- The Jumping Cholla
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- Trade Like a Jumping Cholla
Good Morning!
This is the Jumping Cholla (CHOY-uh). The newsletter that turns options market insights into a fun, easy-to-read email that helps you reduce your chances of getting pricked while trading!
Quote of the day:
"I thought the Jumping Cholla was just a myth, like unicorns or a good hair day. But nope, it's real, and it's out to get me."
- A golf spectator trying to have a relaxing day watching Rory McIlroy swing a club in the middle of a desert
Ain't that always the case?! You're just trying to relax, have a little fun, mind your own business and BAM! You're attacked by a cactus with an evolutionary mechanism designed to defend itself from roaming herbivores!
Today let's explore what this amazing cactus does, and how we can use mother nature's intuition to improve our trading!
BANG for Your Buck:
| 1/4/2023 SPX = 3824.14 | Handles of Movement | 1-Day Implied % Move |
|---|---|---|
| BANG (intraday) | 55 | 1.4% |
| BANG (weekly) | 121 | 3.2% |
Yesterday AM (morning), we had a good old-fashioned re-pricing. Volatility immediately increased on the open (even though spx price increased), probably setting the tone for 2023!
If you are betting against movement, be prepared to "re-think your inks!"
In the coming week, this section will be beefed up with even more relevant and actionable data such as: weekly bang review, overnight expectations, gap probability analysis, and more! Believe it or not, the market just kinda tells you all this stuff, if you know where to look...
What is the Jumping Cholla?
Also known as Cylindropuntia fulgida, these cacti (goddammit, I just lost a bet with my 3rd grade 'language' teacher) have the unique ability to "jump" onto unsuspecting animals or people. This behavior is known as autotomy (the human world might need a whole lot more of this, lol), and it is a survival mechanism that allows the cactus to protect itself from predators and to disperse its seeds.
It's also known as the "Teddy Bear Cactus" due to the soft, furry appearance of its stems (nature is a sadistic beast!). So not only will it lure you in with its unassuming veneer, but it will also tactically deploy its fine, bristly spined stems in order to 1) protect its core from threats 2) use you to disseminate its seed and prosper.
This should sound familiar to many "retail" traders.
The market will lure you in (look like a teddy bear) and then take your lunch money (attack you when you least expect it) all while it thrives. Quite honestly, this is a necessity of nature.
Oh, and the attack, you didn't think it was even possible! It must've jumped out and screwed you personally! (keep telling yourself that...) It couldn't have been that you missed the signs, mismanaged your exposure, took too much risk, etc. Of course not!
We love the Jumping Cholla because it reminds us that every market participant is self-deterministic and must protect itself at all costs, even to the point of losing a limb!
Make Me a Better Trader
If you can't beat 'em, join 'em!
Why aren't you acting like the Jumping Cholla?
Maybe you're not seeing the signs the market advertises on a daily basis? Maybe you still think it's "gambling/entertainment"? Maybe you think you have a "longer time horizon" so it doesn't matter? (wealth managers love that one).
Don't be willing to get pricked, become impervious to attack.
There are no minor leagues. (i.e. no such thing as "retail trader") No participation trophies. Just a sense of false complacency that will take as much as it can from you while you "figure out" the market.
Our newsletter attempts to teach intuition...yes, this is inception, lmao!
You don't need to learn option strategy pnl curves (don't worry, you will). Or how to precisely trade a market signal.
Every move you make needs to instinctively 1) protect your core capital 2) prosper even if you have to take a loss
It's not easy. It requires proper implementation of your trading thesis, active position management, and most importantly psychological fortitude (you might wanna look that one up, sorry).
But, when you are properly informed (and not a complete dipshit), trading is like the life of a goddamn cactus... the MOST boring thing in the world: