The Trade Busters 143 - Throw it on the Pile, Erase your Memory w/ Kris Abdelmessih
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Feb 20, 2025 Kris Abdelmessih, an options trading expert and creator of Moontower AI, shares insights from a year of his project's journey and the power of community in trading. He delves into the differences between trading and investing, specifically regarding volatility, and discusses the importance of risk management strategies like straddles and strangles. Kris emphasizes personalized approaches to trading, including the significance of unit economics and using tools to manage Delta and Vega risks, illuminating the path for retail traders in a complex market.
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Trading vs. Investing in Vol
- Trading vol focuses on fleeting anomalies and mispricings.
- Investing in vol targets persistent risk premiums, like the volatility risk premium.
Straddle Selling and Risk Premium
- Selling options, like shorting a straddle, might be profitable long-term due to volatility and correlation risk premiums.
- However, sizing is crucial, as even profitable strategies can ruin you if sized incorrectly or if markets become illiquid.
Systematic Put Selling
- Corey Hoffstein initially pushed back against systematic put selling.
- However, managing risk and distribution of returns makes the strategy viable by mitigating extreme losses.