00:00:00.000 --> 00:00:00.000 Oh, there you go. That's probably a good idea. Yeah 00:00:00.000 --> 00:00:01.000 Yeah. 00:00:01.000 --> 00:00:02.000 Perfect. 00:00:02.000 --> 00:00:16.000 There you go. So I always forget to do that and they all yell at me every time I do that. So anyhow, I'm going to let you get started. But first tell us a little bit about you and how you ended up here. I know it's been a while since you've ended up here and you know some of your past products and where you've been and we'll get 00:00:16.000 --> 00:00:35.000 Jamming on this thing. By the way, for folks, if you have questions before I forget, there's a Q&A in the Zoom down there. Feel free to use it. Send us lots of questions, both Henry and I love questions. We will get to those along the way, and probably at the end, just depends on how we're moving 00:00:35.000 --> 00:00:51.000 I'm also going to launch a poll of sorts, or a survey. It's about 5 or 7 questions. It's easy, it's mindless, so it just gives us some information about the kind of things that you guys like to hear and see on these things. So anyhow, I'll do all that, ask a lot of questions 00:00:51.000 --> 00:00:53.000 In that case, Henry, have at it. 00:00:53.000 --> 00:01:15.000 Awesome. Yeah, questions are good. So I love to kind of learn what people are trying to figure out. So I've been in the business for almost 30 plus years at this point. I'm a vice president of market intelligence at CIBO, which means basically, literally I get to play with the data all day long. I came into CIBO after a company that I 00:01:15.000 --> 00:01:31.000 Founded called Trade Alert, which was an options-focused flow analytics firm that I started in 05 and ran for about 14 years, CBO bought us during COVID, brought everybody in, and the Trader platform has been a SIBO platform now for 00:01:31.000 --> 00:01:47.000 About six years, although I'll say right now, we're sunsetting it in October because it's a little bit antiquated, but also we're working very hard to kind of pull that functionality into LiveVault Pro, which I have a couple screenshots from in 00:01:47.000 --> 00:02:03.000 In my deck, but option flow analytics really is kind of my passion. I've traded, I've been a market maker, I've been a kind of a handled customer flow, but we're going to kind of talk about market evolution and dynamics, and then I've, I'm always paranoid about 00:02:03.000 --> 00:02:16.000 Kind of showing data that people have seen before and since we did that great day in Florida, I've tried to change it up a little bit, especially because we have SpaceX now to talk about. That certainly was 00:02:16.000 --> 00:02:23.000 Kind of a big event for the… not just the industry, the world of finance in general. So 00:02:23.000 --> 00:02:38.000 So let me share and get started and I'm going to skip a few of these slides. This is a very big deck, and I don't want to blab on for too long. But let's get rolling here. I'm going to just do the window I think will work. Let's see 00:02:38.000 --> 00:02:39.000 I'll let Richard know when it pops up here 00:02:39.000 --> 00:02:47.000 Let's see. Yeah, let me know how it looks. So if I go to slideshow from the beginning 00:02:47.000 --> 00:02:50.000 Yep 00:02:50.000 --> 00:02:52.000 You can, yeah 00:02:52.000 --> 00:02:55.000 I'm gonna make it bigger and 00:02:55.000 --> 00:03:01.000 All right. How does it look 00:03:01.000 --> 00:03:02.000 We're good? Okay. 00:03:02.000 --> 00:03:03.000 Yeah, I mean, it looks good. You can see the, oh, there you go. Now we're good. So yep, you're perfect. Go ahead. Have at it. 00:03:03.000 --> 00:03:16.000 Awesome. Okay, and feel free to interrupt me. I don't want to get through all these slides. Some of the ones at the end are probably not even super applicable to the trading community that we're talking to, but 00:03:16.000 --> 00:03:32.000 The state of the industry update you can actually sign up for at civo.com. I'm just going to talk about what's been going on, and slow down when we get to some of the kind of cool latest, greatest stuff. So just a really quick 00:03:32.000 --> 00:03:53.000 View, and I did show this in Florida, but I've added a month to it, just