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No gods, no kings, only NOPE - or divining the future with options flows. [Part 2: A Random Walk and Price Decoherence]
tl;dr - 1) Stock prices move continuously because different market participants end up having different ideas of the future value of a stock. 2) This difference in valuations is part of the reason we have volatility. 3) IV crush happens as a consequence of future possibilities being extinguished at a binary catalyst like earnings very rapidly, as opposed to the normal slow way. I promise I'm getting to the good parts, but I'm also writing these as a guidebook which I can use later so people never have to talk to me again. In this part I'm going to start veering a bit into the speculation territory (e.g. ideas I believe or have investigated, but aren't necessary well known) but I'm going to make sure those sections are properly marked as speculative (and you can feel free to ignore/dismiss them). Marked as [Lily's Speculation]. As some commenters have pointed out in prior posts, I do not have formal training in mathematical finance/finance (my background is computer science, discrete math, and biology), so often times I may use terms that I've invented which have analogous/existing terms (e.g. the law of surprise is actually the first law of asset pricing applied to derivatives under risk neutral measure, but I didn't know that until I read the papers later). If I mention something wrong, please do feel free to either PM me (not chat) or post a comment, and we can discuss/I can correct it! As always, buyer beware. This is the first section also where you do need to be familiar with the topics I've previously discussed, which I'll add links to shortly (my previous posts: 1) https://www.reddit.com/thecorporation/comments/jck2q6/no_gods_no_kings_only_nope_or_divining_the_future/ 2) https://www.reddit.com/thecorporation/comments/jbzzq4/why_options_trading_sucks_or_the_law_of_surprise/ --- A Random Walk Down Bankruptcy A lot of us have probably seen the term random walk, maybe in the context of A Random Walk Down Wall Street, which seems like a great book I'll add to my list of things to read once I figure out how to control my ADD. It seems obvious, then, what a random walk means - when something is moving, it basically means that the next move is random. So if my stock price is $1 and I can move in $0.01 increments, if the stock price is truly randomly walking, there should be roughly a 50% chance it moves up in the next second (to $1.01) or down (to $0.99). If you've traded for more than a hot minute, this concept should seem obvious, because especially on the intraday, it usually isn't clear why price moves the way it does (despite what chartists want to believe, and I'm sure a ton of people in the comments will tell me why fettucini lines and Batman doji tell them things). For a simple example, we can look at SPY's chart from Friday, Oct 16, 2020: https://preview.redd.it/jgg3kup9dpt51.png?width=1368&format=png&auto=webp&s=bf8e08402ccef20832c96203126b60c23277ccc2 I'm sure again 7 different people can tell me 7 different things about why the chart shape looks the way it does, or how if I delve deeply enough into it I can find out which man I'm going to marry in 2024, but to a rationalist it isn't exactly apparent at why SPY's price declined from 349 to ~348.5 at around 12:30 PM, or why it picked up until about 3 PM and then went into precipitous decline (although I do have theories why it declined EOD, but that's for another post). An extremely clever or bored reader from my previous posts could say, "Is this the price formation you mentioned in the law of surprise post?" and the answer is yes. If we relate it back to the individual buyer or seller, we can explain the concept of a stock price's random walk as such:
Most market participants have an idea of an asset's truevalue (an idealized concept of what an asset is actually worth), which they can derive using models or possibly enough brain damage. However, an asset's value at any given time is not worth one value (usually*), but a spectrum of possible values, usually representing what the asset should be worth in the future. A naive way we can represent this without delving into to much math (because let's face it, most of us fucking hate math) is: Current value of an asset = sum over all (future possible value multiplied by the likelihood of that value)
In actuality, most models aren't that simple, but it does generalize to a ton of more complicated models which you need more than 7th grade math to understand (Black-Scholes, DCF, blah blah blah). While in many cases the first term - future possible value - is well defined (Tesla is worth exactly $420.69 billion in 2021, and maybe we all can agree on that by looking at car sales and Musk tweets), where it gets more interesting is the second term - the likelihood of that value occurring. [In actuality, the price of a stock for instance is way more complicated, because a stock can be sold at any point in the future (versus in my example, just the value in 2021), and needs to account for all values of Tesla at any given point in the future.] How do we estimate the second term - the likelihood of that value occurring? For this class, it actually doesn't matter, because the key concept is this idea: even with all market participants having the same information, we do anticipate that every participant will have a slightly different view of future likelihoods. Why is that? There's many reasons. Some participants may undervalue risk (aka WSB FD/yolos) and therefore weight probabilities of gaining lots of money much more heavily than going bankrupt. Some participants may have alternative data which improves their understanding of what the future values should be, therefore letting them see opportunity. Some participants might overvalue liquidity, and just want to GTFO and thereby accept a haircut on their asset's value to quickly unload it (especially in markets with low liquidity). Some participants may just be yoloing and not even know what Fastly does before putting their account all in weekly puts (god bless you). In the end, it doesn't matter either the why, but the what: because of these diverging interpretations, over time, we can expect the price of an asset to drift from the current value even with no new information added. In most cases, the calculations that market participants use (which I will, as a Lily-ism, call the future expected payoff function, or FEPF) ends up being quite similar in aggregate, and this is why asset prices likely tend to move slightly up and down for no reason (or rather, this is one interpretation of why). At this point, I expect the 20% of you who know what I'm talking about or have a finance background to say, "Oh but blah blah efficient market hypothesis contradicts random walk blah blah blah" and you're correct, but it also legitimately doesn't matter here. In the long run, stock prices are clearly not a random walk, because a stock's value is obviously tied to the company's fundamentals (knock on wood I don't regret saying this in the 2020s). However, intraday, in the absence of new, public information, it becomes a close enough approximation. Also, some of you might wonder what happens when the future expected payoff function (FEPF) I mentioned before ends up wildly diverging for a stock between participants. This could happen because all of us try to short Nikola because it's quite obviously a joke (so our FEPF for Nikola could, let's say, be 0), while the 20 or so remaining bagholders at NikolaCorporation decide that their FEPF of Nikola is $10,000,000 a share). One of the interesting things which intuitively makes sense, is for nearly all stocks, the amount of divergence among market participants in their FEPF increases substantially as you get farther into the future. This intuitively makes sense, even if you've already quit trying to understand what I'm saying. It's quite easy to say, if at 12:51 PM SPY is worth 350.21 that likely at 12:52 PM SPY will be worth 350.10 or 350.30 in all likelihood. Obviously there are cases this doesn't hold, but more likely than not, prices tend to follow each other, and don't gap up/down hard intraday. However, what if I asked you - given SPY is worth 350.21 at 12:51 PM today, what will it be worth in 2022? Many people will then try to half ass some DD about interest rates and Trump fleeing to Ecuador to value SPY at 150, while others will assume bull markets will continue indefinitely and SPY will obviously be 7000 by then. The truth is -- no one actually knows, because if you did, you wouldn't be reading a reddit post on this at 2 AM in your jammies. In fact, if you could somehow figure out the FEPF of all market participants at any given time, assuming no new information occurs, you should be able to roughly predict the true value of an asset infinitely far into the future (hint: this doesn't exactly hold, but again don't @ me). Now if you do have a finance background, I expect gears will have clicked for some of you, and you may see strong analogies between the FEPF divergence I mentioned, and a concept we're all at least partially familiar with - volatility. Volatility and Price Decoherence ("IV Crush") Volatility, just like the Greeks, isn't exactly a real thing. Most of us have some familiarity with implied volatility on options, mostly when we get IV crushed the first time and realize we just lost $3000 on Tesla calls. If we assume that the current price should represent the weighted likelihoods of all future prices (the random walk), volatility implies the following two things:
Volatility reflects the uncertainty of the current price
Volatility reflects the uncertainty of the future price for every point in the future where the asset has value (up to expiry for options)
[Ignore this section if you aren't pedantic] There's obviously more complex mathematics, because I'm sure some of you will argue in the comments that IV doesn't go up monotonically as option expiry date goes longer and longer into the future, and you're correct (this is because asset pricing reflects drift rate and other factors, as well as certain assets like the VIX end up having cost of carry). Volatility in options is interesting as well, because in actuality, it isn't something that can be exactly computed -- it arises as a plug between the idealized value of an option (the modeled price) and the real, market value of an option (the spot price). Additionally, because the makeup of market participants in an asset's market changes over time, and new information also comes in (thereby increasing likelihood of some possibilities and reducing it for others), volatility does not remain constant over time, either. Conceptually, volatility also is pretty easy to understand. But what about our friend, IV crush? I'm sure some of you have bought options to play events, the most common one being earnings reports, which happen quarterly for every company due to regulations. For the more savvy, you might know of expected move, which is a calculation that uses the volatility (and therefore price) increase of at-the-money options about a month out to calculate how much the options market forecasts the underlying stock price to move as a response to ER. Binary Catalyst Events and Price Decoherence Remember what I said about price formation being a gradual, continuous process? In the face of special circumstances, in particularly binary catalyst events - events where the outcome is one of two choices, good (1) or bad (0) - the gradual part gets thrown out the window. Earnings in particular is a common and notable case of a binary event, because the price will go down (assuming the company did not meet the market's expectations) or up (assuming the company exceeded the market's expectations) (it will rarely stay flat, so I'm not going to address that case). Earnings especially is interesting, because unlike other catalytic events, they're pre-scheduled (so the whole market expects them at a certain date/time) and usually have publicly released pre-estimations (guidance, analyst predictions). This separates them from other binary catalysts (e.g. FSLY dipping 30% on guidance update) because the market has ample time to anticipate the event, and participants therefore have time to speculate and hedge on the event. In most binary catalyst events, we see rapid fluctuations in price, usually called a gap up or gap down, which is caused by participants rapidly intaking new information and changing their FEPF accordingly. This is for the most part an anticipated adjustment to the FEPF based on the expectation that earnings is a Very Big Deal (TM), and is the reason why volatility and therefore option premiums increase so dramatically before earnings. What makes earnings so interesting in particular is the dramatic effect it can have on all market participants FEPF, as opposed to let's say a Trump tweet, or more people dying of coronavirus. In lots of cases, especially the FEPF of the short term (3-6 months) rapidly changes in response to updated guidance about a company, causing large portions of the future possibility spectrum to rapidly and spectacularly go to zero. In an instant, your Tesla 10/30 800Cs go from "some value" to "not worth the electrons they're printed on". [Lily's Speculation] This phenomena, I like to call price decoherence, mostly as an analogy to quantum mechanical processes which produce similar results (the collapse of a wavefunction on observation). Price decoherence occurs at a widespread but minor scale continuously, which we normally call price formation (and explains portions of the random walk derivation explained above), but hits a special limit in the face of binary catalyst events, as in an instant rapid portions of the future expected payoff function are extinguished, versus a more gradual process which occurs over time (as an option nears expiration). Price decoherence, mathematically, ends up being a more generalizable case of the phenomenon we all love to hate - IV crush. Price decoherence during earnings collapses the future expected payoff function of a ticker, leading large portions of the option chain to be effectively worthless (IV crush). It has interesting implications, especially in the case of hedged option sellers, our dear Market Makers. This is because given the expectation that they maintain delta-gamma neutral, and now many of the options they have written are now worthless and have 0 delta, what do they now have to do? They have to unwind. [/Lily's Speculation] - Lily
No gods, no kings, only NOPE - or divining the future with options flows. [Part 3: Hedge Winding, Unwinding, and the NOPE]
Hello friends! We're on the last post of this series ("A Gentle Introduction to NOPE"), where we get to use all the Big Boy Concepts (TM) we've discussed in the prior posts and put them all together. Some words before we begin:
This post will be massively theoretical, in the sense that my own speculation and inferences will be largely peppered throughout the post. Are those speculations right? I think so, or I wouldn't be posting it, but they could also be incorrect.
I will briefly touch on using the NOPE this slide, but I will make a secondary post with much more interesting data and trends I've observed. This is primarily for explaining what NOPE is and why it potentially works, and what it potentially measures.
My advice before reading this is to glance at my prior posts, and either read those fully or at least make sure you understand the tl;drs: https://www.reddit.com/thecorporation/collection/27dc72ad-4e78-44cd-a788-811cd666e32a Depending on popular demand, I will also make a last-last post called FAQ, where I'll tabulate interesting questions you guys ask me in the comments! --- So a brief recap before we begin. Market Maker ("Mr. MM"): An individual or firm who makes money off the exchange fees and bid-ask spread for an asset, while usually trying to stay neutral about the direction the asset moves. Delta-gamma hedging: The process Mr. MM uses to stay neutral when selling you shitty OTM options, by buying/selling shares (usually) of the underlying as the price moves. Law of Surprise [Lily-ism]: Effectively, the expected profit of an options trade is zero for both the seller and the buyer. Random Walk: A special case of a deeper probability probability called a martingale, which basically models stocks or similar phenomena randomly moving every step they take (for stocks, roughly every millisecond). This is one of the most popular views of how stock prices move, especially on short timescales. Future Expected Payoff Function [Lily-ism]: This is some hidden function that every market participant has about an asset, which more or less models all the possible future probabilities/values of the assets to arrive at a "fair market price". This is a more generalized case of a pricing model like Black-Scholes, or DCF. Counter-party: The opposite side of your trade (if you sell an option, they buy it; if you buy an option, they sell it). Price decoherence ]Lily-ism]: A more generalized notion of IV Crush, price decoherence happens when instead of the FEPF changing gradually over time (price formation), the FEPF rapidly changes, due usually to new information being added to the system (e.g. Vermin Supreme winning the 2020 election). --- One of the most popular gambling events for option traders to play is earnings announcements, and I do owe the concept of NOPE to hypothesizing specifically about the behavior of stock prices at earnings. Much like a black hole in quantum mechanics, most conventional theories about how price should work rapidly break down briefly before, during, and after ER, and generally experienced traders tend to shy away from playing earnings, given their similar unpredictability. Before we start: what is NOPE? NOPE is a funny backronym from Net Options Pricing Effect, which in its most basic sense, measures the impact option delta has on the underlying price, as compared to share price. When I first started investigating NOPE, I called it OPE (options pricing effect), but NOPE sounds funnier. The formula for it is dead simple, but I also have no idea how to do LaTeX on reddit, so this is the best I have: https://preview.redd.it/ais37icfkwt51.png?width=826&format=png&auto=webp&s=3feb6960f15a336fa678e945d93b399a8e59bb49 Since I've already encountered this, put delta in this case is the absolute value (50 delta) to represent a put. If you represent put delta as a negative (the conventional way), do not subtract it; add it. To keep this simple for the non-mathematically minded: the NOPE today is equal to the weighted sum (weighted by volume) of the delta of every call minus the delta of every put for all options chains extending from today to infinity. Finally, we then divide that number by the # of shares traded today in the market session (ignoring pre-market and post-market, since options cannot trade during those times). Effectively, NOPE is a rough and dirty way to approximate the impact of delta-gamma hedging as a function of share volume, with us hand-waving the following factors:
To keep calculations simple, we assume that all counter-parties are hedged. This is obviously not true, especially for idiots who believe theta ganging is safe, but holds largely true especially for highly liquid tickers, or tickers will designated market makers (e.g. any ticker in the NASDAQ, for instance).
