A little about me: I got started in the volatility trading business about 13 years ago, initially as the sole junior trader to Robert Kanter. From there, I went on to trade at several proprietary trading firms. After having the best year of my trading career, about six years ago, a few partners and I decided to start our own hedge fund. I like to think I’ve established myself as one of the top volatility traders in my space. Along the way, I’ve been fortunate to receive a few industry awards, recognition, and backings for what I’ve been able to accomplish throughout my career as a trader. My focus on this app is pretty simple: to have interesting discussions with other traders and PMs, help younger traders navigate their own journeys, and share some of the volatility trading philosophies and lessons that have served me well throughout my career.

I’ve seen this quite a bit as well. One of the easiest ways to identify someone who lacks real market experience is to listen to the narratives they construct around the market-making community. It’s a huge red flag whenever someone speaks about market makers as though they’re some divine hand from the sky that sees all, knows all, and controls every movement in the market. More often than not, these narratives serve as convenient scapegoats for price action that someone doesn’t fully understand. And when you actually tap the Street, examine positioning, or dig into the underlying data to validate those claims, they frequently fall apart. The irony is that market makers are often just as constrained by inventory, risk limits, adverse selection, and imperfect information as everyone else. They are not omniscient, nor are they some coordinated entity operating with a singular objective. Ultimately the “market makers are pinning the gamma bro” type of arguments are similar to the statements you hear from a fish blaming the dealer at the casino for “bad luck” on a few hands.

First of all, this glorification is not new. I remember reading TRADER Magazine (yeah, bet yah too young to know about that). At least those were real traders. Ask the real OG traders who they looked up to and you'll hear names like PTJ, John Arnold, Steve Cohen, Soros, Druckenmiller, Ken Griffin, and Jim Simons. This doesn't even include the countless other unknowns Ask them who Kimchi is and you'll probably get a blank stare. There's this bizarre celebrity trader culture developing where people with large audiences and livestreams are being treated like some of the greatest traders alive. Somewhere along the way, people started confusing being famous for trading with being famous because you're actually good at trading. Those are two very different things.

You are starting to see the largest hoarding equity stimulus attempt ever. “Let’s attach the general public to direct exposure to our stock. It naturally creates greater attachment to broad inflows and also incentivizes government intervention and support in the event of a crisis.” I would watch for more companies to begin pursuing similar efforts.

Very often, I’ll speak to allocators who have target return objectives for their investments. I usually express that I’m not a fan of this approach, particularly when it comes to long volatility strategies. Let me explain why. Imagine you have a friend who tells you, “Hey, I’m a good poker player. I’m going to play at this casino tonight, and I’m not leaving until I make $500K.” He starts with a bankroll of $50K. He’s a skilled player, and fortunately, he’s seated at a table with players who are considerably worse than him. Nine hours go by, and he’s now up $450K. However, the table dynamics change. A few players rotate out, and two players he recognizes from other circuits sit down. He knows both are significantly better than him. To me, a good poker player would recognize that the opportunity set has deteriorated. He might play a few more hands with a strict floor in mind, but if that floor is breached, he picks up his chips and calls it a night. Unfortunately, our friend has committed himself to his original rule: He cannot leave until he makes $500K. So he continues playing. Nine hours later, he has lost everything. Now, let’s change the scenario. Instead of two superior players joining the table, imagine two more fish sit down. Our friend plays another hour, makes the additional $50K, reaches his $500K target, and walks away. Unfortunately, those two fish each have an additional $2M bankroll and are willing to keep playing all night. In the first scenario, had he recognized the deterioration in the opportunity set, he could have walked away with $450K instead of nothing. In the second scenario, had he recognized the improvement in the opportunity set, he might have walked away with $2M instead of $500K. So what went wrong in both scenarios? He allowed an arbitrary return target to dictate his decisions rather than the underlying conditions that actually determined his expected profitability. This is the fundamental problem I have with target-based investment frameworks. When you establish external parameters that have no meaningful relationship to the underlying distribution of outcomes, you risk systematically making the wrong decisions. You end up taking too much risk when the opportunity set deteriorates and taking too little when it improves. Now, bring this back to volatility investing. I often speak with allocators who say things like, “We want our hedging program to generate a 40% return if the market declines 20%, and we want to monetize when that happens.” I try my best to explain that the parameters you establish for your hedging program have absolutely no influence on the path the market takes or the opportunity set that develops along the way. A 20% market decline tells you very little, in isolation, about whether the remaining convexity is attractively priced, whether volatility is likely to continue expanding, or whether the positioning dynamics that created the opportunity have been exhausted. This is precisely why so many hedging programs struggle with monetization. They either monetize too early, leaving substantial profits on the table, or monetize too late, allowing significant gains to evaporate. The problem isn’t necessarily the hedge itself. It’s that the decision to monetize is being driven by an arbitrary objective rather than the variables that actually determine the expected value of continuing to hold the position. The objective should never be to maximize returns relative to an arbitrary target. It should be to maximize the value extracted from the opportunity set as it evolves.