to kind of show over the last 8 years, kind of what has happened to not just volume, but, you know, volume broken out by the kind of the sectors we usually think about, segments, you know, the single stock volume, the ETF option volume, the index option volume 00:03:53.000 --> 00:04:08.000 Basically, you can see in this column, which is 2026, it's all bright green because it's all the highest in the sheet, but it's also basically all-time record levels. So what we're looking at now through the end of May is 00:04:08.000 --> 00:04:26.000 is, daily volume around 69.5 million contracts. I actually think where we are in June now, where we've topped 70 million contracts a day, so, just look back to 2019 pre-COVID, when we were doing under 20 million contracts a day. We're now doing 70 million contracts a day. 00:04:26.000 --> 00:04:44.000 Incredible growth that, you know, this… you know, as I said, I've been doing this for 35 years. I've never seen the changes that we've seen, like, in the last 4 or 5 years, and we'll get into a little bit of kind of where that's coming from, but, you know, I'll give you the spoiler is a lot of it is self-directed activity 00:04:44.000 --> 00:05:00.000 Retail, pro-tail, you know, users like, you know, the traders that are using Tradier to access the market, and it's phenomenal. So, I'll point out a couple other things that are pretty interesting to me. There's the… right around the middle, there's the zero DTE volume 00:05:00.000 --> 00:05:18.000 Which is currently running around 19 million contracts a day on average. So that's contracts that trade the same day that they expire. They're not listed the same day they expire. They're listed about a month out in most cases. But we continue to see growth there. That's up 40%. This year was up 00:05:18.000 --> 00:05:31.000 38% last year as well. So surprising, really, you know, that that volume, not only is it really, really consistent, but it continues to grow. So the other thing I would probably point out is 00:05:31.000 --> 00:05:47.000 The number of underlings, the things down at the bottom, so the number of underlyings, the number of contracts, the number of expirations, okay, so we basically have about 6,000 underlyings you can trade options on. That's actually kind of flat-lined, okay? 00:05:47.000 --> 00:06:06.000 It used to be, into COVID, it was around 4,300, so we have kind of bounced off of what was a multi-year low. In terms of the number of products you can trade options on. So, you know, that means basically IPOs, which are bringing new stocks to the market, SPACs, which were really hot during COVID, if you remember, you know, that was another way that we 00:06:06.000 --> 00:06:22.000 new products to trade options on, and then ETFs has actually been a big, big source of the growth. All these new ETFs, these buffer protected ETFs, these ETFs that actually use options inside them, you can actually trade options on those ETFs, too, so a lot of the growth has been that. 00:06:22.000 --> 00:06:43.000 The other thing I'll point out, and maybe it's something kind of specific to industry geeks, but you see we have 2.2 million maximum contracts listed. That's all the expirations times all the strikes that are listed across all products. So, if you wanted to kind of process the entire options universe in real time, you're looking at up to 2.2 million 00:06:43.000 --> 00:07:00.000 Options that need to be quoted live, right, because basically all quotes are, you know accessible electronically now. And the way the market actually works, we actually have 18 different exchanges, and they're run by 6 operators, but that really kind of sets up 00:07:00.000 --> 00:07:03.000 An incredibly kind of 00:07:03.000 --> 00:07:21.000 Dynamic, challenging, massive infrastructure required to transact in the industry, especially on the liquidity side. So, and then the last thing I'll point out is the number of maximum number of expirations. Now, right now we have about 8 00:07:21.000 --> 00:07:36.000 Listed at the same time across all products, that's actually going to tip, probably tick up as we're kind of adding, you know, the weeklies. We might fill in the dailies on the single