We assume that all hedging takes place via shares. For SPY and other products tracking the S&P, for instance, market makers can actually hedge via futures or other options. This has the benefit for large positions of not moving the underlying price, but still makes up a fairly small amount of hedges compared to shares.
Winding and Unwinding
I briefly touched on this in a past post, but two properties of NOPE seem to apply well to EER-like behavior (aka any binary catalyst event):
NOPE measures sentiment - In general, the options market is seen as better informed than share traders (e.g. insiders trade via options, because of leverage + easier to mask positions). Therefore, a heavy call/put skew is usually seen as a bullish sign, while the reverse is also true.
NOPE measures system stability
I'm not going to one-sentence explain #2, because why say in one sentence what I can write 1000 words on. In short, NOPE intends to measure sensitivity of the system (the ticker) to disruption. This makes sense, when you view it in the context of delta-gamma hedging. When we assume all counter-parties are hedged, this means an absolutely massive amount of shares get sold/purchased when the underlying price moves. This is because of the following: a) Assume I, Mr. MM sell 1000 call options for NKLA 25C 10/23 and 300 put options for NKLA 15p 10/23. I'm just going to make up deltas because it's too much effort to calculate them - 30 delta call, 20 delta put. This implies Mr. MM needs the following to delta hedge: (1000 call options * 30 shares to buy for each) [to balance out writing calls) - (300 put options * 20 shares to sell for each) = 24,000net shares Mr. MM needs to acquire to balance out his deltas/be fully neutral. b) This works well when NKLA is at $20. But what about when it hits $19 (because it only can go down, just like their trucks). Thanks to gamma, now we have to recompute the deltas, because they've changed for both the calls (they went down) and for the puts (they went up). Let's say to keep it simple that now my calls are 20 delta, and my puts are 30 delta. From the 24,000 net shares, Mr. MM has to now have: (1000 call options * 20 shares to have for each) - (300 put options * 30 shares to sell for each) = 11,000 shares. Therefore, with a $1 shift in price, now to hedge and be indifferent to direction, Mr. MM has to go from 24,000 shares to 11,000 shares, meaning he has to sell 13,000 shares ASAP, or take on increased risk. Now, you might be saying, "13,000 shares seems small. How would this disrupt the system?" (This process, by the way, is called hedge unwinding) It won't, in this example. But across thousands of MMs and millions of contracts, this can - especially in highly optioned tickers - make up a substantial fraction of the net flow of shares per day. And as we know from our desk example, the buying or selling of shares directly changes the price of the stock itself. This, by the way, is why the NOPE formula takes the shape it does. Some astute readers might notice it looks similar to GEX, which is not a coincidence. GEX however replaces daily volume with open interest, and measures gamma over delta, which I did not find good statistical evidence to support, especially for earnings. So, with our example above, why does NOPE measure system stability? We can assume for argument's sake that if someone buys a share of NKLA, they're fine with moderate price swings (+- $20 since it's NKLA, obviously), and in it for the long/medium haul. And in most cases this is fine - we can own stock and not worry about minor swings in price. But market makers can't* (they can, but it exposes them to risk), because of how delta works. In fact, for most institutional market makers, they have clearly defined delta limits by end of day, and even small price changes require them to rebalance their hedges. This over the whole market adds up to a lot shares moving, just to balance out your stupid Robinhood YOLOs. While there are some tricks (dark pools, block trades) to not impact the price of the underlying, the reality is that the more options contracts there are on a ticker, the more outsized influence it will have on the ticker's price. This can technically be exactly balanced, if option put delta is equal to option call delta, but never actually ends up being the case. And unlike shares traded, the shares representing the options are more unstable, meaning they will be sold/bought in response to small price shifts. And will end up magnifying those price shifts, accordingly.
NOPE and Earnings
So we have a new shiny indicator, NOPE. What does it actually mean and do? There's much literature going back to the 1980s that options markets do have some level of predictiveness towards earnings, which makes sense intuitively. Unlike shares markets, where you can continue to hold your share even if it dips 5%, in options you get access to expanded opportunity to make riches... and losses. An options trader betting on earnings is making a risky and therefore informed bet that he or she knows the outcome, versus a share trader who might be comfortable bagholding in the worst case scenario. As I've mentioned largely in comments on my prior posts, earnings is a special case because, unlike popular misconceptions, stocks do not go up and down solely due to analyst expectations being meet, beat, or missed. In fact, stock prices move according to the consensus market expectation, which is a function of all the participants' FEPF on that ticker. This is why the price moves so dramatically - even if a stock beats, it might not beat enough to justify the high price tag (FSLY); even if a stock misses, it might have spectacular guidance or maybe the market just was assuming it would go bankrupt instead. To look at the impact of NOPE and why it may play a role in post-earnings-announcement immediate price moves, let's review the following cases:
Stock Meets/Exceeds Market Expectations (aka price goes up) - In the general case, we would anticipate post-ER market participants value the stock at a higher price, pushing it up rapidly. If there's a high absolute value of NOPE on said ticker, this should end up magnifying the positive move since:
a) If NOPE is high negative - This means a ton of put buying, which means a lot of those puts are now worthless (due to price decoherence). This means that to stay delta neutral, market makers need to close out their sold/shorted shares, buying them, and pushing the stock price up. b) If NOPE is high positive - This means a ton of call buying, which means a lot of puts are now worthless (see a) but also a lot of calls are now worth more. This means that to stay delta neutral, market makers need to close out their sold/shorted shares AND also buy more shares to cover their calls, pushing the stock price up. 2) Stock Meets/Misses Market Expectations (aka price goes down)- Inversely to what I mentioned above, this should push to the stock price down, fairly immediately. If there's a high absolute value of NOPE on said ticker, this should end up magnifying the negative move since: a) If NOPE is high negative - This means a ton of put buying, which means a lot of those puts are now worth more, and a lot of calls are now worth less/worth less (due to price decoherence). This means that to stay delta neutral, market makers need to sell/short more shares, pushing the stock price down. b) If NOPE is high positive - This means a ton of call buying, which means a lot of calls are now worthless (see a) but also a lot of puts are now worth more. This means that to stay delta neutral, market makers need to sell even more shares to keep their calls and puts neutral, pushing the stock price down. --- Based on the above two cases, it should be a bit more clear why NOPE is a measure of sensitivity to system perturbation. While we previously discussed it in the context of magnifying directional move, the truth is it also provides a directional bias to our "random" walk. This is because given a price move in the direction predicted by NOPE, we expect it to be magnified, especially in situations of price decoherence. If a stock price goes up right after an ER report drops, even based on one participant deciding to value the stock higher, this provides a runaway reaction which boosts the stock price (due to hedging factors as well as other participants' behavior) and inures it to drops.
NOPE and NOPE_MAD
I'm going to gloss over this section because this is more statistical methods than anything interesting. In general, if you have enough data, I recommend using NOPE_MAD over NOPE. While NOPE in theory represents a "real" quantity (net option delta over net share delta), NOPE_MAD (the median absolute deviation of NOPE) does not. NOPE_MAD simply answecompare the following:
How exceptional is today's NOPE versus historic baseline (30 days prior)?
How do I compare two tickers' NOPEs effectively (since some tickers, like TSLA, have a baseline positive NOPE, because Elon memes)? In the initial stages, we used just a straight numerical threshold (let's say NOPE >= 20), but that quickly broke down. NOPE_MAD aims to detect anomalies, because anomalies in general give you tendies.
I might add the formula later in Mathenese, but simply put, to find NOPE_MAD you do the following:
Calculate today's NOPE score (this can be done end of day or intraday, with the true value being EOD of course)
Calculate the end of day NOPE scores on the ticker for the previous 30 trading days
Compute the median of the previous 30 trading days' NOPEs
Find today's deviation as compared to the MAD calculated by: [(today's NOPE) - (median NOPE of last 30 days)] / (median absolute deviation of last 30 days)
This is usually reported as sigma (σ), and has a few interesting properties:
The mean of NOPE_MAD for any ticker is almost exactly 0.
[Lily's Speculation's Speculation] NOPE_MAD acts like a spring, and has a tendency to reverse direction as a function of its magnitude. No proof on this yet, but exploring it!
Using the NOPE to predict ER
So the last section was a lot of words and theory, and a lot of what I'm mentioning here is empirically derived (aka I've tested it out, versus just blabbered). In general, the following holds true:
3 sigma NOPE_MAD tends to be "the threshold": For very low NOPE_MAD magnitudes (+- 1 sigma), it's effectively just noise, and directionality prediction is low, if not non-existent. It's not exactly like 3 sigma is a play and 2.9 sigma is not a play; NOPE_MAD accuracy increases as NOPE_MAD magnitude (either positive or negative) increases.
NOPE_MAD is only useful on highly optioned tickers: In general, I introduce another parameter for sifting through "candidate" ERs to play: option volume * 100/share volume. When this ends up over let's say 0.4, NOPE_MAD provides a fairly good window into predicting earnings behavior.
NOPE_MAD only predicts during the after-market/pre-market session: I also have no idea if this is true, but my hunch is that next day behavior is mostly random and driven by market movement versus earnings behavior. NOPE_MAD for now only predicts direction of price movements right between the release of the ER report (AH or PM) and the ending of that market session. This is why in general I recommend playing shares, not options for ER (since you can sell during the AH/PM).
NOPE_MAD only predicts direction of price movement: This isn't exactly true, but it's all I feel comfortable stating given the data I have. On observation of ~2700 data points of ER-ticker events since Mar 2019 (SPY 500), I only so far feel comfortable predicting whether stock price goes up (>0 percent difference) or down (<0 price difference). This is +1 for why I usually play with shares.
Some statistics: #0) As a baseline/null hypothesis, after ER on the SPY500 since Mar 2019, 50-51% price movements in the AH/PM are positive (>0) and ~46-47% are negative (<0). #1) For NOPE_MAD >= +3 sigma, roughly 68% of price movements are positive after earnings. #2) For NOPE_MAD <= -3 sigma, roughly 29% of price movements are positive after earnings. #3) When using a logistic model of only data including NOPE_MAD >= +3 sigma or NOPE_MAD <= -3 sigma, and option/share vol >= 0.4 (around 25% of all ERs observed), I was able to achieve 78% predictive accuracy on direction.
Like all models, NOPE is wrong, but perhaps useful. It's also fairly new (I started working on it around early August 2020), and in fact, my initial hypothesis was exactly incorrect (I thought the opposite would happen, actually). Similarly, as commenters have pointed out, the timeline of data I'm using is fairly compressed (since Mar 2019), and trends and models do change. In fact, I've noticed significantly lower accuracy since the coronavirus recession (when I measured it in early September), but I attribute this mostly to a smaller date range, more market volatility, and honestly, dumber option traders (~65% accuracy versus nearly 80%). My advice so far if you do play ER with the NOPE method is to use it as following:
Buy/short shares approximately right when the market closes before ER. Ideally even buying it right before the earnings report drops in the AH session is not a bad idea if you can.
Sell/buy to close said shares at the first sign of major weakness (e.g. if the NOPE predicted outcome is incorrect).
Sell/buy to close shares even if it is correct ideally before conference call, or by the end of the after-market/pre-market session.
Only play tickers with high NOPE as well as high option/share vol.
--- In my next post, which may be in a few days, I'll talk about potential use cases for SPY and intraday trends, but I wanted to make sure this wasn't like 7000 words by itself. Cheers. - Lily
AMZN Trade Retrospective: Collecting a $.37 Credit for the Potential to Make Another $50
There are different ways to trade in a choppy environment. Here’s a deep dive on how I attempted to use weekly options to trade a potential bounce in AMZN, and collected $.37 initially, for the possibility of making $50 more, even though the trade ended up being only an $.81 winner.
Last Thursday, 9/24, when $AMZN was trading at about $3000 a share, I was looking for a cheap way to play a bounce in the stock. During that time, my bias in the markets had begun to shift to a more bullish stance after seeing how the market had difficulty grinding lower. With that in mind, I wanted to play a potential bounce in tech. But I knew I didn’t want to pay a debit at all to play for a bounce that might not even happen, given how uncertain and choppy the markets had been, but I still wanted to set myself up to capture some large gains if AMZN did indeed bounce. Therefore, the strategy that made the most sense to me, was a Call broken wing butterfly. Given that I’m a very short-term options trader who loves trading weeklies, I was trying to look for a cheap butterfly for the upcoming week that I could put on for a net credit. After exploring the options chain, I came across the +1/-2/+1 3300/3350/3450 call broken wing butterfly for the Oct 2 series. This fly, at the time (on Sept 24), was trading for a total of $.37 credit. Meaning, by putting on that butterfly, I would get paid $.37, and the following scenarios could happen:
If AMZN decided to tank or hang out sideways and never get up close enough to the butterfly to expand the spread in my favor, then I’d walk away pocketing the $.37 credit
If AMZN slowly crept up to reach exactly 3350 by expiration, I’d not only get to keep the credit, but also be able to sell the butterfly back out for $50. Of course, it doesn’t need to reach exactly 3350 by expiration. If AMZN slowly worked its way up to near 3300, then the butterfly would expand very nicely as well.
