ASYMMETRY® Observations are Mike Shell’s observations of all things asymmetry, asymmetric risk/reward, asymmetric payoffs, and asymmetric investment returns.
The sharp uptrend breakouts make investors more optimistic about the stock market, but though strong momentum is bullish, it may be an overreaction.
China balloon and the new changing world order
Natural gas, known as nat gas on the street, has crashed down along with heating oil.
The objective of a strangle is to capture the volatility premium inbedded in option prices, but with less risk than in a straddle, another established premium capture strategy.
Trend following with stop loss vs. call option
Trend following is a directional trading strategy that uses price-based "technical" indicators to identify trends with the objective to gain exposure to the direction of the price trend, expecting the trend to continue.
Using average directional movement to determine trend direction and strength.
TailDex® is a measure of the market’s expectations for an extreme event, often called a “tail event” or a “black swan,” which is a drop of at least three standard deviations.
VXX and VIXY usually move in tandem due to their similar tracking of VIX futures, but in 2022, Barclays' suspension of new VXX issuance created an unprecedented divergence. The March 2022 event highlighted the risks of trading ETNs versus ETFs—while VIXY functioned properly throughout the year, VXX became detached from reality, trading at a significant premium before finally reverting.