Liquidity & For-Profit Exchanges
Aug 27, 2015
In this episode of Truth or Skepticism, Tom Sosnoff and Dylan Ratigan once again partake in a spirited debate on a spectrum of issues, and provide context around the crazy moves in the markets. Read the highlights below and watch the segment (and other archived segments) here!
The guys talk about the recent 10% down move in the S&P’s and put it in context compared to other recent market crashes. Tom explains that there is now a heightened sense of awareness & fear, which is why volatility has spiked. Dylan tries to quantify an average move, but proclaims that nothing about this situation seems average.
Tom & Dylan reflect on the emotions of fear and risk, and relate it back to implied volatility overstating historical volatility. They talk about how this could be just the beginning, since this happened coming off all-time highs.
Dylan asks Tom what his parameters are to selling premium. Tom talks about the history of volatility as an asset class, and how it’s no longer just used to sell - you can play both sides now.
The two discuss whether they’re looking at playing price extremes or selling high IV premium in an environment like this. Tom says he’s doing both. He’s looking to have negative deltas while selling premium in /ES & /NQ.
The duo finishes off the segment discussing for profit exchanges and how they differ from the old days. Back in the day, the traders had a piece of the profit. These days they don’t, which is why there are only a few exchanges that are routing all the orders, and that is hurting liquidity.
Remember, this is just a sneak peek! Check out the full video below:
Wanna see more Truth or Skepticism? Watch all the episodes here in the show archives!
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