If AMZN blew past 3400 by expiration, I’d see a loss, up to a maximum of $50 / spread (if $AMZN moves past 3450). That’s because the 3300/3350 long call vertical of the fly provides 50 points of coverage before I essentially start losing money from the 3350/3450 short vertical, up until that 3450 kicks in to cap off further upside losses.
So that is a rough outline of the potential scenarios that would happen with this trade. Given the choppy market conditions, I was ok with risking $50/spread (point #3), in order to not lose money if I’m wrong on direction (point #1), while at the same time, keeping myself open to the possibility of the butterfly expanding in my favor (point #2) for some potentially very large gains. But satisfying point #3 is tricky. I needed more data points suggesting that $AMZN wouldn’t surge higher early on in the trade. Because if $AMZN did surge higher early on in the trade, then while the 3300 long call would rise in value, those two 3350 short calls would also rise in value, and because there’d still be some time value left, they could be very juiced up and eat away at the profits of that 3300 long call, so much so that the 3450 long call won’t even be able to offset those losses, especially given how far out of the money that 3450 call is. AMZN on 9/24, daily timeframe Looking at the chart above on 9/24, we can see that AMZN was trading at around $3000/share. In order to reach $3300 (where the first long call of the broken wing butterfly is), the stock would need to
Breach the 38% fib retracement (~AMZN=3131) of the move from the 9/2 high to the 9/21 low,
Breach the 20MA and 50MA
Breach the 50% fib retracement (~AMZN=3211)
Breach the 61.8% fib retracement (~AMZN=3292)
before finally reaching the 3300 long call. All of these levels, I felt, should provide some resistance for AMZN to have to chew thru over the following week, before it even gets to the long call. And by that time, if AMZN did reach 3300, then the 3300 long call would still have a lot of extrinsic value left (somewhere around $20 on the last day), while the 3350 short calls would be very cheap (each around $5), so the entire spread could be roughly worth $10. Which would be great, because that means I’d be getting paid $.37 to make another $10. So with all of the above considered, I chose to take on that upside risk, for a chance to make potentially $50 (realistically I try to aim for just half of the max profit: $25, and start harvesting profits and peeling off the flies at around $5-$10), and that day on 9/24, entered the Oct2 3300/3350/3450 call broken wing butterfly for a $.37 credit. After entry, on Friday 9/25 and Monday 9/28, AMZN made steady progress upwards, from 3000 to 3175, breaching the 31.8% retracement and tagging the 20MA and 50MA from below. AMZN on 9/28, daily timeframe but this move wasn’t large and fast enough to expand the value of the 3350 short calls. In fact, theta did a great job draining those short calls, while the 3300 long call did a good job retaining its premium, so the butterfly had already expanded a bit in my favor, and I was sitting at about a small $1.00 profit.
However, on Tuesday and Wednesday, AMZN began to stall out. By the end of Wednesday 9/30, when it looked like AMZN was putting in a topping tail, I decided that AMZN might not be able to make it near 3300 by expiration Friday, so I wanted to take in a bit more credit while I still could, before theta drained more of that 3300 long call. At the time, the spread was trading for almost $2. That’s when I made a slight adjustment to the spread and sold the 3300/3310 call vertical. AMZN on 9/30, daily timeframe This essentially rolled the 3300 long call up to 3310, and I was able to collect a small $.44 credit for it. However, this adjustment did open me up to an additional $10 of risk to the upside, because now, the long call vertical portion of the butterfly is only $40 wide (instead of $50). Still, with only 2 days left for AMZN to go higher, I felt comfortable taking on a bit more upside risk knowing that theta is going to be working hard to drain those 3350 short calls if AMZN did decide to surge higher. And at that moment, I actually wanted AMZN to move more towards my fly. My deltas were still positive, and the risk graph showed that a move towards the short strikes of the fly would expand it by another $4-5 by Thursday. So after this adjustment, the trade stood at a $.81 credit, and the profit potential on the fly was now $40 instead of $50. Which is still pretty good.
On Thursday, AMZN showed some strength and closed above the 50% fib (3211), which meant that if on Friday, AMZN worked its way up to around 3300, the fly could potentially be worth $5-10. Things were looking good (on any continued bullishness, the next target for AMZN was the 61.8% fib retracement at ~3300). So I left the trade alone without making any more adjustments. AMZN on 10/1, daily timeframe
Unfortunately, on Thursday night, news broke out that Trump was diagnosed with Coronavirus, and the market fell lower. By the open, AMZN was already trading at around 3150, roughly 150 points below the fly. The spread had instantly lost all of its value, so I basically let it expire worthless and walked away pocketing the $.81 credit. https://preview.redd.it/mpwrkjpk6xq51.png?width=4096&format=png&auto=webp&s=8dd7f4da7b000b2266ab57a3c23c1863f9423704 While the trade did not work out as well as I had liked, the important thing to note is that I was able to get paid even when the trade didn’t go in my favor. With options, there are ways to trade an underlying to a certain target without ponying up a debit, albeit at the cost of introducing tail risk, while offering the possibility of very large upside. This may be a style of trading that one can consider employing when the outlook of the markets is uncertain, as long as the trader is willing to make the necessary adjustments to control risk. Which leads me to the following section:
What if AMZN decided to surge very early on during the trade? What if AMZN had surged to 3300 with 4-5 DTE, hence juicing up the short calls and causing the butterfly to take on large negative deltas?
Even though the position would be very theta positive, I would pony up the debit to cap off the upside risk by buying the 3400/3450 call vertical, hence turning the 3300/3350/3450 broken wing butterfly into the 3300/3350/3400 balanced butterfly. From there on out until expiration, I would look for ways to reduce the debit incurred from that adjustment.
But what if AMZN tanked afterwards? You could end up getting whipsawed.
I’d rather be safe than sorry and make the necessary adjustments to avoid getting run over, because I don’t like playing the hope card. I could always undo the adjustment and look for ways to collect back more credit (at the cost of introducing risk elsewhere), depending on my new directional bias on AMZN at the time.
Your maximum loss is so large, $5000. I’d never make that bet, I would never risk $5000 to make $5000.
This style of trading is not for everyone. There are different ways to perceive risk. I don't really think of risk as binary as “max gain vs max loss”. If the trade goes against me, I’m not going to open myself up to the possibility of eating the maximum loss. I’m going to manage that risk and make sure that I don’t lose any money at all on the trade. Basically, I’m not going to just put on the trade, walk away to the prayer room, and come back at expiration and hope that AMZN expired at 3350.
Why not just join thetagang and slap on iron condors / credit spreads in this environment? You could’ve collected more credit by selling a 50 point wide put vertical with your bounce thesis.
Different traders have different styles. I personally don’t like pure premium selling strategies. I’d rather have long options in front of the shorts to open myself up for some large upside and convexity in the P/L curve, rather than limit myself to the concavity of pure premium selling strategies. Having long options in front of the shorts also helps me sleep better at night.
It’s hard to read this. Is there a more visual explanation?
Here’s a video on it: https://www.youtube.com/watch?v=8uq76fZ3EME TL;DR - I used weekly options to trade a potential bounce in AMZN, and got paid $.37 initially to do so, for the possibility of making $50 more. While the trade did not pan out, I walked away pocketing $.81 for being wrong.
The morning alarm woke up Ghen. With an annoyed sigh, he stretched out his arm and silenced the foul-sounding chirps. Slowly sitting up in bed, he let out a deep yawn and got to his feet. Running a couple of chitinous fingers along his antennae to stimulate them to life, he made his bed and then went to his closet. Today was a work day, so he needed his suit. Once the pants were on, he stretched out his wings so that he could button up the shirt, then relaxing them once all the buttons were secured. Dressing for the day was done, now for the morning meal. Entering his kitchen, he took out the chilled leftovers of the evening meal last night and popped it into the radiator, first defrosting and then slightly cooking it. During that process, he also fished out a ceramic cup and placed it in his brewer, serving himself some synthesized caffeine. His idle thought led him to being amused that, when eaten directly off a plant, it has a concentration that could kill him three times over. But after going through some refinement and roasting, all it does is make him hyper. Once the meal was put together, his plate of heated leftovers and a cup of almost-piping-hot cup of Xia's, he took his time to enjoy it. His communicator vibrated. When he looked, he found it was from his boss. "Hello?" Ghen answered. "Ghen, the meeting's been moved up to a few minutes from now." His boss, Xkik, announced. "Apparently higher up has something important they want to say. We have a terminal ready for you, I'll message the login details." "Wha-, what's so important?" Ghen asked in bewilderment. "Did a water line rupture or something?" "No, nothing like that." Xkik replied with a slight chuckle. "It's actually about the rumors we've been hearing. That human corporation wanting to acquire us? That's what they're talking about." Ghen could feel everything inside his thorax drop to the floor. "That must mean it's true then, right? Did we get sold off by the Queen to this company then?" "Show up to the meeting and you'll get your answer." Xkik said simply. When he finished, Ghen got the notification on his communicator. There's the login details, allowing him to remotely attend the meeting. "They're about to start, hurry up." Once Xkik disconnected, Ghen worked fast to login and set up the remote viewing. Once everything was done, his screen started transmitting the meeting room. It was already packed. And off by the main board, he saw his answer. There was a human, resting against the wall on his two legs. Standing right in the center of everyone's view was the coordinator, Tizx, watching the clock periodically. As soon as the meeting's start time was reached, the coordinator began. "Alright everyone. I realize that this was rather short notice, so I want to say how appreciative I am that you made it. Now then, let's just get right to it. For some time now, many of you have been hearing rumors that a human corporation has been interested in us. Why? We never really knew. We're just an organization responsible for finding, extracting and providing water to the colony here all under the direction of the Queen herself. Well, as of now, I have the answer for you. Why don't I let Ryan say that?" Stepping back, Tizx motioned for the human, Ryan, to take over. With a nod, Ryan practically bounced over and then took the position. "Good morning to you all. I hope my Zazk is passable, heh. Anyways, the answer to those rumors, is yes. Terran Galactic Company is indeed interested in you all. Which now leads to me. I'm here to announce that, effective yesterday evening, this water company is now a subsidiary of Terran Galactic Company, under the name of Zilia Water Delivery." Many other sub-coordinators broke into hushed conversation, no doubt speaking their thoughts with each other about this move. Ghen could only wonder if this was even a good thing. What will the humans do? Will he still have his job? Will he have to learn how to deal with the ruthless humans? "Now, I am well aware this is quite the...uh, change." Ryan continued. "That's why I'm happy to inform you that, no, nothing negative or detrimental will happen to you. You just have new people to answer to. Operations will continue as normal, everybody here will still keep their jobs. The only real change any of you will personally experience is that Coordinator Tizx here will now report to someone else. On behalf of the Terran Galactic Company, we are extremely excited and are looking forward to working with you all. Thank you for your time." A week later. At least Ryan wasn't lying. After the initial shock wore off, things went back as they normally did. There were no terminations, no reductions in annual pay or anything. Nothing really changed. At least until this new meeting was called. Ghen was at the worksite this time, so he took his seat and watched as, once again, Ryan led the meeting. "Hello again, everyone!" He said cheerfully, his Zazk noticeably improved. "I hope I didn't end up looking like a liar, right? Everything's still normal, all that?" All the zazk in the room confirmed, providing comments to their pleasant surprise as well as lingering thoughts. "Awesome! Awesome." Ryan said jubilantly, his fleshy mouth revealing his bone-white teeth. "Now then, you're probably wondering why I'm here again, right? Well, I got another fantastic piece of news for you all! Two, actually. I'll start with the first: Zilia Water Delivery has just completed its IPO. The company is now publicly traded!" Ghen and the others voiced their confusion, having no idea what in the name of the Queen Ryan was talking about. What was Ryan talking about? What's an IPO? And why exactly is being publicly traded such a significant thing? "Oh, you guys don't know any of that?" Ryan asked in surprised confusion. After everybody confirmed, he let out a quick huff as he began his explanation. "Well, to begin, IPO is short for Initial Public Offering. Basically what that means is that, before today, Zilia was privately held. Only certain individuals could buy and sell shares here. But now that we're public? Literally anyone can buy and sell shares in the company, hence us being publicly traded." "Uh, what's a share?" Ghen asked, still completely lost. "Oh, boy..." Ryan muttered under his breath before returning to his peppy image. "To simply put it, a share is short for having a share of ownership in a company. When you buy a share, you're buying a piece of ownership, and when you sell, you're selling that amount." "So wait...if someone buys a share, they're a co-owner then?" One of the other team coordinators asked. "If they get enough, yeah." Ryan nodded. "You need a lot though, and that really depends on the company. If I had to give an answer though? I'd say usually you need to have a lot more shares than a lot of people combined to be officially a co-owner, but we call that being a majority shareholder." "And how do we do that?" Ghen asked, now growing curious but still not understanding why such a concept exists. "Simple. Buy shares." Ryan said simply. "And that leads into the second piece of awesome news. Zilia's corporate has a product in mind, a premium-package of water delivery. Instead of the usual water that you pump out, filter and ensure its potable before delivery, with the premium package, not only will you get that, but you'll also get all of the required nutrients and vitamins the zazk body requires! And they feel you guys have the best expertise and understanding to pull it off! So, here's what we're offering as a good-faith bonus: A 25% increase to your annual salary as well as being given stock options." Ghen wasn't sure about the second part, but the salary definitely got his attention, as well as everyone else's. Although his job was considered to have a good pay, Ghen isn't going to say no to a higher salary. In fact, he's been focusing his work on getting a promotion so he can come home with even more credits in pocket. "What do you mean by stock options?" Ghen asked after some time. Ryan let out that smile again, the one that revealed his teeth. "If you choose to transfer over to the new group, you'll be provided 50,000 shares in Zilia itself. Why's that awesome? Let me walk you through it. Right now, our last closing price per share was 3.02 credits. And if you have 50,000 shares during that time, you're sitting on 151,000 credits, if you cash it out immediately." "And why shouldn't we?" One of the coordinators demanded in an ambiguous tone. "Because the price per share changes a lot." Ryan explained promptly. "When we got done with