r/thetagang • u/Terrible_Champion298 • 1d ago

Discussion Gobsmacked

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I’m not an index trader, but the SPX chart has been the main chart window in front of me for 3 days. Looking back at the Covid dip, this doesn’t get better for a minimum of 7 weeks. Recovery could be a long way off as well, but I’m looking at long call strategies when that starts.

36 Upvotes

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21

u/MostlyH2O Level 300 Karen 1d ago edited 1d ago

No way to know. This could end in a week or it could be 2 years of depressed markets if a prolonged recession takes place.

I did a little bit of cautious buying but I'm still mostly cash, bonds, and gold.

My advice is avoid the weekend gap risk as much as you can and just be patient. The bottom starts when the volatility stops in my experience, not when we get a +4% green day..

Do. Not. Sell. Puts.

Just don't. Take defined risk positions, ideally with a debit. I really like debit call spreads for the next 2 weeks. It's very rare to just gap down over and over. The market naturally wants to find a bottom.

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u/Terrible_Champion298 1d ago

I’m done with, “This can’t get worse.” It did. Hope your debit spread worked out for you.

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u/MostlyH2O Level 300 Karen 1d ago

Turned 6k into 29k. Closed them all today.

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u/Terrible_Champion298 1d ago

Good. Good job as well. Fight this out going forward with their money.

Couple of things I did notice today, at least up to midday, were that HD & LOW were mildly green, and airlines, oil, and financial anything (with the exception of RKT) are truly screwed. I hunt, it’s what I do.

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u/Chemical-Cellist1407 1d ago

KR is doing well

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u/hobocommand3r 1d ago

So what was the position and when did you open it?

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u/MostlyH2O Level 300 Karen 1d ago

Spx 5300/5200 put debit spreads. Opened for $6k. Closed for 29k.

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u/DPMKIV 1d ago

Honestly, crossing my fingers 4800 is the floor. We break that we have a longer road to recover.

I feel you on the "it can get worse" statements. Think we all would like to see our retirements stop falling to an unknown floor.

My 401k just barely started to recover from the COVID damage. Boom flattened, suppose 10yrs from now it should look sweet but daymn....

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u/Impressive_Essay8167 1d ago

The bottom starts when the volatility stops is a great great perspective

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u/MostlyH2O Level 300 Karen 1d ago

I want to caveat this

Usually crises start from an external event. This one is because Donald Trump decided to shoot the hostage. Because it's triggered by a policy decision, it very well could follow an entirely different pattern from what we've seen before. But as a general rule, you want to see the VIX contract and the standard deviation of daily moves reduce (which of course is the same thing by different measures)

The bottom here may be sudden. Which is why I'm not holding any asymmetric downside risk over any gap.

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u/Impressive_Essay8167 1d ago

Totally. There’s no 100% indicators. But, it’s still a really succinct take.

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u/banditcleaner2 naked call connoisseur 1d ago

Nobody will know the bottom and honestly it’s not a great perspective, because volatility is simply how fast are things falling.

In 2022, VIX would spike here and there but the market continued downwards. There was nothing at all suggesting the bottom was in just because VIX had spiked and then started dropping.

Slow bleeds of the market are more likely from here, with small bounces here and there, but if the tariff plans don’t get cancelled then this will be a long road of chop.

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u/UnnameableDegenerate 1d ago

I'm seeing VIX parallel more with the GFC move rather than the 2022 move.

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u/mastagoose 1d ago

I sold literally the lowest possible puts that I could sell for Monday. 🤞

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u/Riptide34 1d ago

No one knows when the bottom is in, or even when a short-term bottom is in. This hasn't been pretty, and I certainly took a bath today on short premium positions, but there are distinct differences between the macro/economic environment during COVID and now. So, I don't know how much I would take from 2020 to theorize on what might happen today/now.

I was delta neutral in equities prior to Wednesday's event, but I've accumulated long deltas over the last 2 days (not by choice, just happens with moves like this). I'm not adding more long deltas, but I'm also not getting short at this level and after this type of move.

I did add or increase positions in gold and bonds, since the recession potential is looking greater and greater. I think times like this are when you have to preserve capital and live to trade another day.

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u/Terrible_Champion298 1d ago

What I’m looking for in the 2020/2025 comparison is institutional investment behavior. It took 5-6 weeks to bottom then, and then it rose fairly quickly which I anticipate will happen again. It’s fair to say we’ve matched the timeframe and exceeded the dip. It might take another week to determine the bottom, but after that those modern day Ivy League sharks are going to start grinding again. I’ve been largely playing defense lately; I don’t plan on missing the next bus.

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u/thrawness 13h ago

Plan from expiration to expiration.

Smart money, dumb money—all of it ultimately flows into the books of just a few market makers. So ask yourself: what will their books look like heading into April expiration?

Monthly expirations act as a reset. Once all those derivatives roll off, market makers are essentially wiped clean. And what usually follows is a reflexive, often sharp, counter-move—one that’s been observed time and again after major expirations.

While the long-term direction may remain uncertain, aligning your strategy around expiration cycles puts you one step ahead. It helps you think like a market maker, not a retail trader.

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u/elbrollopoco 1d ago

I think we're getting close to bottoming but we could see 25% before everything stabilizes if more retaliations start happening

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u/UnnameableDegenerate 1d ago

Pointy finger of blame.

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u/Terrible_Champion298 1d ago

It’s definitely special.

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u/UnnameableDegenerate 1d ago

I mean, I've been sounding the alarm for an entire month, no one listened. That probably should have given me more conviction to add short in hindsight, so I did not capture this move with the size I would have liked, but it is what it is.

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u/Terrible_Champion298 1d ago

The SPX topped out 44 days ago. Refer to the picture. It’s been a rough ride for many short sellers since.

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u/UnnameableDegenerate 21h ago

You didn't listen either fam.

I don't like seeing people lose money so I'm taking some extra time this weekend to help out. Hope you'll listen this time: until next year at the earliest, all rips should be sold, get your risk out and reduce size or get comfortable bagholding.

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u/Terrible_Champion298 10h ago edited 10h ago

“Listened.” Disregarded. You were actually preaching bullish 39 days ago like lowered deltas couldn’t be caught. Move along, Oracle. Basic unsolicited trading advice isn’t needed.

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u/UnnameableDegenerate 8h ago

And that pride is gonna get you killed when we see SPX 2200 next year. Good luck.

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u/Terrible_Champion298 8h ago

I’m more concerned about your audacity. 🤣

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u/UnnameableDegenerate 8h ago

Thanks for the banter to break up a boring sunday morning :)