your own indie band
Bill Watterson, creator of Calvin and Hobbes, gave a commencement speech in 1990. @Dylan0A4 tweeted this excerpt (emphasis mine):
We’re not really taught how to recreate constructively. We need to do more than find diversions; we need to restore and expand ourselves. Our idea of relaxing is all too often to plop down in front of the television set and let its pandering idiocy liquefy our brains. Shutting off the thought process is not rejuvenating; the mind is like a car battery—it recharges by running. You may be surprised to find how quickly daily routine and the demands of “just getting by” absorb your waking hours. You may be surprised to find how quickly you start to see your politics and religion become matters of habit rather than thought and inquiry. You may be surprised to find how quickly you start to see your life in terms of other people’s expectations rather than issues. You may be surprised to find out how quickly reading a good book sounds like a luxury.
Creating a life that reflects your values and satisfies your soul is a rare achievement. In a culture that relentlessly promotes avarice and excess as the good life, a person happy doing his own work is usually considered an eccentric, if not a subversive. Ambition is only understood if it’s to rise to the top of some imaginary ladder of success. Someone who takes an undemanding job because it affords him the time to pursue other interests and activities is considered a flake. A person who abandons a career in order to stay home and raise children is considered not to be living up to his potential—as if a job title and salary are the sole measure of human worth. You’ll be told in a hundred ways, some subtle and some not, to keep climbing, and never be satisfied with where you are, who you are, and what you’re doing. There are a million ways to sell yourself out, and I guarantee you’ll hear about them.
To invent your own life’s meaning is not easy, but it’s still allowed, and I think you’ll be happier for the trouble. Reading those turgid philosophers here in these remote stone buildings may not get you a job, but if those books have forced you to ask yourself questions about what makes life truthful, purposeful, meaningful, and redeeming, you have the Swiss Army Knife of mental tools, and it’s going to come in handy all the time.
(h/t Stefan for texting me the tweet)
I had never read that commencement tweet but it’s exactly what I tried to convey in Backsolving Your Ride On Earth . Paul Millerd in his book Good Work recounts being taken aback when I called him “ambitious”. No matter what you do for work there are compromises. Ambition is being ruthlessly intentional about your compromises. “I want a life that looks like this” means saying “no” a lot and bearing the cost of those no’s gracefully.
First of all, why is generally hard to say “no”? Because a lot of things you should say “no” to in order to stay in sync with your desire are hard to say “no” to. They are often things that convey status. They are enviable. It is hard to say no to things that are enviable even if in your heart you know they don’t matter much to you.
And why is hard to be graceful about saying “no”? Because we cope, overcompensate, and cry “sour grapes”. The person who rejects materialism after noticing that its borrowed desires were nothing but empty calories but then sits in judgement of others. They’re trying to have it both ways. They’ve done an admirable job of knowing themselves but don’t realize that freedom from the herd involves some loneliness. They try to build their own herd by taking an adversarial posture against their old team. The reformed financier who hates financiers (cough, Taleb).
It’s pointless to say “just ignore others” because it cuts so strongly against our social nature. A more useful framing is to remember that there are so many cultures, ways of being, and perspectives that whatever you are into, it’s not the first time someone was into it. It’s been decades since your neighbors were just the people on your block. The substack you are reading is a block on a neighborhood you never would discovered before the internet.
There’s a community for everything (my favorite metaphor for that is the ponyplay crowd). You’ll get more strength from a small community than the the toxoplasma of rage . Watterson’s suggestions are worth taking seriously but they are hard. They are deeply ambitious. To pursue them joyfully, without FOMO or overcompensation, you’ll need a culture that organizes its values similarly. A community that gives props for actions that bring you closer to those values. This will align your innate need for acceptance with behavior that reflects your authentic self.
The trick is doing this without inheriting the group’s collective defensiveness or, too often, derangement. Have some self-respect. Pick a counter-culture animated by generative impulses not animosity. Hating your past self is not a productive identity. It’s merely layover as you reweight trade-offs.
Money Angle
A few posts worth sharing:
People always put their money in futures they predict (5 min read ) by Rohit Krishnan
Excerpt (emphasis mine and can’t emphasize that enough!!):
If you think the future of corporate American looks a lot like the past of corporate America, the Buffett portfolio is great. If you think the future’s pretty unknown, the Cockroach is great. If you’re in the middle, choose conventional wisdom. Note that these aren’t optimal, they’re just the financial equivalent of choosing the right sport to play. To do anything more is often the work of a lifetime. Investing has the highest delta between being the benefits to laziness and downsides to medium effort that I’ve ever seen.
Stocks and Flows (5 min read ) by Byrne Hobart
This short post is educational and includes occasional ancillary observations that echo some of the stronger moontower themes.