the IPO? It closed at 2.73 a share. Right now? My money's on the closing price being 2.99 a share. However, we are extremely confident in this premium package being successful. If it does? Well, my bet is that the share price will skyrocket to 3.12 a share. If you hold those shares and the price gets to what my bet was? You'll instead get 156,000 credits. Just by holding onto them, you just made an additional 5,000 credits!" "And what if we have more shares?" Ghen questioned, now getting excited at the prospect of free money. "Even more money!" Ryan laughed a bit. "And don't forget about dividends, but that's for another time. The premium group is gearing up right now, we just need the workforce. If any of you wants in, I'll be back tomorrow with all the forms needed to make it official. Take the day and tonight to think it over, yeah?" Everything else melted into a blur. Ghen was practically on autopilot that whole day. Was this the secret to the humans' incredibly massive economy? How so many of them have amassed so much money out of nowhere? All you had to do was just buy this share out of a company and you get more money without even working? As soon as he got home, Ghen knew what he was going to do during the night. After feverishly looking through the galnet, now having the human race connected to it, he looked and gathered up as many books that were translated into zazk as he could find, all talking about the human economic system. The last time he undertook such an intensive study was during his primary education phase. And during his search, he even found forums on the galnet that were completely dedicated to the human's economy. All of them talking about strategies on what company, or stock, to pick. How to analyze a company's performance to determine if it was worth the money, or it had potential to grow over time. And that was when he discovered the humans found another method to the extremely simple buying and selling process. There were humans and some other immigrated aliens who made five times what Ghen could receive over a simple month just by watching the share prices during trading hours, and then buying and selling them at the proper times. Ghen's mind was just absolutely flabbergasted. He thought it was just some strange concept only aliens could make, but no, not with the humans. They've practically made their economy into an art or a science. No, not even their economy. Everything. If humans can see a way to make money off of it, they'll do it. And if there isn't, they'll look for a way. Healthcare was monetized. Galnet services, transportation, shopping at the store, they even made all of their utilities into profit-oriented companies. And it was there that Ghen paused, the realization slamming into him. Everything was monetized. Which means, if you don't have the money for it, you're not getting it. Right? Are the humans truly that ruthless? So obsessed with making money? To the point that they're willing to deprive their own people of the absolute necessities if it's a source of credits? Ghen let out a scoff. There's no way. Nobody is that cruel and callous. He's never been to the United Nations. He can't rely on what a bunch of random people on the galnet says. He decided that from here on out, he'll only go as far as saying that humans are a little obsessed with credits, nothing more. ... There he was. Ryan, sitting in the office provided to him. And there was a rather large line leading to him. Looks like word got around. Although, the line wasn't as large as he expected it to be. Maybe the others thought it was just a ruse? That there's no such thing as making free money by spending it on such a made-up concept? Ghen only knows that, if it is a ruse, it's an extremely elaborate one, where all of the humans are in on it. And he believes that's just extremely ridiculous. At the end, if he's unsure, he'll just take the transfer for the very real increase in his very real salary. And although he spent a very good chunk of the night reading up on how humans do things, he's still going to play it smart. He'll leave his 50,000 shares alone and see where it goes from there. "Good morning sir." Ryan greeted warmly once Ghen took his seat. "Now, name please?" "Ghen." He answered, barely keeping his nerves down. "Alright...and what's your position at this location?" Ryan questioned after scribbling on his form. "I monitor the pumping stations near the extraction sites." Ghen explained, staying on point. "To be more specific, I check to see if they're in need of maintenance, as well as reading the flow rate that's determined by the calculators installed there. If there's too little for what's needed, I pump out more. And if there's too much, I pull it back a little." "Nice...and how long have you been doing it for?" Ryan complimented with a nod. "As of tomorrow, ten years." Ghen replied, voice quickly changing to minor awe once he realized that fact. "Excellent. Do you have anyone in mind you'd like to replace you here?" Ryan questioned after another scribble. "If you don't have anyone, you're free to say so." Ghen took a moment to think it over. A bunch of names went through his mind, but one stuck with him. "Tilik. He's just been accepted here, but he's learned quickly. Very attentive and he always catches something subtle. I think he'll do really well in my position, even better actually." "Tilik, really?" Ryan questioned with a little shock, going through his completed forms. Ghen felt a short sense of panic in him. Did something happen, or was Tilik actually transferring? His answer didn't take long to reveal itself. "Right, Tilik was actually one of the first people to want to transfer here. He's actually requested to be part of the testing teams specifically. Do you have a second choice?" "Um...no, actually." Ghen replied, feeling a little ashamed. "Tilik was my only choice, to be honest." "Hey, don't worry." Ryan said assuringly with his hands raised. "Nothing wrong with that. Sometimes, there's just nobody up to snuff, right? 'Kay, so, last question. Is there anything specific you'd like to do when given the transfer?" "If you need someone monitoring new pumps, I'd be happy to do that." Ghen stated. "So basically same job but with better payoff, am I right?" Ryan grinned. "I hear you. Sometimes, we're just not paid enough for what we're doing. I know I think that sometimes. Uh, our secret, yeah?" "Yeah, our secret." Ghen nodded, thinking it'd be better to have friendly relations with the human, just in case. "Awesome. Back on topic, that's it." Ryan announced, placing the form on his pile. "We'll give you a call when you're accepted." "Oh, uh, that's it?" Ghen questioned with a shrug in shocked surprise. "What, expecting a question like, why do you want to transfer?" Ryan chuckled a bit as he leaned in his seat. "You can bullshit all you want, but we both know the answer. Sweet money and stock options. Not saying that's a bad answer of course, just that it's pretty obvious." "I suppose it is." Ghen commented, realizing the point. "Also, you mentioned this...dividend? Is that for Zilia shares?" Ryan laughed a little bit before nodding. "Yep, announced before I came here. About 0.43 per share. Want to know why that's awesome? Instead of waiting for the proper price to cash out your shares, now? The company pays you for each share you hold." "A...Are you serious?" Ghen demanded, flabbergasted. Ryan nodded with his now-trademark grin. "Dead serious. If you get the transfer, and get those 50,000 shares? A little head math...right, if you hold onto those, in addition to your salary, you'll now annually be paid 21,500 credits, if you keep it at 50,000 shares. Only you can decide to sell or buy shares." Ghen just stood there silent and motionless, no idea of whether to believe it or not, to which Ryan just laughed. Once he walked out of the room, he managed to snap back to reality. Again, just focus on the very real pay-raise. He'll deal with the other parts later. After he returned to his spot, he spotted Tizx approaching by his desk. The coordinator seems to be as casual as always. "I saw you in that line a bit ago, Ghen." He said as he leaned on the desk. "Guess you're really taking that human's word?" "I mean, I don't know about all this share business or what not." Ghen began with a shrug, his tone sounding a little defensive. "But I mean, having a bigger salary? Course I'm going for it when I can. And if all this magic credits turn out to be real? You realize we can live like the royal servants, right? Get the best cars, the nicest food and all that?" "I'd be very careful, Ghen." Tizx warned in a sudden shift in tone. "Don't trust those humans. The way they just...obsess over money? Come up with more and more insane ways of getting credits? I don't know, it just makes my wings twitch." "You think this is a bad idea?" Ghen asked with a little surprise at the change-in-demeanor. "I think you should be careful, with the humans, and with what you're saying." Tizx replied, straightening his posture. "I wouldn't put it past those Earthmen to backstab you if it gets them a few more credits. And we all know how the royal servants get if any of us lowly commoners start thinking we can break into their circle." "I hear you, I'll be on my guard, promise." Ghen stated with a nod. With a confirming nod of his own, Tizx returned back to his duty, walking past Ghen's desk. Several weeks later. Everything became so much better. Ghen got the transfer. He didn't need to relocate to a new residence either. And after he was walked through into learning how to manage his stock account, and seeing that new form of payment in his hands, he already felt as though he made the best decision. But it was only when he decided to take those shares more seriously that he became privy to what he was given. After receiving the dividend payment, and actually seeing it was real, valid credits after transferring it to his main bank account, all he could describe was the most powerful high he ever felt. While his first thoughts were to buy himself a royalty-class car, some nicer furnishings for his home, or even a better home entirely, he ended up going the smarter route. After going back to his stock account, he discovered that Zilia's shares rose to about 3.22 credits in price. Knowing that this was the easiest money he could ever make, he took all of his dividend earnings and bought more shares in Zilia, bringing him to owning 56,891. And from his new regional coordinator, a human named Dylan, tomorrow is the grand release of the premium package. For just a monthly rate of 14.99 credits, the tap water will now include a sizeable portion of all nutrients and vitamins required in the zazk physiology. Still, Ghen has to admit. He's not entirely sure why anybody would want such a thing, if they'd even go for it. But, as long as he's practically swimming in easy credits, he won't pay much attention to it. And just like when he was intensively studying the basics of how the human economy worked, he barely got any sleep. His mind was constantly thinking about the things he would buy. Or rather, what other stocks to put his credits into. Even now he can still hardly believe it. Just spend your money on some, make-believe thing and, if you wait long enough and picked the right stock, you'll get more than you spent back? His mind even wandered onto what human colonies, or even their homeworld, Earth, was like. If everybody was making so much money, what kind of things would they offer? What kind of ridiculous service or product or item can you get? He's even debating on joining some forum and just asking around. Explain how he's new to how humans do things and was wondering what he should expect if he's successful. By the time he felt like he can go to sleep, the binary-stars of the system were rising from the horizon. After getting out of his bed and changing to clean clothes, his mind returned onto what-ifs. What if he bought better clothes? He's had his eye on that human brand of luxury clothes, Tessuti di Venezia, that's been all the rage amongst the royal servants. Or maybe he can go on vacation and just check out Earth for real? It was a short ride to his workplace from his home. After getting stuff his stuff and preparing to walk through the doors, he heard the roar of a car grow louder. When he looked, he saw the sleekest and quite possibly the coolest looking car he's ever seen. Each time the engine revved it would startle him, both from how harsh it sounded as well as just how intense it sounded. And after it parked, he saw the doors pop out and then slide along the body back. And there, he saw Tilik, the seat literally turning and extending out a bit before he got off. As soon as he saw Ghen staring, he struck a rather prideful pose after putting on his lab coat and then sauntered over to Ghen. "What do you think?" Tilik said, without any doubt inviting praise or compliments. "D...Did you actually buy that?" Ghen asked, unable to tear his eyes away from the car. "You're Queens-damn right I did!" Tilik laughed happily. "Thing takes off like a starship, has temperature-controlled seating, all-in-one center console, barely any bouncing on rough roads. Hoof, best decision I've ever made!" "How much did that thing cost?" Ghen asked after letting out an incredulous laugh. "Five million credits." Tilik replied, earning an absolutely shocked stare from Ghen. "And thanks to the incredible salary I have, in addition to all these shares and dividends, I'll pay back the credits I borrowed in no time!" Ghen needed a few moments before he could speak again. "All I've been doing is buying more shares." Tilik laughed and then patted the now-envious monitor's back. "Smart man. I got a little carried away, yeah, but not anymore. Any spending credits I got, going right back to investing. That's what it's called right, investing?" "Yeah, it is." Ghen nodded, feeling a fire light up in his thorax. "And also? Today's the day that the premium water thing is being released. Here's hoping it starts out well, right?" "Oh it will, trust me." Tilik chuckled as they both began making their way inside the workplace. "Lots of research, lots of study. By the Queen, so much of it...it'll make your head spin." And after hearing that, Ghen had a moment of realization. "Hey, Tilik? How did you get such a nice position anyways? Weren't you just studying under me before the humans came along?" Tilik let out a sigh after opening the door. "I'll be honest, I never wanted your job. Not because it's boring or terrible, just...I didn't suffer so many sleepless nights in the science academy just to be a glorified button pusher. This is what I've always wanted. Doing science, solving problems rather than just applying the solution, you know?" "Wait, you got an academic certificate?" Ghen questioned, completely floored. "How did you end up beneath me then? I should've been answering to you!" "Simple." Tilik gave a heavier sigh. "A royal servant was asking for the same job I was. Take a guess at who got it." "Ouch. Good thing the humans came along when they did, yeah?" Ghen was taken aback. He never heard anything about a servant taking a job at his place. "Looks like you're proving yourself to be well suited." "By the Queen, of course I am." Tilik nodded. "Like I said, I nearly broke my wings through so many nights, got certified top of my class, all just to get pushed to the dirt because someone who was born into a particular family wanted the same thing I did? I know I'm smarter than any of those empty-skull servants back in the Center. I know that, whatever, uh...corporate? Yeah, whatever corporate wants out of science, I will xeek give it to them." "Well, let me know how things go in the lab." Ghen said, admiring his drive as they neared the main office floor. "Because this is where the button pusher needs to go." Tilik let out a laugh as he nodded. "Hey, how about we meet up at Queen's Fine Eatery tonight. I'll pay, yeah?" Ghen, at first, wanted to admonish him for choosing such an outrageously expensive place to go. But he quickly realized that, he truly is good for it, thanks to the humans. "Well, hey, if you're paying for it." ... It was a fantastic opening. After being told what news sites to keep in mind for stocks, he first heard it from Dylan, and then got more detail on Business Today. There was such a massive demand right from the start that Zilia needs to increase extraction just to meet it. But what really got his attention was the effect it had. Zilia Water Delivery's share price just blasted off. After seemingly holding steady at about 3.15, by the time he got home and logged onto his account, it already reached 7.04 a share. The calculator on his account told him that he got a value-gain of 54.26%. Never in his entire life had he felt such...joy. With all of the shares he currently has? He's sitting at 400,512.64 credits. He knows that it is woefully pathetic compared to what