0xdylan
reacted to
Hey mooers! 👋 Welcome to the FIRST edition of Aussie Market Mates, your weekly go-to for buzzing community highlights! Here, we’ll round up the hottest discussions, hottest takes, and most engaging content from moomoo community.
This Week’s Spotlight: Australia’s Rate Cut Buzz
This week, all eyes are on the RBA’s May Meeting as policymakers grapple with a high-stakes balancing act: taming slowing inflation while navigating strong ...
This Week’s Spotlight: Australia’s Rate Cut Buzz
This week, all eyes are on the RBA’s May Meeting as policymakers grapple with a high-stakes balancing act: taming slowing inflation while navigating strong ...
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0xdylan
commented on
Friends who have read my previous articles know that I have written four articles, two about VIX, one about the losses from leveraged and inverse ETFs, and one about Options, all of which are more theoretical and technical. Although the response has been pretty good, it seems that sharing practical operational insights may resonate more with everyone.
1. Decisively abandon the SVIX ETF.
Initially, when the VIX surged, there was actually a Buying of the SVIX ETF (buying from $12 all the way down to $10), but considering the investment amount and time (The time cost mainly requires time to wait for the paths and VIX's backwardation to pass, specific points can be found in the analysis articles mentioned earlier.However, decisively sold the ETF and replaced it with several Call Options on SVIX. Due to the leverage structure of Options, if SVIX rises from $12 to $14, the returns on buying Call Options on SVIX will far exceed those of the SVIX ETF, though the risks are also higher, making it suitable for those willing to take big risks with small investments.
2. Chose to Buy the SVIX single leg Call.
In general, many advanced options strategy practitioners do not recommend buying a single leg Call, but considering the differences between VIX and company Stocks, the single leg Call was still used as a tool.
The reasons are as follows:
1. The structure of SVIX differs from that of company stocks, as single-leg Calls/Puts have more advantages.
Traditional company stock Options usually do not recommend single-leg Call operations, as stock price fluctuations are restricted by fundamentals, leading to slow trends and long periods of consolidation, which can easily...
1. Decisively abandon the SVIX ETF.
Initially, when the VIX surged, there was actually a Buying of the SVIX ETF (buying from $12 all the way down to $10), but considering the investment amount and time (The time cost mainly requires time to wait for the paths and VIX's backwardation to pass, specific points can be found in the analysis articles mentioned earlier.However, decisively sold the ETF and replaced it with several Call Options on SVIX. Due to the leverage structure of Options, if SVIX rises from $12 to $14, the returns on buying Call Options on SVIX will far exceed those of the SVIX ETF, though the risks are also higher, making it suitable for those willing to take big risks with small investments.
2. Chose to Buy the SVIX single leg Call.
In general, many advanced options strategy practitioners do not recommend buying a single leg Call, but considering the differences between VIX and company Stocks, the single leg Call was still used as a tool.
The reasons are as follows:
1. The structure of SVIX differs from that of company stocks, as single-leg Calls/Puts have more advantages.
Traditional company stock Options usually do not recommend single-leg Call operations, as stock price fluctuations are restricted by fundamentals, leading to slow trends and long periods of consolidation, which can easily...
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0xdylan
commented on
Recently, due to tariffs and the earnings report season in the US stock market, the market has been highly volatile, and many Moo friends are seeking opportunities in Options. Especially some Moo friends who buy underlying stocks may also want to try their hand after seeing the kinds of multiple to dozens of times returns on Options in the Community. However, it is not that, although the basic Concepts of Options have been understood, the series of Greek letters in buying and selling Options prices can feel quite confusing.
As an investor hoping to reduce unnecessary risks through increased awareness, a summary has been prepared for all Moo friends, which can be referenced one by one while buying and selling Options.
1. Delta (Δ): Sensitivity of the symbol's price changes.
Definition: Delta measures the sensitivity of the Options price to changes in the symbol's asset price, meaning that when the symbol's stock price changes by $1, the Options price will change by how much.
For example:
If the Delta of a Call option is 0.6, it indicates that when the symbol's stock price rises by $1, the price of the option will increase by approximately $0.60.
