Gamma Sqeeze

The options market has grown massively in the past year largely on the backs of household investors buying cheap, weekly expiring, OTM call options resulting in explosive growth then decline of targeted tickers. Fundamentals have very little to do with this although sentiment in the name certainly helps. This is why I questioned your BlackBerry reasoning, because it was clear to me that the underlying was being manipulated.

The essential piece here is that it seems like social media has opened up a market hack and stimulus cheques and cheap money are making exploiting that hack trivial. In the olden days, megaphoning a position would lead one or more big fish to take the opposing position such as in a short squeeze/bull raid dynamic or would beef of the name for a sec, so the big players could sell and move on. That essentially stabilizes the market and improves functioning. Shorting is good! The market needs all the votes (transactions) it can get as voting improves information flow which improves efficiency.

With the now well-known gamma squeeze playbook, there doesn’t seem to be a way to counter.

1) A sentimental name is chosen prob through random aggregation of social media sentiment,
2) the name becomes a meme and goes viral,
3) people spend money on very cheap call options,
4) those call options force the underlying purchase of those stocks by the market makers. Essentially, small money leverages big market moves
5) The rising stock price + sentiment multiplies the buy in setting up a positive feedback loop
6) Algos lurk all around this and pump and dump as needed probably amplifying the effects.

Instead of countering, I imagine institutional traders that are free to chase new strategies are jumping aboard here. This was first discussed in the media in late August, 2020 when markets went briefly parabolic before the correction and it was revealed that there was massive dark-pool call option buying.

The cycle ends when the expiration nears or passes, smart money steps out, shorts the name or buys puts funded with sold calls that then have massive premium due to the high volatility that this dynamic sets up.

Sister by Sufjan Stevens


What the water wants is hurricanes,
And sailboats to ride on its back.
What the water wants is sun kiss,
And land to run into and back.
I have a fish stone burning my elbow,
Reminding me to know I’m glad
That I have a bottle filled with my own teeth.
They fell out like a tear in the bag.
And I have a sister in Detroit.
She has black hair and small hands.
And I have a kettledrum.
I’ll hit the earth with you.
And I will crochet you a hat.
And I have a red kite;
I’ll put you right in it.
I’ll show you the sky.

The last 60 hours

I’m not a wildfire expert, but this has to be unprecedented. Here is an animated GIF of the wildfires from the afternoon of the 7th until the morning of the 9th.

At the start of the animation, you can see the Lionshead fire smouldering. Overnight on the 7th/8th the cold front passes and the fires just explode westward. Major fires erupt in the McKenzie, Umpqua and Clackamas drainages as the Beachie fire above Opal creek rapidly expands and is caught by the Lionshead.

Stay safe everyone.

Clackamas Wildfire Update

Most importantly, locations north of 211 look safe at the moment except at Unger Rd. No updates on Bittner Mill aside from what I sent Shara an hour ago. But don’t take my word for it. Keep your phones charged and listen to the radio or look out for police on evacuation missions.

Here’s the latest satellite image as of 11:10 this morning and another at 11:30. The big northernmost blob of orange near the intersection of 122.5W, 45N is the Riverside fire that started near Ripplebrook RS. That fire moved rapidly due west yesterday and overnight. The orange spotted grey streak to its immediate south is the Santiam complex fire (was the Beachie and Lionshead fires). You can see that these two fires appear to have merged and, best I can tell, the point of merging is near Glen Avon. The fire looks very active in that area and shows a recent move to the NW toward Mollala (but not threatening it).

I just listened to the Clackamas County live update and they are way behind on what they are willing to share (they don’t want to overstate fire size and I think the latest data isn’t being communicated up to officials just yet). They publicly estimate 20,000 acres in Clackamas River and another 2200 elsewhere. They are way low on that number with the Santiam fire coming in from the south.

Oregon Heartbreak

I’m deeply saddened to see the destruction at the hands of wildfire today throughout the Cascade Mountains. The burned areas contain forests that were many of my first wilderness experiences and towns and small cities I’ve known for decades. I await the news that will come when people return to these places or when images are captured. I hope everyone made it out okay and that all lives are spared. I’m glad to know that my family members are safe.

Take up

Somewhere along the line I gave up. What’s the opposite of that? Take-up? Live up? I dunno, but I bet it has nothing to do with wasting endless work hours in front of a computer not working and pawing the internet for dopamine that doesn’t exist. I bet it has much to do with time in the mountains. Time exploring. Time laughing with friends. Time in/on/over the ocean. All of the things that I’m getting so little of right now.

And they still deny…

I love it. The COVID deniers’ basic take is:

 “If I’m not sick or dead, it’s not a big deal. If Bolsonaro isn’t sick or dead, it’s not a big deal.”

 That’s fun.

 This is also fun.

 According to Wikipedia, 10,580 Boeing 737s have been produced to-date. Maybe 6500 are in service. Average capacity is about 150 humans. People’s moms, dads, brothers, sisters etc etc take those seats on a regular basis, or did in the before times. It’s safe to say that almost everyone in the developed world has been aboard one and many in the less developed world.

 The number of coronavirus deaths globally is currently 624,000 (after only 4 months of high infection rates). And is climbing by 1% per day.

 If the entire active fleet of 737s was filled to 3/4 capacity, lofted into the sky and then crashed, it would kill that many people. And the world would lose its mind. The world lost its mind when four planes managed to kill less than 3000 in NYC, rest their souls. Or, you could note that about two 911s have been happening every day for the past four months.

 Or, you could note that the globe is seeing about 40 737s full of happy life travellers hit an unforgiving deck each day due to this virus. I don’t care how old they are in the median, that’s a massive number.

 So, to get started, you wack the entire fleet of 737s full of people and then, on an ongoing basis, another 40 planes per day goes down. No big deal, right? It’s just someone’s grandma. Who cares if they are bringing refrigerator trucks into the US south to start storing the dead. Who cares if so many died in NYC that a huge uptick in persons buried in the city mass grave was recorded.

 These are deaths on top of normal death rates. Yes, people die, we get it. That’s never an argument against concern for additional deaths. It doesn’t hold water now and will continue to leak water like the 3$ walmart sieve it is as death rates continue to climb.

 This is not a flu. It has rapidly outstripped typical ILI/Pneumonia deaths in only four months, many of the deaths in summer even though there have been efforts to control the spread of the virus. Yes, 99% of people get it and get over it. But 1% have a really crappy ride (look up what it actually means to be intubated and put on a ventilator — it’s hell and deadly in its own right) and half of those, maybe a bit under, will die.

 And all that had to be done was for you numbskulls to listen to a few directives about social distancing, wearing masks and not being greedy for all of a month at most. But the planet failed. The author of the blog downplayed the virus as did many others in its comments section and, of course, all over the media. The US failed the worst. Brazil a close second (note the equivalent, nationalistic leadership of both nations). All you had to do was take a tiny bit of inconvenience and the virus would have run out of hosts. But now we all have to take a year’s worth of mask wearing and family missing and social distancing and on and on and on because of your inability to grasp the magnitude of something that every professional who knew better howled how large scale this would become.

 I get it, you are libertarian. You believe in freedom. Fine. But an essential tenant of libertarianism is respecting the rights of others to do as they will. While not a fan overall, I think this concept is really cool. It allows complete personal freedom as long as you don’t wreck someone else’s day. Yet, here you all are. You took all of your freedoms and completely crapped all over everyone else’s right to live happy healthy lives. Total garbage.