the royal servants have just in their pockets, but the fact that he has such money, just by owning some intangible concept? Why even work at Zilia? Why doesn't he just sit at home, figure out what companies to invest in and make his money that way? What's even the point in working a real job, getting a pathetic pay when you can just take the money you have, determine where to spend it, and get triple back? All just sitting on your wings at home, researching? He was so wrapped up in his excited high that he completely forgot he was going to meet Tilik at Queen's. After quickly and haphazardly putting on his nicer clothes, he got to the place only a few minutes late. Tilik was there by the guide, no doubt having been waiting for him. As soon as he strode up, Tilik's wings stiffned out some. No doubt he must've seen the numbers as well. "I can see your wings, Ghen." Tilik began with an excited chuckle. "Made some serious credits?" Ghen let out an incredulous scoff, struggling to find the words for a moment. "Incredible. All I'm going to say." "Likewise." Tilik chortled some before nodding to the table guide. "All here. Table please?" "Right this way, sir." The guide said politely. It was a short walk, travelling between round tables. The vast majority were populated by zazk, but Ghen was surprised at seeing a few humans here as well. No doubt corporate workers checking out the local food. He did spot them having bowls filled with some kind of mass. Some were brown, others white with what looks to be black specks on them. They arrived at their table. A rather nice one, affording a view out the windows into the busy colony streets. Once Tilik and Ghen settled in, the guide handed out the menus. "May I suggest our rather popular option for tonight?" The guide began. "Human ice-cream. Ingredients sourced from Earth itself. Very cold, but incredibly sweet, and coming in many flavors. The most popular amongst us is called vanilla-bean. The vanilla itself soaks in the cream for much of the process, and then the innards sprinkled on top of it near the end. Rumor has it that the Queen herself has demanded personal shipments of such a treat straight from the home of vanilla, an island on Earth named Madagascar." Ghen didn't even spare a single thought. "Vanilla bean ice cream then, please." "Same." Tilik seconded when the guide glanced to him. With a slight bow, the guide proceeded to ferry their orders to the kitchen. Thankfully it was just a short wait before the guide returned, carrying a large plate containing bowls of ice cream. Ghen could feel the saliva on his mandibles as the bowl was placed before them. He could just feel the cold air around that glistening mass of sugary goodness. The white snow decorated with the black dots of vanilla bean. Once the guide left them, Tilik and Ghen both dived in at the same time. As soon as the ice cream entered his mouth, touched his tongue, he exploded in incomprehensible bliss. The sweetness, the smooth and creamy mass, even the taste of vanilla he wasn't sure about was just absolutely delightful. It was so overwhelming that his entire body limped, slumping in his seat as he was forced to ride on the surging tide of joy and happiness sweeping over him. Tilik was no different. He too was taken completely by the effects of the ice cream, his wings fluttering some against the seat. Ghen could hear some noise. It was the humans they passed by. They were chuckling, grinning, and glancing over at them discreetly. Unlike the two zazk, the humans seemingly just enjoyed the ice cream as if it was just another nice dessert to them. Or perhaps they couldn't allow themselves to succumb to the high? And as soon as the wave of indescribable bliss and happiness subsided, Ghen knew. He just knew. This was the life. He wanted this. The ice cream was just the beginning. So many things denied because he didn't have the credits, or worse, not the blood. Because he was just a drone in the great Collective, even if he had the credits, he wasn't allowed because of what caste he was born in. That fire that sparked in him when he saw Tilik's new car? It exploded into a raging firestorm. And when looking into Tilik's eyes, Ghen could see the same. He was on the same page as Ghen was. Both of them were sold. They have the credits. And the humans? If you can pay for it, they'll never discriminate. All they cared about is if you have the money. And by the Queen, Ghen and Tilik will endeavor to amass as much credits as physically possible. The rest of the night faded into a blur. A blur that evokes only one thing. Bliss. It was only when he walked through the door of his pathetic hut that Ghen's mind snapped back to focus. His mandibles felt sticky. And he felt a weight in his stomach. How much ice cream did he eat? Whatever it was, he ate such volume that the lower-section of his throax extended and rounded out, visible even under his shirt. He felt something odd in his pocket. It was a receipt. 43,000 credits for ten bowls of vanilla bean ice cream. Was that ten bowls for both of them? Or individually? Ghen didn't care. He's good for it. Returning back to his calculator, he acted upon the decision that he had made at that eatery. He's acquiring as many books about investing and stock trading as he could find, frequent and study all the discussions and arguments presented by other like-minded individuals such as he, all to ensure he can live the good life. And he had a very good feeling Tilik was doing the exact same thing. Well, first, the gurgling in his stomach, as well as the feeling of something rising demanded his attention. Looks like he'll need to take the night off to let his stomach get back to normal. Three Years Later. Ghen looked out beyond the horizon, seeing the colony that he grew up in. On the far side was where his old house was. With only a simple robe on, made from the finest silk from Earth's nation-state of China, he relaxed in his seat. It was a long road. Stockpiling credits from pre-existing investments and from subsequent pays, he and Tilik made it. From having only half a million in assets and cash, now transformed to over eight-hundred million. And now, his call contracts on American Interstellar? They've just announced a breakthrough in their next generation of warp drives, reducing the speed coefficient even further, resulting in far faster travel. And with that, their stock price climbed sharply. Another hundred million credits in the bank. Soon, very soon, he and Tilik are about to become the galaxy's first zazk billionares. But that's not enough. There are many humans who are billionares. Only those he can count on one hand are considered trillionares. He's going to break into that circle. He and Tilik. Looking beyond the colony, he saw the abandoned building of the workplace he transferred to when the humans arrived. Turns out, the reason for such a high demand was that the humans also slipped in sugar to the tap water. As soon as that broke, many influential royal servants demanded investigations and outright banning of Terran Galactic Company's influence over the former government division. Zilia's stock price plummeted. But thanks to an advance tip from his human coordinator, Dylan, he and Tilik made a put contract. And that's where they struck gold, as the human saying goes. Dylan warned that if they were citizens of the United Nations, they'd be investigated and convicted for insider trading. But, since they weren't, and the Collective were only just introduced to capitalism, there's no risk at all. Now the colony is going through a withdrawal phase, Zilia has been dissolved and reformed back as a government division and are currently at work re-establishing the standard, plain water delivery. "Well, shit." Tilik muttered as he walked up to Ghen's side, taking well to human speech. "Looks like you win. American Interstellar's announcement really was a good thing. There goes a million credits. Ah well, the Royal Shipyards will make it back for me soon." "Oh? Did they just go corporate?" Ghen asked curiously, glancing to Tilik. "Hell yeah they did." Tilik chuckled, sitting down. "Queen and her retard servants fought it hard, but Royal Shipyards is now officially a human-style corporation. And, to a surprise to all the xenophobes in the galaxy, they're already being offered contracts for ship production. That'll raise the stock price pretty good." "What's that human word...?" Ghen muttered, already having a reply in mind. "Dick? Yeah, calls or suck my dick, Tilik." Tilik roared in laughter. "Already made them. Forty credits a share by this day next month." "I have half a mind to go thirty." Ghen chuckled. "Either way, until then, I heard from Dylan that he knows a guy who knows several prime human women who happen to be into zazk." "You're interested in women?" Tilik said as his wings fluttered. "With how often you tell me to suck you off, I'd have thought differently." "Oh, I always thought it was you who was into men." Ghen responded dryly. "Just wanted to be a good friend, you know? Considering how you never seem to make it past, Hey sweet thing, I'm rich you know." "Oh, go fuck yourself." Tilik countered with a little laugh. After he stopped, wings stiffened, he looked to Ghen. "So, know any royal servants we can put the squeeze on for more revenue streams?" "I got just the one." Ghen nodded, sitting up. "Fzik. He's been fighting to control the ice cream trade. Worried it's a corrupting influence. Got done talking with the human CEO of Nestle earlier. If we clear the way, he'll know how to squeeze a little more gains in stock price when he makes the announcement." Tilik's wings stiffened even more, signaling his approval. "Alright, time to throw some credits around, yeah?" AN: Sorry for the period of no updates. College is starting up, lots of stuff to clear and work out. Not sure why but I just got a bug up my butt about incorporating money and the stock market into a short. Here it is. Sorry if it seems abrupt, character limit fast approaching. Let me know how you guys think about it!
I am not a top-100 player, as given the inevitable RNG of effects, matchups and draws in card games, and the lack of rewards for ranking up in LoR, I simply don't see the point in painstakingly grinding up to such a level. The highest I've climbed is low Diamond, but considering the above knowledge, I believe that at a certain skill level (perhaps at around Platinum), it's more about how much time one can put in than how skilled they are. HOWEVER, considering all this, I have the absolute conviction that this deck is a top-100 worthy deck.
This is the only deck that I've played since Day 1 of Call of the Mountain, with various modifications, and I believe that it is a completely undiscovered meta unicorn. I've never faced a similar deck on ladder, and my deckbuilding experiments with any other archtypes have left me completely unsatisfied with the lack of interaction and agency, as well as the sheer counterability of the vast majority of tools currently out there. A lot of people are frustrated with the current meta - a lot of points of which are covered by BruisedByGod in his recent video critique. To summarize his main points:
Most answers are completely outclassed by threats
Sheer lack of healing options locks out deckbuilding choices
Most top-tier strategies prey on lack of interactivity (Pirate Burn, Lee Sin OTK, Star Spring)
This is a Control deck which, while originally devised to prey on the inevitably popular Aurelion Sol and Troll Chant and abuse the broken, flexible toolbox of Invoke on Day 1, also manages to both answer all 3 of these problems efficiently.
Lunari Duskbringer x 3
Spacey Sketcher x 3
Lunari Shadestalker x1
Pale Cascade x 3
Unspeakable Horror x 2
Vile Feast x 3
Simply the best available early-game that an Invoke Targon deck could hope to muster - Diana functioning as both early game and late-game removal (we have just enough Nightfall Synergy) for practically no investment, Pale Cascade being legitimately one of the most broken cards currently in the game, and the ping cards also serving a modicum of uses at all stages of a match. Spacey Sketcher has been severely underrated so far - providing critical tools for certain matchups and/or providing early game minions without needing to actually run them (a fundamental weakness of faster decks top-decking late). Its 'discard-replace' synergy with our late-game, as well as Duskpetal Dust and meta-call flex cards is just icing on the cake. Finally, note how every early game card I've chosen scales well and still plays a role as the game goes later; as removal, Elusive blocking, tool-building, Burst-speed Nightfall, pings and cantrip Combat Tricks. This is an often overlooked but fundamental difference between Control early-drops, and aggro early-drops (such as Precious Pet). ~
Sunburst x 3
Vengeance x 3
These two cards, combined with any generated Obliterates, form the only proper removal this deck has - and were the catalyst for me creating this deck in the first place. All three of these removal types leave almost NO room for the opponent to interact with them, and I believe that is the sole condition for a high-cost removal spell to be playable in the current game state. NOTE: Ruination is easily and always played around at a high-level of play - and leaves the opponent with ALL of the agency/choice to play around it/bait it exactly how they wish, instead of you (whose only options are to play the card too early and get out-tempo'd afterward, use more than 3 mana elsewhere to catch-up at which point it becomes unplayable, or lose the game to a sudden-attack completely at your opponent's discretion) - the ultimate NO-NO for this deck: I never even considered putting it in. ~
Meta Call Flex Spots
Divergent Paths x 2
At times I feel as if this card could be cut to 1 copy, but right now 2 feels great against the current meta, and drawing into at least one is almost necessary in order to compete with Star Spring (Obliterate is conditional and too great a tempo loss early on). In other metas previously, I've experimented with 1 copy of Passage Unearned, as well as 2 extra copies of Lunari Shadestalker. ~
Literally Everything Else One Could Ever Hope to Need
Lunari Priestess x 2
Solari Priestess x 3
Mountain Scryer x 3
Moondreamer x 3
Starshaping x 3
I still believe that Invoke is one of the most broken mechanics currently in the game. This is one of the heaviest late-game decks I can possibly imaginable, yet the only cards above 5-mana we run are removal, and our mid-game minions and healing straight up provide whatever early OR late-game tools we might possibly need in any matchup - it's simply overly flexible (flexilibity in card games being a MUCH bigger deal than most people give it credit for) and not enough of a tempo/stat sacrifice IMO. I think that Invoke as a mechanic is even stronger when ran in bulk, and especially in a Control deck - as the game goes on slowly you generate a toolbox that can handle just about any dynamic situation that meta decks can throw your way. The spell-mana nerf to Living Legends has balanced it out quite a bit, however the same-nerf to Cosmic Inspiration still hasn't convinced me that it isn't in the top 5 least healthy effects that a game based on carefully stat-balanced of minion trading could ever have (hit me up with your Cosmic Inspiration hate!) - a large proportion our games are won by this disgusting effect. Solari Priestess and Starshaping need no introduction as some of the most popular, utilitarian Invoke cards, however Mountain Scryer and Moondreamer (not so much Lunari Priestess) really put in the work, and I've never seen anyone else play these cards. The former provides crazy mana-advantage as the game goes on given our huge focus on Celestials (it's a shame we can't afford to push its Invoke chances even higher), and the latter has juuussst the right stat distribution at 3/5 to blockade most midgame tempo plays out opponent might go for. NOTE: Aurelion Sol is straight up unnecessary to compete late-game, is always burdensome and clunky draw, ruins our surprise factor (though that doesn't exist anymore with this post being made), and we often outvalue decks running him anyway (don't forget that the original premise of this deck was 'How can I best remove Aurelion?'). ~
Matchups/Strategy (Order Based on Mobalytics Tier List)
Lee Sin (60/40)
A somewhat favored matchup - although more recent lists that have cut Bastion in favor of Nopify may be a bit more in their favor (a proper Ping Counter). Hard mulligan for Spacey Sketcher, Sunburst and our pings. Generating Silence (Equinox) for Mentor of the Stones/Zenith Blade is our main early game goal. Our Mid-to-Late game goal is removing all 3 Lee Sin's at the expense of practically everything else (the rest of their deck is pretty much completely irrelevant, but rushing them down is also pretty much impossible) - after which our win is basically guaranteed.