This year Ambrus donated $100k to @sonofasaintorg . This is an organization that does real hands on work to provide long-term mentorship and support to boys and young men who are growing up without their fathers, in socioeconomically deprived areas. If you are a trader/ investor looking to pay back your blessings. This is an organization worth looking into.

Opportunity set getting interesting! Have a great weekend everyone 🫡

Jim Nantz says Mike Ditka used to pay and tip for everything with $100 bills, and never ask for change “I noticed early on that all he carried were $100 bills. All he did was peel off hundreds all the time. Buy a beer at the bar on the way out to dinner, ‘Yeah, give me a Budweiser.’ $100. Keep the change.” “Coat check, comes into a restaurant, comes out, $100. Man on the street, homeless, there was one guy that kind of understood the routine and he was there every week. Mike, every time, $100 bill.” “I finally got up the nerve to say, ‘Hey coach, why don’t you ever get change? Why just the hundreds?’ He says, ‘Hey, what’s the difference anyway?’” “He said, ‘You know, the way I look at it, when I die and they drop me down into the ground, I hope there’s a little opening in that coffin and my last $100 bill comes flying out and goes up into the sky and drifts away. That would make me happy.’” “So I said, ‘This gets a little pricey, doesn’t it?’ ‘It’s not that bad, Jim.’ He said, ‘Here’s the way I rationalize it in my head. We got 20 weeks. I come every single Friday to New York. I come in with 50 $100 bills, $5,000. And at the end of the season, I’m spending $100,000.’” “He would say, ‘I’ve allocated $100,000 to the football season to go enjoy myself in New York. And that’s the way it is.’ I take $5,000 in cash in hundreds every single week. And that’s what he did.”

There’s this persistent narrative in trading that the smartest guys in the room are inevitably the ones who make the most money. You constantly hear things like, “How could you ever compete with a firm like XYZ?” I’ve said this before, but I think that couldn’t be further from the truth. In my experience, a few attributes consistently separate good traders from everyone else: 1) A relentless desire to progress. 2) An exceptional work ethic. 3) Slightly above-average intelligence. 4) Genuine self-awareness and humility. 5) Unwavering discipline. 6) Mental flexibility and the ability to adapt. 7) Natural gravitation to take risk. If you genuinely possess these attributes and dedicate yourself to the craft, it becomes very difficult not to develop into a good trader over time. It’s actually quite rare the giga brain that is strictly exceptional raw intelligence ends up lasting long in this game.

Hedge fund borrowing from banks has tripled since 2020, and prime brokerage is now one of Wall Street's biggest profit pools Equity and fixed-income prime brokerage revenue is expected to hit $47.9B this year, per Coalition Greenwich. Prime services will make up about 38% of bank's equities revenue, up from 10% in 2005. A single large multi-manager or prop trading client can generate up to $200M a year for a bank after trading costs. The leverage, per Fed and bank data: - Top 50 hedge funds borrow about $3 per $1 of AUM - Top 15 borrow about $11 per $1 - Largest funds run 20-25x including derivatives, per one bank executive - Market makers can reach 40x The Bank of England said in July that prime brokerage balances rose about 40% year over year. Goldman and Morgan Stanley still lead. JPMorgan, Citi and Bank of America are pushing for share, alongside BNP Paribas, Barclays and ABN Amro. Competition is loosening terms. Financing commitments for top clients have stretched from about two weeks to one, three and in some cases six months. Post-2008 rules pushed risk-taking off bank balance sheets and into the multi-managers. The biggest platforms ran more than a third of industry trading last year on under a tenth of assets. Funds split positions across several prime brokers, so no single lender sees total leverage. Regulators could look into requiring consolidated position reporting across primes.