stocks as well soon. So, 00:07:36.000 --> 00:07:52.000 But the short story is incredible growth basically across all segments of the market, like, you know, really like we've never seen before. So a quick kind of super high-level view of annual option volume since contracts were first listed. I did talk about this in Florida 00:07:52.000 --> 00:08:08.000 It's just kind of mind-blowing to see where we've come in, you know, in basically the last 15 years or so. You know, we went from trading floors for about the first 25 years to kind of modernization and electronification and the exchange is kind of automating 00:08:08.000 --> 00:08:23.000 We kind of had a quiet decade, really, around the GFC. Things were relatively flat, market struggled. And since COVID, it's been off to the races. So you just see this growth rate, you know, this 10, 20% growth rate 00:08:23.000 --> 00:08:38.000 Continuing. The last time we had a decline was actually 2022. Let's see, I have a little bit of a slide on that here. So, if you remember 2022, the market went down for a change. We actually were down about 20% that year 00:08:38.000 --> 00:08:44.000 You know, following kind of the explosion to the upside from what we saw during the 00:08:44.000 --> 00:08:49.000 Pandemic years, but so that the 00:08:49.000 --> 00:09:05.000 What's kind of interesting, though, is, if you look at this chart, 2022, the average daily volume in total went up to 40 million contracts today from 38. But you actually see a decline in the single stock average daily volume from 26 million to 21 00:09:05.000 --> 00:09:28.000 It's about 22. So that was less trading activity, and it's no coincidence that it happened during a year where the market was going down. It was kind of a slow decline kind of year. Everybody that I talked to looks at 2022 as a really weird year because the market went down, you know, about 20%, but there were no big shocks and people that actually owned puts in 2022 did not make any money. 00:09:28.000 --> 00:09:38.000 Because it just was happening slow, so slowly, and you didn't get any VIX, you know, volatility explosion. 00:09:38.000 --> 00:09:41.000 Yeah 00:09:41.000 --> 00:09:42.000 Yeah. 00:09:42.000 --> 00:09:53.000 We've experienced that in our day, right? Right, Henry? Let me… let me bust in here for a second. I want to answer a question from maybe the previous slide. A viewer's asking, have you seen ZeroDTE accelerate with the PDT rule going away? I wanted to get that PDT in here, early 00:09:53.000 --> 00:09:54.000 Yeah. 00:09:54.000 --> 00:10:00.000 Because you and I had a little conversation pre-show about this, so let's tackle that one for now, right now. 00:10:00.000 --> 00:10:19.000 Yeah, I will… I have a slide specifically on index volume, but yeah, PDT is a really interesting change, right? And it's been coming for a long, long time. And now it's gone, right? So you got rid of this $25,000 minimum value account effectively across all brokers. Some of them took a little bit longer than others 00:10:19.000 --> 00:10:38.000 And that rule was actually specifically for options. It was keeping people from trading, in some cases, keeping people from closing profitable trades, which, you know, we teach. Like, listen, you know, close your… if you're, you know, if you have an option position on, and let's say you're short a contract, and it goes from 00:10:38.000 --> 00:10:53.000 You know, from $2 where you sold it down to 10 cents or a nickel, and there's two hours left in the day, we say cover that trade, right? Take the risk off. You've already made, you know, 99% of the money you're gonna make. I'm not giving recommendations, but 00:10:53.000 --> 00:11:15.000 That is the way all the good traders I talk to think. And with the PDT flag, which was kind of hard to comprehend, especially for, you know, retail small account new traders to the industry, they just knew they had a warning, and they're like, well, if you do another trade, you're not going to be allowed to trade. You're going to hit this PDT 00:11:15.000 --> 00:11:23.000 The the day trading limit. Now that's gone and we are seeing index volume 00:11:23.000 --> 00:11:39.000 grow, and in particular in