This matchup is sadly the most binary thing: Sunburst/Vengeance/Ping's VS Lee Sin/Spell Denial/Zenith Blade
The rest of both decks are basically irrelevant other than to slow down the level up/speed up the level up/Draw into above cards
Draw Draw Draw + Always save enough mana to Removal Spell + Ping if the opponent has 4 mana up late game
I believe that we are very, very heavily favored if played properly (although it's a VERY nuanced matchup to play right), and most of our losses come from bricking our early-game draws and/or not drawing/generating a single Starshaping/Golden Sister as their burn damage inevitably builds up. Hard mulligan for all 1/2 cost cards (only keep 1 Pale Cascade with a 1/2 cost minion).
NEVER, EVER play early minions proactively (e.g. NO turn 1 Lunari Duskbringer unless they play something) - only ever match however many minions the opponent has AND trade right away to minimise Make it Rain/TF value (For instance, if you proactively play a minion with nothing to trade it into, and then find yourself needing to play, say, Diana/Solari Priestess later - the opponent is basically guaranteed free additional AOE value: make EVERY chump blocker count)
ALWAYS open attack into Powder Keg's (usually with our single developed minion)
Take ANY trade you can get (even if somewhat unfavorable) to clear both sides of the board going into turn 8 - one of the ways we can lose is if Riptide Rex clears our heavy board and we only have time to develop one chump blocker before the onslaught - especially because Riptide is MUCH stronger against minions than the nexus > Late game, try to keep both sides of the board as empty as possible
If you find yourself with priority against their activated Plunder past turn 8, play small minions to bait out Rex without having to pass the turn OR play larger minions, especially with uneven health like Moondreamer to protect the rest of your board from potential cannons
ALWAYS try to find a NON-Rex'able position late game to develop Golden Sister, and save Pale Cascade if possible to protect her from Noxian Fervor and recover 6 previous health
ALWAYS have enough mana to remove Leviathan if the opponent has more than 8 mana on any given turn (prioritise Leviathan over Swain himself)
Sacrifice minions to TF attacks and remove Zap Sprayfin ASAP to minimise chip damage (which really builds up)
Be careful and make sure you always have a way to prevent Swain connecting with the Nexus (even if they develop him this turn and open attack the next); Pale Cascade is a good tool here
Pirate Aggro (55/45)
We are much more prone to bricking on draws here than Swain/TF, as we need quite a specific hand to deal with their onslaught - This is probably our most draw-dependent, low-agency matchup by far - as face-deck matchups tend to be. In addition - Captain Farron is much more effective against our removal strategy than the likes of Leviathan. Nonetheless, from my experience I think that we're still every-slightly-so favored in this matchup - often winning by the skin of our teeth. Starshaping/Golden Sister are mandatory late-game, and not bricking by not drawing/generating either is also basically a loss. Hard mulligan for all 1/2 drops, and keep a single Sunburst for Gangplank if your hand is already looking great.
There's nothing much to say here given the nature of their deck - pray your draws are good and take the obvious trades
A very unfavored and binary matchup (see below as to why) that has luckily become rarer recently. Mulligan for Removal/Invoke cards.
Save Starshaping for when you can actually make use of the heal (don't just play it on turn 3 because they're 'starting off slowly' - it's very important to maximise your leeway to survive Atrocity later on)
Try to remove Trundle on curve with Sunburst/Vengeance
Generate/Stockpile removal throughout the midgame
Sadly, none of these choices really matter in the end and the match comes down to luck - if Warmother's pulls a Level 1 Tryndamere on their attacking turn, the obvious open attack followed by a loss is all but guaranteed (Vengeance doesn't stop Atrocity in this case - leading to too great a health/tempo loss, and my previous Passage Unearned tech to deal with specifically this scenario simply wasn't worth the dead card in other matchups). We can also lose to a big levelled Trundle, or simply not generating/drawing into enough removal. Sadly these cases happen more often than not. Warmother's generated too much tempo if left unchecked by hard removal for even a single turn so there is little leeway for bad luck.
If Warmothers' timing and Invoke/draws are on our side, the matchup becomes pretty simple - Smartly use about a removal spell on their big guys for about 8 turns, play around Ruination and Atrocity, then cruise to victory.
This deck was basically created on Day 1 specifically to destroy Trundle/Asol. Sadly though, even at 75/25 the matchup is worse than it should be due to the nature of Invoke RNG - if one player draws into Cosmic Inspiration and the other didn't the match is over, full stop + the occasional shenanigans involving The Great Beyond uninteractibly going face and non-stop Living Legends value. Mulligan for Sunburst, Vengeance and pings.
Remove Trundle ASAP with Sunburst (Vengeance/Obliterates are best saved for Asol so getting Sunburst value while Trundle is still unleveled and 6 health is a big deal in terms of removal distribution)
Always try to remove Asol on the first turn he's played with Vengeance chaining into a ping to minimise the opponent's chance of getting game-winning Invoke RNG/matching your late-game value with free Celestials
If you still haven't drawn a ping late game, try to fish for Crescent Strike with Spacey Sketcher
Play around 7-mana Asol (Augur of the Old Ones) as much as possible
Pray you draw Cosmic Inspiration and the opponent doesn't
Discard Aggro (80/20)
I don't know why this deck is considered competitive - maybe because our matchup here is basically as favored as TF/Swain except without any gameplay nuance required on our part. Mulligan for 1-2 drops. Keep Solari Priestess/Sunburst if hand is good. Only necessary statistical losses to bad early draws against an aggro archtype.
Make obvious trades. Play around Mystic Shot on Diana. Chump block Draven/Jinx. Remove Draven/Jinx. Profit.
Another draw dependent, but quite favored matchup. Quite difficult to play though - you need to balance maintaining some modicum of tempo whilst also being able to deal with their crucial threats. Mulligan for 1-2 drops ESPECIALLY Pale Cascade/Pings, and Removal.
DON'T play ANY minion with less than 3 attack from turns 1-4 UNLESS you're getting tempo'd into the ground OR you have Pale Cascade (otherwise Fiora gets a free trade and the opponent gets to use their buffs reactively rather than proactively - giving you less leeway to remove her)
Save ping's for Fiora Barrier's, NOT Fleetfeather Tracker UNLESS you're getting tempo'd into the ground
Save a removal spell and mana for turn 3 Fiora, turn 4 Shen, turn 6 Genevieve and turn 9 Brightsteel UNLESS you're getting tempo'd into the ground
Basically the Pirate Aggro matchup but a tad bit slower and with no burn - giving you more leeway to make up for bad draws both early and late.
Make the obvious trades, pray to draw well and don't to let Genevieve get 2 attacks off
Basically the Trundle/Asol matchup except with no 'must remove ASAP' threats giving you more leeway to make up for bad draws. Celestial RNG and especially Cosmic Inspiration still give them a chance to win as usual. ~
Shyvana Dragons (50/50?)
I surprisingly, haven't faced too much of this deck yet personally, but looking at it's cards compared to ours, I think the matchup would be about 50/50 (an otherwise favourable looking matchup affected a bit by their high tempo removal and guaranteed Cosmic Inspiration in the form of Kadregrin). ~
This matchup is dependent on whether we draw removal for Ashe somewhat on curve, how much tempo they manage to build early on and whether we draw good enough to afford to play around Reckoning. Mulligan for Sunburst, Solari Priestess, Pings and Diana (only if you've already drawn support) as our other standard early drops are all pretty ineffective against theirs.
Remove Ashe ASAP
Try to Vengeance Sejuani on the attack if she directly attacks your Frostbitten minion in order to prevent the free value trade and maintain tempo on board.
Play around Reckoning as much as possible, especially if it wouldn't affect their own board too much compared to yours - maximise your 5+ attack minions to theirs if Reckoning begins to look more likely
Try to bait out an invested attack/Frostbite support for Trifarian Gloryseeker before pinging her - especially because Elixir of Iron is a bit rarer nowadays
Probably our most favored meta-deck matchup, and unfortunately rarer recently. Their win conditions - Kalista, Blighted Caretaker tempo, Neverglade Collector and They Who Endure simply don't stand a chance against our toolbox. Most losses come from unanswered Blighted Caretaker tempo. Mulligan for Spacey Sketcher, Sunburst and Pale Cascade.
ALWAYS pick Silence (For They Who Endure) or Stun (For Blighted Caretaker) off Spacey Sketcher
Try to hold a minion to play on turn 3/4 to kill an attacking Kalista with Pale Cascade AND get the Nightfall card draw
Play as reactively as possible with your pings - playing them proactively will almost always be answered by Glimpse Beyond, and when they run out of gas later on they will be forced to play their Glipmse proactively - your chance to strike!
Silence/Sunburst Blighted Caretaker as it comes down
SAVE Vengeance for They Who Endure - going into the late game, stockpile Silence/Sunburst and Vengeance and maintain enough mana (usually open-attacking) if necessary (IF can still afford to play They Who Endure that turn) to use one of the former followed by Vengeance to counter into their Atrocity: with this line of play, it's basically impossible to lose the combo
The biggest downside and sheer impossible matchup of this archtype. Maokai manages to pack even less interactivity/inevitability than we do, and the nature of our deck gives us no chance of out-tempoing Deep early OR late. Auto-concede. ~
A simpler aggro matchup than the others. Mulligan for 1-2 drops - especially Spacey Sketcher and Diana, as well as Sunburst.
ALWAYS pick the Stun spell off Spacey Sketcher, and save it for Diana, or of lesser priority, Nocturne/Ephemerals off Stalking Shadows
Removing Nocturne ASAP with either Sunburst or Vengeance is a HUGE priority
ALWAYS play around Pale Cascade
Play around Atrocity and Doombeast damage later on in the match
Another matchup that I haven't faced too much of just yet. Mulligan hard for Divergent Paths and Solari Priestess - Once we remove their uninteractive element trump-card in the Landmark win-condition, if we can survive their early tempo, the rest of the match should be a cinch given our heal/health-ignoring conditionless removal for their Champions. ~
Thanks for reading up to this point, and pardon my formatting, the ridiculous length and the sheer pomposity of it all. I still think Invoke is flexible to the point of being broken and the only reason the matchup spread is so good. I also think that with the release of this guide - more people will come to recognise this archtype and the element of surprise affecting enemy mulligans against an assumed more aggro, Nightfall-focused Diana archtype will be lost. People will also know to play around less common cards such as Sunburst, and I expect winrates to fall somewhat across the board. To conclude this guide, I'd like to say that this is this is not a healthy deck. At the deepest level, this deck is fundamentally about removing agency from your opponent and giving it to yourself, as well as securing the critical boon of having inevitability over your opponent in a game with the nature of LoR. If all decks were like this, LoR would completely cease to be fun. What else do I think is unhealthy right now? - Simple: anything removing interactivity from your opponent - ESPECIALLY as a win condition; Maokai, Star Spring, Cosmic Inspiration, Lee Sin. The avenues through which these cards can be interacted with are way too limited right now. A lot of the metagame nowadays is about having an uninteractable win condition, or focusing damage to face so fast the opponent has no chance to react - another form of non-interactivity. Here's hoping that the meta in the near future heads back in the direction of the close but fair midrange board battles we all came to love back in vanilla LoR. ~ (slinx4)
Wall Street Week Ahead for the trading week beginning August 17th, 2020
Good Saturday morning to all of you here on stocks. I hope everyone on this sub made out pretty nicely in the market this past week, and is ready for the new trading week ahead. Here is everything you need to know to get you ready for the trading week beginning August 17th, 2020.
Stocks are ignoring the lack of a stimulus package from Congress, but that could change - (Source)
Stocks could hang at record levels but gains may be capped until Congress agrees to a new stimulus package to help the economy and the millions of unemployed Americans. Stocks were higher in the past week, and the S&P 500 flirted with record levels it set in February. In the coming week, there are some major retailers reporting earnings, including Walmart, Home Depot and Target, but the season is mostly over and the market is entering a quiet period. There are minutes from the Fed’s last meeting, released Wednesday, and housing data, including starts Tuesday and existing sales Friday. Investors had been watching efforts by Congress to agree to a new stimulus package, but talks have failed and the Senate has gone on recess. There is a concern that Congress will not be convinced to provide a big enough package when it does get to work again on the next stimulus round because recent economic reports look stronger. July’s retail sales, for example, climbed to a record level and recovered to pre-pandemic levels. “The juxtaposition of getting more fiscal stimulus and better data has paralyzed us in our tracks … we’ve seen this sideways [market] action,” said Art Hogan, chief market strategist at National Alliance. “It feels like we need more action from Congress, and the concern is the longer we wait, the better the data gets and the less impactful the next round of stimulus will be.” Some technical analysts say the market may pull back around the high, to allow it to consolidate gains before moving higher into the end of the year. The S&P 500 reached an all-time high of 3,393 on Feb. 19. Hogan said he expects stocks to tread sideways during the dog days of August, but they could begin to react negatively to the election in September. He also said it is important that progress continue against the spread of Covid-19, as the economy continues to reopen. Peter Boockvar, chief investment strategist at Bleakley Advisory Group, said the market could have a wakeup call at some point that the stimulus package has not been approved. “I think it will cross over a line where they care,” he said. “I think the market is in suspended animation of believing there will be a magical deal.” Boockvar said he expects a deal ultimately, but the impact is not likely to be as big as the last round of funding. “What they’re not grasping is any deal, any extension of unemployment benefits, is going to be smaller than it was, and the rate of change should be the most important thing investors focus on,” he said. “Not the binary outcome of whether there’s a deal or no deal. There’s going to be less air going into the balloon.”