Fingers crossed that we actually get some good trading opportunities into the end of the year. Welcoming stocks moving higher or lower. Three months of nothingness and headfakes in equity land has been a boring torture chamber.

I don’t invest in other hedge funds because all of my investable capital is committed to my own. But if I ever decided to start allocating to other managers, rather than going through a barrage of questions attempting to assess areas where I lack genuine expertise, I would focus on understanding the broad risks and then dial in on two main principles. 1) Does management have meaningful personal capital invested alongside its investors? It’s a relatively straightforward yes-or-no question, but I think the answer reveals quite a bit. You can rationalize all sorts of reasons why management shouldn’t have its own capital at risk, but to me, there is no substitute for genuine alignment of incentives. 2) Is management genuinely obsessed with its craft? I think this is one of the most underappreciated qualities in evaluating any business. And I genuinely believe it’s what gets people from being in the top 10% to top 1%. When someone is genuinely obsessed with what they do, late-night strategy discussions, weekend meetings, and countless hours refining the business stop feeling like obligations. They become problems that people have a burning desire to solve. That obsession drives deeper thinking, better questions, and an unwillingness to settle for satisfactory answers when better ones might exist. Over time, that passion and attention to detail compound. Small improvements accumulate, processes become more robust, and ultimately, that obsession manifests itself in the quality of the product and its results. As humans it’s kinda hard to be bad at something you are obsessed and passionate about especially if your work ethic aligns.

I’ve been preaching this story for a few years now. Notional short Vega in the street remains massive relative to where it has ever been. It doesn’t mean go and naively buy puts because that’s entirely silly. But whenever vol is rising this is something people should be cognizant of, contrary to the one dimensional view of “just short vol on spikes”.

S&P all time highs…… America 🇺🇸 🫡

When Nasdaq told Thomas Peterffy his automated bids had to be “keyed in through the keyboard,” he took the rule literally. So he built a machine that typed faster than any human could. Thomas Peterffy, founder of Interactive Brokers, explains: "We had a Nasdaq terminal, and we started to trade quite a lot." "One day, the vice chairman of Nasdaq came in." "He expected to see twenty people on terminals constantly making markets." "Instead, there were two or three people sitting around, mostly writing computer code." "He asked, ‘Who is doing all this trading?’" "I pointed to the computer." "He said, ‘This is not going to work. You clearly have an advantage over people typing bids and offers by hand.’" "I said, ‘That’s life. Technology grows, and people who use the technology have an advantage until everyone else catches up.’" "Then he found a Nasdaq rule saying bids and offers had to be keyed in through the keyboard." "So we built pistons over the keyboard." "The computer drove the pistons." "When we had something to type, it didn’t go bam, bam, bam." "It went brr." The rule said the orders had to touch the keyboard. Peterffy made sure they did.

The @yalefootball family and God’s green earth lost a GREAT man today: espn.com/college-football/st…. You wouldn’t know who I am if it weren’t for Coach Reno. This man has positively impacted more lives than anyone I’ve ever met. RIP, Coach.  Roll Dogs, —Sunny D 💙 P.S. Coach Reno was wise enough to tell me that @Yale had “the best communications program in the country,” when I told him it was my dream to be an on-air sports analyst. “We regularly ship kids up the road to ESPN,” he followed up immediately.  FWIW, @Yale did not have a communications program. He simply did what he had to do to get me to turn down @UW_Football—where I would’ve played had I not chosen @yalefootball. As someone who was also tasked with climbing the socioeconomic ladder for his family, he knew that I didn’t understand the significance of attending @Yale as a beyond-dirt-poor crack baby who didn’t have access to the internet at home.  He was right. Best bold-faced lie of my life.  God is good all the time, and all the time God is good. 💜

From a societal perspective, one of the hardest things to explain to a young kid on Fintwit is that some of the biggest red flags for a LARP or grifter are the stereotypical Lamborghini and watch posts. Meanwhile, one of the biggest green flags is the guy casually drinking a 2014 Grand Cru Burgundy with his family on a random Tuesday night while tweeting up a storm complaining that his wife is pissed because the marble slab for his living room centerpiece is three weeks late.