THE DIFFERENT WAYS THEY HURT YOU

 

“Yea, not quite that kind of hurt, but close!”

When markets are very volatile, market makers whether they’re at NADEX or 

scumbag LP’s at Turnkey, 1) jack the spreads higher, 2) demand and get more 

“slippage candy” from fills, and 3) jerk the market around violently looking 

for stops. When VIX is dead, they bleed premium out of your positions like 

water out of a squeezed sponge … it matters little which market.

After watching NADEX markets closely over these last months, I’m pretty 

sure they have only one market maker for all products and markets … I could 

be wrong of course, but I don’t think so … and that market maker [or LP] is 

IG Group, London, which coincidentally is their parent company. “Gee, no 

conflict of interest there, huh”?

What leads me to that conclusion, is the dramatic drop in volatility in pretty 

much all markets, but nowhere near the drop in premium “optionality” that 

should have come with the respective call spreads ranges going lower … well, 

how come? … well, how about cuz there’s no competition for starters, and 

they can pretty much price ‘em where they want … and when VIX drops, they 

don’t want to get stuck short “gamma”, so they price them accordingly 

… that means if you buy ‘em you’re more than likely overpaying 

“bigly & yuge”, and it’ll be like putting money in a slot machine.

Today a perfect example in GBPUSD … around 8:45 AM EST, the nearest 

floor & ceiling call spreads had combined premium of 110 PIPS … that’s a 

helluva lot of premium to pay for 6 hours 15 minutes to expiration, with Cable 

already having an approximate 130 PIP range … you gotta make up 110 PIPS 

somewhere, so if the market diddles around, you’re simply toast … well, the 

market has diddled around, and here at 1 PM EST, the premium is at 69 

… and if nothing happens until 3 PM EST, they’ll be a lot lower than that 

… again, the problem is they were vastly overpriced to begin with, and you 

would need something breaking “Brexit” wise to get that kind of move 

… maybe, but I wouldn’t count on it. 

By the same token, oil call spread premiums are also priced extremely high, 

and with today’s range of about 70 cents per barrel, good luck with that 

… there’s no way in hell you make money … and with oil’s 20 Day Range 

MA going to go lower again after this week, it makes zero sense to pay for 

something you’re not getting … viz., volatility!

Gold? … it’s its own special kind of stupid at NADEX … extremely wide call 

spread floors & ceilings, with most at $50, and one at $100 … not only does 

this mean increased margin cost, but it offers no optionality protection … add 

to that a very wide spread + commission, and who wants to trade gold with a 

60 - 70 cent net cost per OZ.? … and it’s the same in silver. Stock indices? 

… fugetaboutit! … VIX here has been literally crushed to a pulp, but call 

spread premiums are only down slightly … again, the LP isn’t gonna get 

caught short gamma to a bunch of small retail specs … you either pay up or 

don’t play … “well, that’s an easy decision to make, see ya later”!

So, we wait, cuz that’s all we can do … otherwise you’re playing slots, and 

that’s not what I’m here for or want to do … until tomorrow mi amigos 

… Onward & Upward!!

-vegas

OUR NADEX SIGNALS SERVICE IS UP & RUNNING … DAILY 

WTI CRUDE OIL SIGNALS & “VOLATILITY” STRATEGIES 

IN 20 OTHER MARKETS, INCLUDING COMMODITIES, FX, 

& STOCK INDICES! … “what on earth are you waiting for”?