It’s the economy
Still, economists expect to see a strong rebound in the third quarter, and are anticipating about about a 20% jump in third-quarter growth. But they also say that could be threatened if Congress does not help with another stimulus package. Mark Zandi, chief economist at Moody’s Analytics, described the July retail sales as a perfect V-shaped recovery, but cautioned it would not last unless more aid gets to individuals and cities and states. Democrats have sought a $3 trillion spending package, and Republicans in the Senate offered a $1 trillion package. They could not reach a compromise, including on a $600 weekly payment to individuals on unemployment which expired July 31. President Donald Trump has tried to fill the gap with executive orders to provide extra benefits to those on unemployment, but the $300 federal payment and $100 from states may take some time to reach individuals, as the processing varies by state. He has also issued an order instructing the Treasury to temporarily defer collection of payroll taxes from individuals making up to $104,000. “I think in August and September, there will be a lot of Ws, if there’s not more help here,” said Zandi, referring to an economic recovery that retrenches from a V shape before heading higher again. “It’s clearly perplexing. It may take the stock market to say we’re not going to get what we expect, and sell off and light a fire.” Zandi said it could come to a situation like 2008, where the stock market sold off sharply before Congress would agree to a program that helped financial companies. “We need a TARP moment to get these guys to help. Maybe if the claims tick higher and the August employment numbers are soft, given the president is focused on the stock market, that might be what it takes to get them back to the table in earnest,” he said, referring to the Troubled Asset Relief Program that helped rescue banks during the financial crisis. He ultimately expects a package of about $1.5 trillion to be approved in September. The lack of funding for state and local governments could result in more layoffs, as they struggle with their current 2021 budgets, Zandi said. Already 1.3 million public sector jobs have been lost since February, and there will be more layoffs and more programs and projects cancelled. The impact will hit contractors and other businesses that provide services to local governments. “The multipliers on state and local government are among the highest of any form of support, so if you don’t provide it, it’s going to ripple through the economy pretty fast,” he said. Economists expect to see a softening in consumer spending in August with the more than 28 million Americans on unemployment benefits as of mid-July no longer receiving any supplemental pay. “The real irony is things are shaping up that September is going to be a bad month, and that’s going to show up in all the data in October,” Zandi said. “They are really taking a chance on this election by not acting.”
This past week saw the following moves in the S&P:
The S&P 500 Index is a few points away from a new all-time high, completing one of the fastest recoveries from a bear market ever. But this will also seal the deal on the shortest bear market ever. Remember, the S&P 500 Index lost 20% from an all-time high in only 16 trading days back in February and March, so it makes sense that this recovery could be one of the fastest ever. From the lows on March 23, the S&P 500 has now added more than 50%. Many have been calling this a bear market rally for months, while we have been in the camp this is something more. It’s easy to see why this rally is different based on where it stands versus other bear market rallies:
They say the stock market is the only place where things go on sale, yet everyone runs out of the store screaming. We absolutely saw that back in March and now with stocks near new highs, many have missed this record run. Here we show how stocks have been usually higher a year or two after corrections.
After a historic drop in March, the S&P 500 has closed higher in April, May, June, and July. This rare event has happened only 11 other times, with stocks gaining the final five months of the year a very impressive 10 times. Only 2018 and the nearly 20% collapse in December saw a loss those final five months.
As shown in the LPL Chart of the Day, this bear market will go down as the fastest ever, at just over one month. The recovery back to new highs will be five months if we get there by August 23, making this one of the fastest recoveries ever. Not surprisingly, it usually takes longer for bear markets in a recession to recover; only adding to the impressiveness of this rally.
“It normally takes 30 months for bear markets during a recession to recover their losses, which makes this recovery all the more amazing,” said LPL Financial Chief Market Strateigst Ryan Detrick.. “Then again, there has been nothing normal about this recession, so maybe we shouldn’t be shocked about yet another record going down in 2020.”
When a Few Basis Points Packs a Punch
US Treasury yields have been on the rise this week with the 10-year yield rising 13 basis points (bps) from 0.56% up to 0.69% after getting as high as 0.72% on Thursday. A 13 bps move higher in interest rates may not seem like a whole lot, but with rates already at such low levels, a small move can have a pretty big impact on the prices of longer-term maturities.
Starting with longer-term US Treasuries, TLT, which measures the performance of maturities greater than 20 years, has declined 3.5% this week. Now, for a growth stock, 3.5% is par for the course, but that kind of move in the Treasury market is no small thing. The latest pullback for TLT also coincides with another failed attempt by the ETF to trade and stay above $170 for more than a day.
The further out the maturity window you go in the fixed income market, the bigger the impact of the move higher in interest rates. The Republic of Austria issued a 100-year bond in 2017, and its movements exemplify the wild moves that small changes in interest rates (from a low base) can have on prices. Just this week, the Austrian 100-year was down over 5%, which is a painful move no matter what type of asset class you are talking about. This week's move, though, was nothing compared to the stomach-churning swings from earlier this year. When Covid was first hitting the fan, the 100-year rallied 57% in the span of less than two months. That kind of move usually occurs over years rather than days, but in less than a third of that time, all those gains disintegrated in a two-and-a-half week span from early to late March. Easy come, easy go. Ironically enough, despite all the big up and down moves in this bond over the last year, as we type this, the bond's price is the same now as it was on this same day last year.
At the headline level, July’s Retail Sales report disappointed as the reading missed expectations by nearly a full percentage point. Just as soon as the report was released, we saw a number of stories pounce on the disappointment as a sign that the economy was losing steam. Looked at in more detail, though, the July report wasn’t all that bad. While the headline reading rose less than expected (1.2% vs 2.1%), Ex Autos and Ex Autos and Gas, the results were much better than expected. Not only that, but June’s original readings were all revised higher by around a full percentage point. Besides the fact that this month’s report was better underneath the surface and June’s reading was revised higher, it was also notable as the seasonally-adjusted annualized rate of sales in July hit a new record high. After the last record high back in January, only five months passed until American consumers were back to their pre-Covid spending ways. For the sake of comparison, back during the Financial Crisis, 40 months passed between the original high in Retail Sales in November 2007 and the next record high in April 2011. 5 months versus 40? Never underestimate the power of the US consumer!
While the monthly pace of retail sales is back at all-time highs, the characteristics behind the total level of sales have changed markedly in the post COVID world. In our just released B.I.G. Tips report we looked at these changing dynamics to highlight the groups that have been the biggest winners and losers from the shifts.
100 Days of Gains
Today marked 100 trading days since the Nasdaq 100's March 20th COVID Crash closing low. Below is a chart showing the rolling 100-trading day percentage change of the Nasdaq 100 since 1985. The 59.8% gain over the last 100 trading days ranks as the 3rd strongest run on record. The only two stronger 100-day rallies ended in January 1999 and March 2000.
While the Nasdaq 100 bottomed on Friday, March 20th, the S&P 500 bottomed the following Monday (3/23). This means tomorrow will mark 100 trading days since the S&P 500's COVID Crash closing low. Right now the rolling 100-day percentage change for the S&P 500 sits at +46.7%. But if the S&P manages to trade at current levels tomorrow, the 100-day gain will jump above 50%. It has been 87 years (1933) since we've seen a 100-day gain of more than 50%!
Whether you want to look at it from the perspective of closing prices or intraday levels, the S&P 500 is doing what just about everybody thought would be impossible less than five months ago - approaching record highs. Relative to its closing high of 3,386.15, the S&P 500 is just 0.27% lower, while it's within half of a percent from its record intraday high of 3,393.52. Through today, the S&P 500 has gone 120 trading days without a record high, and as shown in the chart below, the current streak is barely even visible when viewed in the perspective of all streaks since 1928. Even if we zoom in on just the last five years, the current streak of 120 trading days only ranks as the fourth-longest streak without a new high. While the S&P 500's 120-trading day streak without a new high isn't extreme by historical standards, the turnaround off the lows has been extraordinary. In the S&P 500's history, there have been ten prior declines of at least 20% from a record closing high. Of those ten prior periods, the shortest gap between the original record high and the next one was 309 trading days, and the shortest gap between highs that had a pullback of at least 30% was 484 tradings days (or more than four times the current gap of 120 trading days). For all ten streaks without a record high, the median drought was 680 trading days.
Whenever the S&P 500 does take out its 2/19 high, the question is whether the new high represents a breakout where the S&P 500 keeps rallying into evergreen territory, or does it run out of gas after finally reaching a new milestone? To shed some light on this question, we looked at the S&P 500's performance following each prior streak of similar duration without a new high.
STOCK MARKET VIDEO: Stock Market Analysis Video for Week Ending August 14th, 2020
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STOCK MARKET VIDEO: ShadowTrader Video Weekly 8.16.20
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(VIDEO NOT YET POSTED!) Here are the most notable companies (tickers) reporting earnings in this upcoming trading week ahead-
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Walmart Inc. $132.60
Walmart Inc. (WMT) is confirmed to report earnings at approximately 7:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $1.20 per share on revenue of $134.28 billion and the Earnings Whisper ® number is $1.29 per share. Investor sentiment going into the company's earnings release has 81% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 5.51% with revenue increasing by 2.99%. Short interest has decreased by 12.5% since the company's last earnings release while the stock has drifted higher by 0.6% from its open following the earnings release to be 9.9% above its 200 day moving average of $120.64. Overall earnings estimates have been revised higher since the company's last earnings release. On Tuesday, August 11, 2020 there was some notable buying of 12,381 contracts of the $135.00 put expiring on Friday, August 21, 2020. Option traders are pricing in a 4.9% move on earnings and the stock has averaged a 2.3% move in recent quarters.
NVIDIA Corp. (NVDA) is confirmed to report earnings at approximately 4:20 PM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.95 per share on revenue of $3.65 billion and the Earnings Whisper ® number is $2.01 per share. Investor sentiment going into the company's earnings release has 84% expecting an earnings beat The company's guidance was for earnings of $1.83 to $2.06 per share. Consensus estimates are for year-over-year earnings growth of 65.25% with revenue increasing by 41.53%. The stock has drifted higher by 31.0% from its open following the earnings release to be 57.7% above its 200 day moving average of $293.24. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,787 contracts of the $460.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 7.7% move on earnings and the stock has averaged a 4.0% move in recent quarters.
Alibaba Group Holding Ltd. (BABA) is confirmed to report earnings at approximately 7:10 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $1.99 per share on revenue of $21.13 billion and the Earnings Whisper ® number is $2.11 per share. Investor sentiment going into the company's earnings release has 83% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 8.74% with revenue increasing by 26.22%. Short interest has increased by 30.1% since the company's last earnings release while the stock has drifted higher by 25.0% from its open following the earnings release to be 20.0% above its 200 day moving average of $211.59. Overall earnings estimates have been revised lower since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 12,935 contracts of the $300.00 call expiring on Friday, November 20, 2020. Option traders are pricing in a 6.2% move on earnings and the stock has averaged a 3.1% move in recent quarters.
JD.com, Inc. (JD) is confirmed to report earnings at approximately 5:50 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.38 per share on revenue of $26.98 billion and the Earnings Whisper ® number is $0.46 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 52.00% with revenue increasing by 23.25%. Short interest has increased by 16.7% since the company's last earnings release while the stock has drifted higher by 24.1% from its open following the earnings release to be 36.9% above its 200 day moving average of $45.34. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 12,799 contracts of the $62.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 8.0% move on earnings and the stock has averaged a 6.4% move in recent quarters.
Home Depot, Inc. (HD) is confirmed to report earnings at approximately 6:00 AM ET on Tuesday, August 18, 2020. The consensus earnings estimate is $3.71 per share on revenue of $31.67 billion and the Earnings Whisper ® number is $3.75 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 17.03% with revenue increasing by 2.69%. Short interest has decreased by 39.8% since the company's last earnings release while the stock has drifted higher by 16.7% from its open following the earnings release to be 22.4% above its 200 day moving average of $229.20. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 14, 2020 there was some notable buying of 3,323 contracts of the $300.00 call expiring on Friday, August 28, 2020. Option traders are pricing in a 4.2% move on earnings and the stock has averaged a 2.5% move in recent quarters.
Lowe's Companies, Inc. (LOW) is confirmed to report earnings at approximately 6:00 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $2.93 per share on revenue of $21.29 billion and the Earnings Whisper ® number is $2.97 per share. Investor sentiment going into the company's earnings release has 78% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 36.28% with revenue increasing by 1.42%. Short interest has decreased by 19.2% since the company's last earnings release while the stock has drifted higher by 25.9% from its open following the earnings release to be 31.2% above its 200 day moving average of $117.67. Overall earnings estimates have been revised higher since the company's last earnings release. On Friday, August 7, 2020 there was some notable buying of 1,994 contracts of the $170.00 call expiring on Friday, August 21, 2020. Option traders are pricing in a 6.0% move on earnings and the stock has averaged a 5.8% move in recent quarters.
Target Corp. (TGT) is confirmed to report earnings at approximately 6:30 AM ET on Wednesday, August 19, 2020. The consensus earnings estimate is $1.56 per share on revenue of $19.30 billion and the Earnings Whisper ® number is $1.64 per share. Investor sentiment going into the company's earnings release has 75% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 14.29% with revenue increasing by 4.77%. Short interest has decreased by 36.8% since the company's last earnings release while the stock has drifted higher by 10.0% from its open following the earnings release to be 18.0% above its 200 day moving average of $115.73. Overall earnings estimates have been revised higher since the company's last earnings release. On Monday, August 10, 2020 there was some notable buying of 4,479 contracts of the $135.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 6.3% move on earnings and the stock has averaged a 7.7% move in recent quarters.