XSP, which is the SPX index divided by 10, so basically it's priced very close to SPY, and it's a popular product, it's European cash settled index options, which, you know, are a little simpler than 00:11:39.000 --> 00:11:55.000 Physically saddled spy or something like that. And that's actually where we are seeing the growth, and it's not subtle. It is from certain brokers that cover the retail small account universe, we're seeing 00:11:55.000 --> 00:12:16.000 pretty sharp, like a hockey stick growth because these traders wanted to trade more, whether it was closing positions or they have some strategy they like, and they were just basically stopping when they hit a certain number of trades in a week. Now that is out the window. You can trade as much as you want. There are, you know, margin applies, so, you know, risk control by the brokers is 00:12:16.000 --> 00:12:36.000 still taking place, people can't be, if you're irresponsible, you're going to run into trouble. But yes, we are seeing a big uptick, and I assume that we'll probably, you know, that's one of the big drivers. You know, every conference I go to, we're always like, well, where's the growth going to come from this year? Because, you know, we see, basically, we've had… this will be the sixth straight year of 00:12:36.000 --> 00:12:40.000 Of market growth. 00:12:40.000 --> 00:12:52.000 You know, where's it going to come from? You know, we already have zero DTEs, you can't really add in, you know, I suppose you could theoretically add in even shorter maturities, but I doubt we're going to see that in listed options. 00:12:52.000 --> 00:13:05.000 But the PDT rule going away, it's definitely goosing volume. Some of the new listings, like SpaceX, definitely goosing volume. So 00:13:05.000 --> 00:13:06.000 Yeah, sure. Okay. Good. 00:13:06.000 --> 00:13:17.000 That's a really good question, and it's very, very kind of fresh. So awesome. All right, a few on just kind of how this market stacks up. So what you're looking at here is, and these are fresh, I just updated this yesterday 00:13:17.000 --> 00:13:33.000 It's actually dated two days from now, so it's not the 26th, it's the 23rd. Basically, although I said, you know, before we have about almost 6,000 listings you can trade options on, it's very, very concentrated market. So, in the ETF world. 00:13:33.000 --> 00:13:50.000 Basically, the top 10 do 83% of the flow, okay, out of almost 2,000, right? So, you know there's 2,200 others that only make up 17%. And if you've traded options for a while, you know, you'll hear like, oh, a lot of options, a lot of names don't trade at all, a lot of strikes don't trade at all. 00:13:50.000 --> 00:14:05.000 Kind of something we're always kind of looking at and trying to figure out what resources are getting wasted on things that don't seem to trade. And there's a balance there in terms of like, well, geez, you want to have a product in case some sector really starts to explode 00:14:05.000 --> 00:14:23.000 But that's kind of how it works in the ETF world. It's the big ETFs you've heard of and then you've got IBIT in there, which is the Bitcoin ETF. You've got Triple Q, which is a levered ETF as well. In the index world, it's even more concentrated. There's about 00:14:23.000 --> 00:14:46.000 40 indexes available to trade options on. The top 10 trade 99.9% of the activity. So, that's gonna be SPX and VIX is the majority, and then XSP is right in here as well. You've got NDX options and Russell options as well. There's even DJX, the Dow Jones Index divided by 10 trades on SIBO as well 00:14:46.000 --> 00:15:02.000 It's an SPX and VIX world. And then XSP, which I mentioned in terms of the PDT rule, seeing a big boost. XSP and SPX are basically the same product, right? So they trade separately, but all of the liquidity that's in the SPX, which 00:15:02.000 --> 00:15:12.000 Which currently trades about 5 million contracts a day, okay, trades about a third of the entire market's premium happens in the SPX product. 