For example, when Byrne writes:
making a market is closer to a job than an investment, but buying a passive portfolio is very much an investment—you're getting paid to deal with volatility and the passage of time, not for any special effort it took you to click the "buy" button.
it reinforces my distinction between trading and investing (see this section from the moontower foreword to the newly released book Retail Option Trading by Euan Sinclair and Andrew Mack).
Money Angle For Masochists
Back on Oct 17th, I sold Z24 WTI (oil) 67 strike puts unhedged.
I explained my reasoning in this thread back when I did the trade. They were the equivalent to the USO Nov 15th 69 puts (I said Nov 22nd expiry but that was in error.)
I covered the WTI puts on Thursday morning. I published this thread when I covered them. Here’s a mildly edited version:
We'll use the USO puts to write the post-mortem of a roughly 2 week trade. I hope its super educational.
Let's start with the vibes.
Markets feel a bit, I don't know, ahead of themselves. Everything but oil popping (til today). Rates & USD higher.
I’m less bullish on oil (and broadly bearish).
I cut oil length and bot t-bills this am.
Let’s get to the specifics of the “cutting length” trade because there’s many ways to do that. But my directional bias coincided with wanting to buy back my short vol (the moontower mantra -- don't touch the options without a vol lens).
Why?
Vol has sufficiently relaxed in oil since i sold the puts. The put skew was at normal levels when i first sold the 30d delta puts but the vol was high. Since spot/vol corr was positive that made them seem extra high!
These pics show the negative VRP and negligible event premium assuming 35% fair base vol (which comes from eyeballing the USO vol term structure).
While that explains the how and why of covering the position, let’s understand the p/l attribution of the position while I held it. We do this with the same type of charts I've been showing post-mortems with.
I'll narrate where your eyes should go so it’s easier to learn.
If the puts were hedged the trade was steadily profitable except for 2 days out of 11 when the market popped.
See the yellow boxes on the red line:
Every day we can see the contribution to the hedged p/l from 2 components:
The yellow boxes are examples of the daily decomposition.
Look what happened on Friday 10/25’s big down move...the hedged p/l was still positive. Yes, you got hammered on the realized p/l but vol got slammed! The put skew was in fact unjustified. The down move was what I call stabilizing to the market
Down moves aren't normally stabilizing but my idea was that the Middle East conflict was driving the high vol so in this context a down move would be stabilizing so the total vol was unjustified if oil is lower.
(Ofc I was naked short the puts so that Friday was still a tough p/l day because i experienced a rough delta p/l but overall it was buffered by the puts underperforming)
Over the life of the trade, on a delta hedged basis you would earn $.45 being short the option from $1.76 On an unhedged basis it was $.78 (I actually made more than that because I actually sold the options closer to $2 bc the stock was about the same place it is right now, $71.85)
More importantly let's look at the cumulative p/l attribution:
Almost all of it came from vega. The option was well-priced from a realized vol point of view!
This all ties in to my general gestalt of "short where she lands, long where she ain't " bit. If vol is going to relax when it "gets there" then you don't wanna use the option to bet it's gonna get there. And if everyone thinks it's "not going there" then when it does it will destabilize and you'll wish you owned that option.
As a junior trader I remember selling calls bc "it'll never get there". I promise you there are many people who think like that. They don't understand vol trading.
[An aside: That statement sounds more incendiary than I’d like. It troubles me I can’t fully articulate it. It’s a bit of an ink blot test. It’s understandable if you find that unsatisfying but the raw reality is indifferent to both of our dissatisfaction. In truth, there was a point of separation somewhere along the evolution of trading careers where as things got more competitive from the floor days to today, the traders who were copycatting disappeared into other parts of the business. When trading morphed from time/place advantage edge to positional edge it exposed the copycats lack of deep options understanding. Before Hollywood, there was a “me too” era on option pits across the land, where you only had to be savvy enough to identify who was smart and just make sure you yelled “buy’em” at the same time.
There are a lot of people who sound like they get vol trading. In fact I can’t fully imagine how hard it is for someone who’s not super experienced to tell the difference. The problem with codifying a “trading Turing test” is the same one interviewers have with candidates — as professional-grade info gets disseminated it’s hard to know if someone has earned it or parroted it.]
One of the savviest oil options traders I ever knew had a good formulation:
He'd buy those nominally cheap (but vol expensive) weeny puts when he was bullish. Because if the market dropped he just wanted to own what I call "the trap door" to protect what he really wanted to do...get balls long
In my own trading, i wanted to own the trap door. Whatever everyone thinks is impossible is the option i want. Stick’em in my back pocket and if it ever comes into play I'm the only one with 2 hands on the wheel
I admit this instinct was much stronger when i was trading a big book and i don't have it as much now (that's another discussion altogether).
Anyway, I hope this was overall educational. There's an art to this game called options. If anything i maybe it gets the ole mind bicycle spinnin’ in such a way that even if you don't trade options, it can mentally upgrade your whole investment decision OS.
From My Actual Life
We were a a “generic Brooklyn indie band album cover” for Halloween.
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