Sea Limited (SE) is confirmed to report earnings at approximately 6:30 AM ET on Tuesday, August 18, 2020. The consensus estimate is for a loss of $0.47 per share on revenue of $1.03 billion and the Earnings Whisper ® number is ($0.36) per share. Investor sentiment going into the company's earnings release has 74% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 34.29% with revenue increasing by 136.16%. Short interest has decreased by 8.5% since the company's last earnings release while the stock has drifted higher by 91.7% from its open following the earnings release to be 98.1% above its 200 day moving average of $63.87. Overall earnings estimates have been revised lower since the company's last earnings release. On Tuesday, August 4, 2020 there was some notable buying of 4,000 contracts of the $110.00 put expiring on Friday, January 15, 2021. Option traders are pricing in a 12.9% move on earnings and the stock has averaged a 16.7% move in recent quarters.
Niu Technologies (NIU) is confirmed to report earnings at approximately 3:00 AM ET on Monday, August 17, 2020. The consensus earnings estimate is $0.07 per share on revenue of $88.07 million and the Earnings Whisper ® number is $0.11 per share. Investor sentiment going into the company's earnings release has 57% expecting an earnings beat. Consensus estimates are for earnings to decline year-over-year by 30.00% with revenue increasing by 13.97%. Short interest has increased by 18.9% since the company's last earnings release while the stock has drifted higher by 129.8% from its open following the earnings release to be 90.3% above its 200 day moving average of $10.94. Overall earnings estimates have been revised higher since the company's last earnings release. The stock has averaged a 3.7% move on earnings in recent quarters.
BJ's Wholesale Club, Inc. (BJ) is confirmed to report earnings at approximately 6:45 AM ET on Thursday, August 20, 2020. The consensus earnings estimate is $0.57 per share on revenue of $3.64 billion and the Earnings Whisper ® number is $0.60 per share. Investor sentiment going into the company's earnings release has 73% expecting an earnings beat. Consensus estimates are for year-over-year earnings growth of 46.15% with revenue increasing by 8.79%. Short interest has decreased by 3.2% since the company's last earnings release while the stock has drifted higher by 33.8% from its open following the earnings release to be 46.7% above its 200 day moving average of $28.27. Overall earnings estimates have been revised higher since the company's last earnings release. On Wednesday, August 12, 2020 there was some notable buying of 2,119 contracts of the $50.00 call expiring on Friday, September 18, 2020. Option traders are pricing in a 12.4% move on earnings and the stock has averaged a 10.0% move in recent quarters.
Retard Bot Update 2: What is there to show for six months of work?
What is there to show? Not shit, that's why I made this pretty 4K desktop background instead: 4K On the real: I've been developing this project like 6 months now, what's up? Where's that video update I promised, showing off the Bot Builder? Is an end in sight? Yes sort of. I back-tested 6 months of data at over 21% on a net SPY-neutral, six month span of time (with similar results on a 16 year span) including 2 bear, 2 bull, 2 crab months. But that's not good enough to be sure / reliable. I had gotten so focused on keeping the project pretty and making a video update that I was putting off major, breaking changes that I needed to make. The best quant fund ever made, the Medallion fund, was once capable of roughly 60% per year consistently, but in Retard Bot's case 1.5% compounded weekly. "But I make 60% on one yolo" sure whatever, can you do it again every year, with 100% of your capital, where failure means losing everything? If you could, you'd be loading your Lambo onto your Yacht right now instead of reading this autistic shit.
The End Goal
1.5% compounded weekly average is $25K -> $57M in 10 years, securing a fairly comfortable retirement for your wife's boyfriend. It's a stupidly ambitious goal. My strategy to pull it off is actually pretty simple. If you look at charts for the best performing stocks over the past 10 years, you'll find that good companies move in the same general trajectory more often than they don't. This means the stock market moves with momentum. I developed a simple equation to conservatively predict good companies movements one week into the future by hand, and made 100%+ returns 3 weeks in a row. Doing the math took time, and I realized a computer could do much more complex math, on every stock, much more efficiently, so I developed a bot and it did 100% for 3 consecutive weeks, buying calls in a bull-market. See the problem there? The returns were good but they were based on a biased model. The model would pick the most efficient plays on the market if it didn't take a severe downturn. But if it did, the strategy would stop working. I needed to extrapolate my strategy into a multi-model approach that could profit on momentum during all different types of market movement. And so I bought 16 years of option chain data and started studying the concept of momentum based quantitative analysis. As I spent more and more weeks thinking about it, I identified more aspects of the problem and more ways to solve it. But no matter how I might think to design algorithms to fundamentally achieve a quantitative approach, I knew that my arbitrary weights and variables and values and decisions could not possibly be the best ones.
Why Retard Bot Might Work
So I approached the problem from all angles, every conceivable way to glean reliably useful quantitative information about a stock's movement and combine it all into a single outcome of trade decisions, and every variable, every decision, every model was a fluid variable that machine learning, via the process of Evolution could randomly mutate until perfection. And in doing so, I had to fundamentally avoid any method of testing my results that could be based on a bias. For example, just because a strategy back-tests at 40% consistent yearly returns on the past 16 years of market movement doesn't mean it would do so for the next 16 years, since the market could completely end its bull-run and spend the next 16 years falling. Improbable, but for a strategy outcome that can be trusted to perform consistently, we have to assume nothing. So that's how Retard Bot works. It assumes absolutely nothing about anything that can't be proven as a fundamental, statistical truth. It uses rigorous machine learning to develop fundamental concepts into reliable, fine tuned decision layers that make models which are controlled by a market-environment-aware Genius layer that allocates resources accordingly, and ultimately through a very complex 18 step process of iterative ML produces a top contender through the process of Evolution, avoiding all possible bias. And then it starts over and does it again, and again, continuing for eternity, recording improved models when it discovers them.
The Current Development Phase
Or... That's how it would work, in theory, if my program wasn't severely limited by the inadequate infrastructure I built it with. When I bought 16 years of data, 2TB compressed to its most efficient binary representation, I thought I could use a traditional database like MongoDB to store and load the option chains. It's way too slow. So here's where I've ended up this past week: It was time to rip off the bandaid and rebuild some performance infrastructure (the database and decision stack) that was seriously holding me back from testing the project properly. Using MongoDB, which has to pack and unpack data up and down the 7 layer OSI model, it took an hour to test one model for one year. I need to test millions of models for 16 years, thousands of times over. I knew how to do that, so instead of focusing on keeping things stable so I could show you guys some pretty graphs n shit, I broke down the beast and started rebuilding with a pure memory caching approach that will load the options chains thousands of times faster than MongoDB queries. And instead of running one model, one decision layer at a time on the CPU, the new GPU accelerated decision stack design will let me run hundreds of decision layers on millions of models in a handful of milliseconds. Many, many orders of magnitude better performance, and I can finally make the project as powerful as it was supposed to be. I'm confident that with these upgrades, I'll be able to hit the goal of 60% consistent returns per year. I'll work this goddamn problem for a year if I have to. I have, in the process of trying to become an entrepreneur, planned project after project and given up half way through when it got too hard, or a partner quit, or someone else launched something better. I will not give up on this one, if it takes the rest of the year or five more. But I don't think it'll come to that. Even with the 20% I've already achieved, if I can demonstrate that in live trading, that's already really good, so there's not really any risk of real failure at this point. But I will, regardless, finish developing the vision I have for Retard Bot and Bidrate Renaissance before I'm satisfied.
Going to keep this simple. EDIT: this isn’t simple and I should write a short story on this. I am generally risk averse. I hate losing $100 at the casino, I hate paying extra for guac at chipotles, I will return something or price match an item for a few dollars of savings. I am generally frugal. But, I somehow had no issues losing 10k in options... How I started I remember my first trades like they were yesterday. I was trading the first hydrogen run-up in 2014 (FCEL, BLDP, PLUG) and made a few hundred dollars over a couple weeks. I quickly progressed to penny stocks / biotech binary events and general stock market gambling mid-2014. I was making a few % here and there but the trend was down in total account value. I was the king of buying the peak in run-ups. I managed to make it out of 2014 close to break-even to slightly down. WSB Era March 2015 was my first option trade. It was an AXP - American Express - monthly option trade. I saw one of the regular option traders/services post a block of 10,000 calls that had been bought for 1.3 and I followed the trade with 10 call options for a total of $1300. I woke up the next day to an analyst upgrade on AXP and was up 50% on my position. I was addicted! I day-dreamed for days about my AXP over night success. I think around that time there was some sort of Buffet buyout of Heinz and an option trade that was up a ridiculous amount of %%%. I wanted to hit it BIG. I came up with the idea that all I needed to reach my goal was a few 100% over night gains/ 1k>2k>4k>8k> etc. I convinced myself that I would have no problems being patient for the exact criteria that I had set and worked on some other trades. Remember, the first win is always free. I was trading options pretty regularly from March 2015 until August 2016. During my best week I was up 20k and could feel the milli within reach. I can remember the exact option trade (HTZ) and I was trading weeklies on it. For those who have been in the market long enough, you will remember the huge drawdown of August 2015. I lost half my account value on QCOM calls (100 of them) that I followed at the beginning of July and never materialized. I watched them eventually go to 0. It was another 10,000 block that was probably a hedge or sold. In August 2015 there were some issues with China and all of us woke up to stocks gapping down huge. Unfortunately my idea of buying far dated calls during the following days/weeks after the crash went sideways. I quickly learned that an increase in volatility causes a rise in option prices and I was paying a premium for calls that were going to lose value very quickly (the infamous IV crush). I kept trading options into the end of 2015 and managed to maintain my account value positive but the trading fees for the year amounted to $30,000+. My broker was loving it. I tried all the services, all the strategies. I created rules for my option plays: 1. No earnings 2. Only follow the big buys at a discount (10,000 blocks or more). 3. No weekly options 4. Take profit right away 5. Take losses quickly 6. etc. I had a whole note book of option plays that I was writing down and following. I was paying for option services that all of you know about - remember, they make money on the services and not trading. I even figured out a loop-hole with my broker: if I didn’t have enough money in my account, I could change my ask price to .01 and then change it to market buy and I would only need to accept a warning ⚠️ for the order to go through. I was able to day trade the option and make money, who cares if I didnt have enough? After a few months of this, I got a call from my broker that told me to stop and that I would be suspended if I continued with this. By the way, I was always able to satisfy the debit on the account - so it wasn’t an issue of lack of funds. Lost it all. Started taking money from lines of credits, every penny that I earned and losing it quicker and quicker. I was a full on gambler but I was convinced that 8 trades would offset all the losses. I kept getting drawn in to the idea that I could hit a homerun and make it out a hero. I eventually hit rock bottom on some weekly expiring FSLR options that I bought hours before expiration and said to myself - what the f are you doing? I resolved to invest for the long term and stop throwing tendies away. The feeling was reinforced during the birth of my first born and I thought - what a loser this kid will think of me if he knew how much I was gambling and wasting my life. It was a really powerful moment looking at my kid and reflecting on this idea. I decided at that point I was going to save every penny I had and invest it on new issues with potential. Fall 2016 TTD, COUP and NTNX IPO ‘ed I decided I was going to throw every dollar at these and did so for the next few months. I eventually started using margin (up to 215%) and buying these for the next 6 months. They paid out and managed to make it over 100k within the year. The first 100k was hard but once I crossed it, I never fell below this magic number. 2017 - I did some day trading but it was mostly obsessing over the above issues. I did gamble on a few options here and there but never more than 1k. 2018 - SFIX was my big winner, I bought a gap up in June 2018 and my combined account value had crossed 400k by August 2018. I was really struggling at crossing the 500k account value and experienced 3 x 30-40% drawdowns over the next 2 years before I finally crossed the 500k barrier and have never looked back. I still made some mistakes over the next few months - AKAO & GSUM come to mind. Both of these resulted in 20k+ losses. Fortunately my winners were much bigger than my losers. I thought about giving up and moving to index funds - but i was doing well - just experiencing large drawdowns because of leverage. 2019 big winners were CRON SWAV STNE. 2017 / 2018 / 2019 all had six digit capital gains on my tax returns. At the beginning of 2020 I was still day trading on margin (180-220%) and got a call from my broker that they were tightening up my margin as my account was analyzed by the risk department and deemed too risky. Believe it or not this was right before the covid crash. I brought my margin down to 100-110% of account value and even though the drawdown from covid hit hard, I wasn’t wiped out. I stayed the course and bought FSLY / RH during the big march drawdown and this resulted in some nice gains over the next few months. I am constantly changing and testing my investment strategy but let me tell you that obsessing over 1 or 2 ideas and throwing every penny at it and holding for a few years is the best strategy. It may not work at some point but right now it does. I still day trade but I trade with 10k or less on each individual position. It allows me minimize my losses and my winners are 1-7%. I am able to consistently make between 3-700$/ a day on day trades using the above strategy. I still take losses and still dream about hitting it big with an option trade but dont feel the need to put it all on the line every month / week. I finally crossed into the two , club. I know people are going to ask for proof or ban but I am not earning anything for posting and the details about some of the trades should be proof enough that I kept a detailed journal of it all. I have way more to write but these are the highlights. Eventually I will share how I build a position in a story I love. I still sell buy and sell to early but I am working on improving. TL:DR - I gambled, lost it all and gambled some more lost more. I made it out alive. I have only sold calls/puts lately. The one common denominator in all successful people is how much they obsess over 1 or 2 ideas. Do the same. All the winners on this sub have gone all in on one idea (FSLY / TSLA ). Stick with new stories or ones that are changing and go all in...wait a second, I didnt learn anything.
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