You call sell Call Spreads OTM aroung 30 delta for December expiration. The VIX is high so buying a put is very pricey. By selling the call spread you benefit from bearish view. The only thing is that your max profit is capped. Good luck!

Thanks for the suggestions, Gentlemen. The spread trade is a good idea. I'll see how far this rally will go. What a volatile day Oct 13th! Someone makes big money today.

I would not reenter today. But I think JB remains longer term very bearish, and you might want to consider using big rallies to re-enter.

When vol spikes the price of the puts goes up, it gets expensive (so in regards to justifying the price... good luck, the options are pricey). If I were you I would be happy with the trade and catch things on the other side. Don't forget options expire, if there's a surprise rally you could lose a bit as volatility normalizes, so I would consider my entire option premium as risk if just buying a put. If losing it all bothers you its too much. If you know what a put spread is, and how to trade that, you can get skin in the game that way. It will offset some of the volatility premium and you can define your risk.

For a deep dive into the questions you must ask yourself to run option portfolios take a look at some of the free pieces from QVR Advisors: https://www.qvradvisors.com/research

And UK pension equity did go UP. Liabilities have been collapsing in value. The problem is much of this was hedged with swaps. So as the received swap positions lost money (lots of money) the fund needed to post margin. However the liability positions (the present value of what is owed to pensioners) went down, no margin was being paid to the pension fund. So a classic liquidity problem. The pension funds were getting terrible fills on their sales and bad ltvs on their posting of collateral. Without assistance they might have been unable to meet all the margin calls.

Yes. A short USD position! Apologies!

Lol I have same question some clarity please.

Thank you for that clarification, mostly in cash sitting and waiting. Julian has been an incredible asset to us during this bear market. Give him my best and my family and I thank him. Christmas isn't cancelled for us due to his brilliant maneuvering.

JB is waiting for fixed income to be less of a falling knife before catching it. The most recent inflation print is an excellent test of whether USD fixed income has found a floor (have rates peaked). Once US fixed income has stabilized, thats when we can think about SELLING the dollar. Not before. We appear to be in the middle of a global margin call. These things (JB usually refers to it as the "Napalm run") dont respect value. If it happens you need to hedge very tight and consider basis risks. Its a terribly destructive force. If thats whats happening, you need to think deeply about capital preservation.

Would like to hear Julian to discuss about the next big trade tomorrow!

Ah Lena, you should always get professional tax advice. The IRS are not gentle folk. I can give you my impression. Most brokers will give you a tax document which will reflect their understanding of your short and long term capital gains, interest and dividends. This includes most option brokers. Yes, if you made a short term capital gain on an option you will have incurred a liability, But you can net them against all your short/long term cap gains. Once again, I dont even play an accountant on TV. This comment is very much "for what little my understanding is worth".

Appreciate that response, Harry. My ask was if sizing information can be included in the reports along with position recommendations, which Julian and Raoul publish. Thanks

I think sizing deserves its own 45 min discussion. Its not a simple question. But my first observation is that always err on the side of too small rather than too large. Give possible scenarios real thought. Do you remember when oil prices traded negative? The settlement of an oil future ended up being -$37 and change! That happened because the world was out of storage. But its impact on many retail investors was profound. And they didnt participate in the subsequent rally cos in many cases there accounts were closed by the losses. I think about that a lot because I have dabbled in oil futures. It could have happened to me. So there is a really good reason why retail investors should only buy options, and never sell them. Yes, it will usually make it a bit harder to make money. But you will never find yourself losing more than the premium. As a jumping off point, I would suggest focusing on your worst case scenarios, and then sizing to a point where you are comfortable with that potential loss. Be super careful with "high conviction trades". Counter intuitively those are the trades that are most likely to hurt you. “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. “ – Mark Twain

On the first one, globalization meant prices went down which is deflation. In deflation bond yields go down (as central banks keep interest rates low to fuel growth) which provides fuel to risk assets and they go up. This is the negative correlation Julian is talking about.

@K K -- I am assuming you posted your comment in response to mine, by mistake.

no one knows whats going to happen. People always think in previous recessions and think things are obvious. Nothing is obvious. You'll see unlikely things happen and afterwards you wonder why you thought they were unlikely. Walk out of the casino when you dont understand the games being played and if you are inclined watch positions and diversify. Regarding you remark of negative correlation to stocks and bonds during globalisation. After volcker interest rates where pretty high, cutting interest rates is a rally-maker for stocks. More liquidity cheaper lending, who doesnt love that right? Create cheap(ish) debt on the balance sheet and buy back shares, stock price go up, everything is good. Yes until interest rates start to rise. Its about the rate of change, and they are rising pretty fast. Anyways cutting was always good for growth after a slump. And then after a while when things have gotten a little heated in stocks, think very lofty valuations, there are corrections. People sell their nifty stocks and dive into bonds. So the idea was you always ride it both ways since you are in a perpetual bondmarket, right? Then add leverage on both. After the GFC and EU sovereign bond crisis Central banks kind of removed market mechanisms of interest rate discovery in "risk" free assets (haha), think gov bonds. Whats happened since is that sovereigns' have maxed out their credit cards and inflation is now back in the picture. Central banks cant help anymore (nothing left to cut, and they gotta hike) and getting out another credit card on the taxpayer his/her/she/unicorn credit is not going to help this time either. Speaking gov level. But it kind of goes for everything. There are allot of mortgages, allot of corporate debt and allot of credit cards that are maxed out. More debt will just cause more of the same bad stuff, bad debt, inflation, slower growth etc. There is too much debt to deflate yet inflate further isnt an option either, too high inflation is problematic too, as much as central bankers love themselves a little inflation. Too much causes an overdose and isnt nice either. In the end its always the currencies that go. And its looking like its the end of the perpetual bond market at last. The fed is rushing in to move like jagger and Larp like Volcker, emotional and jittery, but they are forgetting that they have pushed down the kool-aid to everyone and their grandma for the last ten years and really since the 80's and things start to fall apart nicely here. Any and all collateral is melting faster then a modern gletsjer, no not really, yet, and all the FED can do is play a little with their interest rates. Its not just about the fed, its about everything. DEBT is everywhere. Its a problem and there isnt an easy way out other then a massive currency devaluation. But that is very tough too! Oh yes, and there is little to no real growth. Unless you believe robots and ai will solve all of our issues instead of creating more issues. The farewell to the old economy is also a farewell to allot of people in it. They will suffer. Rough times ahead, ahoy matey.

Such a great question. If someone does figure it out could they tell me!

Its funny you should say that