00:15:12.000 --> 00:15:27.000 So, XSP basically piggybacks on that ecosystem, and then there's some kind of overlap in the liquidity from the SPY world as well. And then in the single stock world, it's not quite as concentrated, but it's still pretty concentrated, with the top 10 doing basically 00:15:27.000 --> 00:15:43.000 A third of the activity, Apple, NVIDIA, Tesla, now SpaceX has been coming in in third place, I think for the last five, the first five days of trading. So, it might actually shape up a little differently and be Nvidia, Tesla, SpaceX, Apple, because that's how it's been looking. So 00:15:43.000 --> 00:15:58.000 Just a couple more just on how the market has evolved to short-dated trading, right? This is a really interesting phenomena, so that the explosion in retail activity is one of the biggest drivers, and that really kind of got, you know. 00:15:58.000 --> 00:16:04.000 jump-started around COVID, but you were in the business serving that community before COVID anyway, right, Lex? 00:16:04.000 --> 00:16:05.000 Oh, yeah. 00:16:05.000 --> 00:16:20.000 So, but COVID really was kind of an inflection point and you can see it. What's interesting is while the total volume has continued to grow, this top chart shows you one week and shorter. So contracts expiring within a week 00:16:20.000 --> 00:16:36.000 basically go from, you know, 6 million contracts a day to, you can't see it on the chart here, it's about 35 million contracts a day now. That's been the majority of the growth. Now, you do have growth in the longer dated as well, which is nice to see. We definitely want to see that, but basically going from 11 million to 28 00:16:36.000 --> 00:16:51.000 Is not the same kind of growth going from 6 million to 35 million. And then in the bottom charts, you can actually, we break it out by ETF index and single stock, because it really is kind of different use cases, or slightly different use cases, and a different kind of trading community as well. 00:16:51.000 --> 00:17:07.000 In the ETF world, it's extreme 2.6 million to 18 million contracts a day. This is SPY NQ's, IWM, and it's the zero-day, you know, the daily cycles peaking up incredible amounts of activity 00:17:07.000 --> 00:17:23.000 Same thing in the index world, you know, you basically go from half a million contracts a day or so to almost 4 million contracts a day, so 8 times growth, you know, since 2020. And now this, in 2022 is when the daily expirations were finally filled in 00:17:23.000 --> 00:17:43.000 We already had Monday, Wednesday, Friday in SPX and in the ETFs, the big ETFs. But in April of 2022, we listed Tuesday, Thursday, and it rounded out the week. It also kind of makes these trading strategies that I don't think even, you know, I was at CIBO and I was not involved in the decision, but I don't think anybody really anticipated the 00:17:43.000 --> 00:17:58.000 explosion that we would see in the growth. And then the single stock world, it's not quite the same picture because there are no daily expirations yet in the single stocks. There are Monday, Wednesday, Friday in the top 8 or 9. 00:17:58.000 --> 00:18:03.000 They haven't listed Tuesday, Thursdays yet. There's actually a debate actually at OIC before 00:18:03.000 --> 00:18:16.000 But for your event, one of the discussions was basically should we fill in the Tuesday, Thursdays, or should we add more names for the Monday, Wednesday, Friday? So, and I have a slide on that that kind of shows, how I think that's going to go. 00:18:16.000 --> 00:18:34.000 I'll just do a quick one on index activity. As I said, it's an SPX and VIX world. This is in log scale, because otherwise you can't see the lines for the less liquid ones. So SPX, almost 5 million contracts a day. VIX almost a million contracts a day. XSP, you know, as I said 00:18:34.000 --> 00:18:55.000 Seeing some real growth. It was having pretty solid growth in general, along with kind of the retail wave anyway, because people, once they're trading short-dated options. 