18,400 Speaker 1: with my tickets. They're still pretty exciting, all right. I 614 00:32:18,440 --> 00:32:21,200 Speaker 1: gotta give it to Chris. The the Kardashian market mover 615 00:32:21,320 --> 00:32:23,960 Speaker 1: story is pretty darn good, Chris, well done, thank you, 616 00:32:24,360 --> 00:32:30,120 Speaker 1: very well done, Very well done. A serious one. Yeah, 617 00:32:30,560 --> 00:32:32,320 Speaker 1: so you said you had to a serious one and 618 00:32:32,360 --> 00:32:34,239 Speaker 1: a not serious one. So before we let you go, 619 00:32:34,320 --> 00:32:36,400 Speaker 1: you have to share your not serious one, because as 620 00:32:36,400 --> 00:32:38,960 Speaker 1: you know, Mike and I are big fans of not 621 00:32:39,080 --> 00:32:43,479 Speaker 1: serious things. Oh no, that So my other one was 622 00:32:43,760 --> 00:32:45,960 Speaker 1: the Apple into day move this month has been around 623 00:32:46,000 --> 00:32:49,760 Speaker 1: five percent a day. Uh, that's about nine billion dollar 624 00:32:49,920 --> 00:32:52,840 Speaker 1: change in market cap each day. So staying in that, 625 00:32:52,880 --> 00:32:55,280 Speaker 1: in another way, Apple has been changed in value each 626 00:32:55,360 --> 00:32:58,560 Speaker 1: day by basically the value of the entire company of Starbucks. 627 00:32:58,560 --> 00:33:01,120 Speaker 1: So that's actually my series one. That's a that's a 628 00:33:01,160 --> 00:33:04,280 Speaker 1: good one. That reminds me actually pretty crazy that none 629 00:33:04,280 --> 00:33:07,080 Speaker 1: of us brought up snow either. Snowflake the company that 630 00:33:07,120 --> 00:33:09,040 Speaker 1: I p oed uh at the end of its I 631 00:33:09,120 --> 00:33:11,880 Speaker 1: p O seventy billion dollar company about the value of 632 00:33:11,880 --> 00:33:16,200 Speaker 1: Goldman sachs Um and so many people hadn't heard of 633 00:33:16,400 --> 00:33:19,560 Speaker 1: Snowflake before. I know I hadn't. I know I hadn't. 634 00:33:19,720 --> 00:33:21,920 Speaker 1: But we talked about great timing to be a cloud 635 00:33:22,000 --> 00:33:26,000 Speaker 1: company come market now. But all right, Chris put it 636 00:33:26,040 --> 00:33:30,040 Speaker 1: on the resume was winner of the Craziest Thing for 637 00:33:30,280 --> 00:33:34,560 Speaker 1: the third week of September. Put that at the top, 638 00:33:34,840 --> 00:33:37,080 Speaker 1: top of the awards and uh, what is it on 639 00:33:37,120 --> 00:33:40,200 Speaker 1: your resume? Awards and other distinctions or something like the certificates. 640 00:33:43,920 --> 00:33:47,040 Speaker 1: Put it on there. Congratulator, I will, I will take anything, 641 00:33:47,840 --> 00:33:50,280 Speaker 1: and I'll and I'll also say, Chris um, you had 642 00:33:50,280 --> 00:33:52,040 Speaker 1: all the answers, so we're so so happy that we 643 00:33:52,080 --> 00:33:54,360 Speaker 1: could have you on the show this week. Again, that 644 00:33:54,480 --> 00:33:57,480 Speaker 1: was Chris Murphy with Susquehanna. Thanks for joining the show. 645 00:33:57,920 --> 00:34:09,480 Speaker 1: Thanks guys, What Goes Up? We'll be back next week. 646 00:34:09,920 --> 00:34:12,520 Speaker 1: Until then, you can find us on the Bloomberg Terminal 647 00:34:12,600 --> 00:34:16,359 Speaker 1: website and app or wherever you get your podcasts. We'd 648 00:34:16,360 --> 00:34:18,000 Speaker 1: love it if you took the time to rate and 649 00:34:18,040 --> 00:34:20,880 Speaker 1: review the show on Apple Podcasts so more listeners can 650 00:34:20,920 --> 00:34:23,680 Speaker 1: find us. And you can find us on Twitter, follow 651 00:34:23,719 --> 00:34:27,799 Speaker 1: me at at Sarah Pontzack, Mike is that Reaganonymous, and 652 00:34:27,840 --> 00:34:32,399 Speaker 1: you can also follow Bloomberg Podcasts at podcasts. Also, thank 653 00:34:32,400 --> 00:34:35,080 Speaker 1: you to Charlie Pellett of Bloomberg Radio and the voice 654 00:34:35,080 --> 00:34:37,920 Speaker 1: of the New York City Subway System. What Goes Up 655 00:34:37,920 --> 00:34:40,960 Speaker 1: as produced by Jordan Gospore. The head of Bloomberg podcast 656 00:34:41,040 --> 00:34:44,040 Speaker 1: is Francesco Levie. Thanks for listening, See you next time.