We use this example of a Call Options for SVIX with a strike price of $14 that expires on June 6, 2025. Detal=0.3558, which means that if SVIX increases by $1, the price of this option will rise by approximately $0.3558.
For Call Options: Delta is between 0 and 1; for Put Options: Delta is between -1 and 0; At-the-money (...
As an investor hoping to reduce unnecessary risks through increased awareness, a summary has been prepared for all Moo friends, which can be referenced one by one while buying and selling Options.
1. Delta (Δ): Sensitivity of the symbol's price changes.
Definition: Delta measures the sensitivity of the Options price to changes in the symbol's asset price, meaning that when the symbol's stock price changes by $1, the Options price will change by how much.
For example:
If the Delta of a Call option is 0.6, it indicates that when the symbol's stock price rises by $1, the price of the option will increase by approximately $0.60.
We use this example of a Call Options for SVIX with a strike price of $14 that expires on June 6, 2025. Detal=0.3558, which means that if SVIX increases by $1, the price of this option will rise by approximately $0.3558.
For Call Options: Delta is between 0 and 1; for Put Options: Delta is between -1 and 0; At-the-money (...
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0xdylan
commented on and voted
This should be the last article in the current VIX series, and I hope these three articles can help moo friends find opportunities to tilt the odds in our favor when future black swan events occur (recently reading Howard Marks' "Mastering the Market Cycle", which repeatedly mentions this idea).
This article was prompted by seeing a moo friend comment below the first article about the "invisible loss" of long and short leveraged ETFs, asking.What is the reason for the continued rise of SVIX from 2022 to 2024?Of course, I also saw some comments under SVIX asking.Why did the VIX drop so much this time but SVIX only climbed a little from the bottom?Believe that this article will provide answers after reading it.
"History Doesn't Repeat Itself, but It Often Rhymes", believe that black swans will appear repeatedly, so by fully understanding the knowledge related to the VIX, we can continuously tilt the odds amidst panic.
Believe that after reading the previous article about"Path"the explanation, half of the knowledge regarding leverage and inverse ETFs has been understood, in this article we will discuss the other half that needs to be understood: the VIX as a structure of futures,Contango and Ba...
This article was prompted by seeing a moo friend comment below the first article about the "invisible loss" of long and short leveraged ETFs, asking.What is the reason for the continued rise of SVIX from 2022 to 2024?Of course, I also saw some comments under SVIX asking.Why did the VIX drop so much this time but SVIX only climbed a little from the bottom?Believe that this article will provide answers after reading it.
"History Doesn't Repeat Itself, but It Often Rhymes", believe that black swans will appear repeatedly, so by fully understanding the knowledge related to the VIX, we can continuously tilt the odds amidst panic.
Believe that after reading the previous article about"Path"the explanation, half of the knowledge regarding leverage and inverse ETFs has been understood, in this article we will discuss the other half that needs to be understood: the VIX as a structure of futures,Contango and Ba...
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0xdylan
commented on
In this article, let's discuss one of the "hidden costs" of Leveraged/Inverted ETFs, which isVolatility Decay.。
Volatility Decay refers to the phenomenon where Leveraged/Inverse ETFs experience long-term profit deviation from the expected multiples due to daily compounding rebalancing in volatile markets.
First, for Moo friends who do not have a financial background, let's clarify one thing,If a symbol Index price is 100, it will not return to 100 if it rises by 10% and then falls by 10%, or if it falls by 10% and then rises by 10%. Instead, it will be 99. The missing 1 is the mathematical compound loss, which is the foundation for understanding volatility decay.
With this foundation, let's look at the two sets of data in Figure 1, which reflectthe impact of Leveraged/Inverse ETF path dependency + volatility decay.⚠️
Path dependency means that the total profit of Leveraged/Inverse ETFs not only depends on the total volatility of the symbol (such as the VIX Index), but also largely relies on the specific sequence of its ups and downs and the volatility process. This is the core mechanism of volatility decay.
For example:
Path A first increases by 10% and then decreases by 9.09%: -2x ETF rises 📈 16.36%.
Path B first -9.09% then +10%: -2x ETF falls...
