Right view. Wrong structure.
"I had the right view... but still lost money."
Does it resonate with you?
The answer is usually simple: your view can be expressed in many different ways. Not all of them make money.
Most traders start with direction. Then bolt on a structure they know, even when it's sub-optimal for what the vol surface is offering.
On our global trading desk? You flip it. We start with what vol is giving you. Then see if your view fits inside it.
Last week's $NVDA earnings. Case in point.
I flagged (see X post) why the stock may sell off...
We had persistent high put skew diverging from price, plus the other Mag7 names' earnings price action as analogue.
But if you just bought puts? You got crushed. IV reset killed you.
Our structure made a cheeky 200% because it captured the expensive implied vol that was going to reset lower no matter what.
Same view. Completely different outcome. The only variable was letting the vol surface choose the structure.
How often do you check vol before entering a directional idea; what do you do with that info?
Volatility first.
Imran
Disclaimer (Your Gains & Losses, Your Responsibility): This content from Options Insight LLC (“Options Insight”) is for educational purposes only and does not provide individual investment advice or recommendations, nor should it be considered an offer to buy or sell any security. All information is general and not tailored to your specific objectives, financial situation, or risk tolerance. Employees of Options Insight may hold positions in the assets discussed. While we use sources believed to be reliable, we are not responsible for errors, omissions, or losses resulting from reliance on this content. Always consult a licensed investment professional.
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