Volatility Decay refers to the phenomenon where Leveraged/Inverse ETFs experience long-term profit deviation from the expected multiples due to daily compounding rebalancing in volatile markets.
First, for Moo friends who do not have a financial background, let's clarify one thing,If a symbol Index price is 100, it will not return to 100 if it rises by 10% and then falls by 10%, or if it falls by 10% and then rises by 10%. Instead, it will be 99. The missing 1 is the mathematical compound loss, which is the foundation for understanding volatility decay.
With this foundation, let's look at the two sets of data in Figure 1, which reflectthe impact of Leveraged/Inverse ETF path dependency + volatility decay.⚠️
Path dependency means that the total profit of Leveraged/Inverse ETFs not only depends on the total volatility of the symbol (such as the VIX Index), but also largely relies on the specific sequence of its ups and downs and the volatility process. This is the core mechanism of volatility decay.
For example:
Path A first increases by 10% and then decreases by 9.09%: -2x ETF rises 📈 16.36%.
Path B first -9.09% then +10%: -2x ETF falls...
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0xdylan
commented on and voted
$VIX Index Futures (JUN5) (VXmain.US)$
On April 4, 2025, amid the joy of TGIF, the three major U.S. stock indexes all plunged:
📉 The Nasdaq fell sharply by 5.82% 📉 The Dow Jones dropped by 5.5% 📉 The S&P 500 dropped significantly by 5.97%
This sharp drop is not a technical pullback, but rather a combination of emotions and Algo trading causing a stampede: Trump announced increased tariffs on major Global countries, catching the market off guard. China quickly retaliated with a 34% retaliatory tariff, raising concerns about a repeat of the Global trade war, and many Financial Institutions simultaneously sang the tune of "economic recession," igniting risk-averse sentiment instantly.
In the face of an unexpected crisis, some panic and cut their losses, but there are also those who benefit from the "black swan." What kind of understanding do they rely on? In fact, it is something called the VIX Fear Index, which profits precisely amidst the chaos. This time, the VIX Fear Index soared to 45+, reaching a new high since the pandemic in 2020.
So what is the VIX.Full name: CBOE Volatility S&P 500 Index (VIX.US), commonly referred to as the "fear index" because it reflects the extent to which investors expect volatility over the next 30 days. One can look at the spike in VIX data during the destruction of the World Trade Center on 9/11 and the beginning of the COVID-19 pandemic.
✅ VIX 25: Significant emotional volatility.
🚨 VIX > 40: Extreme panic, selling out of control (this time it surged to 45)
⛔ VIX and S&P 500 usually move in the opposite direction:
The more the stock market falls, the more the VIX soars...
On April 4, 2025, amid the joy of TGIF, the three major U.S. stock indexes all plunged:
📉 The Nasdaq fell sharply by 5.82% 📉 The Dow Jones dropped by 5.5% 📉 The S&P 500 dropped significantly by 5.97%
This sharp drop is not a technical pullback, but rather a combination of emotions and Algo trading causing a stampede: Trump announced increased tariffs on major Global countries, catching the market off guard. China quickly retaliated with a 34% retaliatory tariff, raising concerns about a repeat of the Global trade war, and many Financial Institutions simultaneously sang the tune of "economic recession," igniting risk-averse sentiment instantly.
In the face of an unexpected crisis, some panic and cut their losses, but there are also those who benefit from the "black swan." What kind of understanding do they rely on? In fact, it is something called the VIX Fear Index, which profits precisely amidst the chaos. This time, the VIX Fear Index soared to 45+, reaching a new high since the pandemic in 2020.
So what is the VIX.Full name: CBOE Volatility S&P 500 Index (VIX.US), commonly referred to as the "fear index" because it reflects the extent to which investors expect volatility over the next 30 days. One can look at the spike in VIX data during the destruction of the World Trade Center on 9/11 and the beginning of the COVID-19 pandemic.
✅ VIX 25: Significant emotional volatility.
🚨 VIX > 40: Extreme panic, selling out of control (this time it surged to 45)
⛔ VIX and S&P 500 usually move in the opposite direction:
The more the stock market falls, the more the VIX soars...
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