00:18:55.000 --> 00:18:56.000 Sure 00:18:56.000 --> 00:19:04.000 Index options that settle into cash are just a lot safer. You know, you don't have that confusion about what's going to get assigned and after-hours moves and everything else. And then, you know, once you get kind of down the list, we're going from 5 million here down to, you know, we're showing things that are basically 1,000 or even less than 1,000 contracts a day 00:19:04.000 --> 00:19:07.000 That gets you the top 10. That's 00:19:07.000 --> 00:19:24.000 That's how it works. So, and then if you think about it in dollar premium, like I said, SPX, it's a monster, trading 15 billion contracts a day. That's a third of the whole market. So the whole market trades 45 billion or so a day. SPX is $1 out of every $3. So 00:19:24.000 --> 00:19:28.000 And then, I want to talk about the XSP binary, so we can 00:19:28.000 --> 00:19:31.000 This is a new slide and I'm 00:19:31.000 --> 00:19:34.000 Yeah, so this is a new deal, right, Henry? 00:19:34.000 --> 00:19:52.000 Yeah, so SIBO listed… so binary options, it's a new deal, you know, everybody's heard about these prediction markets, you know, things like calcium, Poly market and you can't really avoid the news stories about people replacing bets before certain, you know, military moves, or 00:19:52.000 --> 00:20:11.000 It's a little bit of a free-for-all. In fact, we had a management conference last week in Wisconsin, and I asked Craig Donohue, our CEO, who used to work for… he used to be the CEO of CME. So I said, listen, you have a lot of experience working, you know, under 00:20:11.000 --> 00:20:16.000 Sure. 00:20:16.000 --> 00:20:17.000 Right. 00:20:17.000 --> 00:20:25.000 The CFTC, which regulates futures markets, and it also happens to currently regulate the, these prediction markets and then but some of the prediction markets feel very much like equities, right? Like you can actually do predictions on 00:20:25.000 --> 00:20:38.000 Stocks in certain ways. So I asked him, is this the biggest kind of free-for-all that you've ever seen? And he said, yeah, yeah, this is a little bit messy when it comes to regulatory structure 00:20:38.000 --> 00:20:44.000 But SIBO, you know, because we are an SEC regulated listed options exchange 00:20:44.000 --> 00:21:01.000 you know, I guess as far as options go, we're kind of vanilla, right? But, you know, we also do about 25% of the total volume, and as you saw, the total volumes exploded. So we've rolled out our own binaries, okay? Binaries are a kind of a prediction. Basically 00:21:01.000 --> 00:21:16.000 The little on the right side, you basically see the example is a 680 or above call, okay, but it's a binary, meaning if XSP, okay, which again is just SPX divided by 00:21:16.000 --> 00:21:27.000 If it closes over 680 on the expiration, you get a dollar. Simple, okay? Everything's times 100 because we're still using listed options. 00:21:27.000 --> 00:21:42.000 That's it. You don't have if it's 679.99, you don't get anything. It's worthless. If it's 6801, it's worth $1. And that's a binary option, and these have been around, but 00:21:42.000 --> 00:21:59.000 There's kind of a whole new engagement going on. So the two slides I'm showing at the top, which is the recent option trades, those are both me, those are from today. I'm very proud to say I tried to trade everything SIBO has to get a feel for how 00:21:59.000 --> 00:22:17.000 Market is working, it's even better if I'm allowed to, if I can make a little money. In this case, these 2 trades are me. This morning, when XSP was at 7, almost at 741, okay, I sold the 735 put binary for a dime 00:22:17.000 --> 00:22:33.000 Okay, so this picture here is a binary call, meaning if it expires above 680, it's worth… with the index above 680, it's worth $1. The put is just the opposite, so if it expired below $7.35, it would be worth a dollar 00:22:33.000 --> 00:22:49.000 So my bet on this was that we weren't going to tank much lower than we were this morning. This was a pretty rough morning. We did end up closing at 736, but I actually closed in… closed the trade for 3 cents, so I actually left a bid sitting out there 00:22:49.000 --> 00:23:19.000 Because, you know, and now this case is basically a test trade, but as I said, why wait until the end for that last, you know, penny or two? And in this case, you know, I made a… whatever, I made a call, but, and I made a little tiny bit of money on it, but 00:23:19.000 --> 00:23:20.000 Right. 00:23:20.000 --> 00:23:27.000 The thing to understand here is that this option that I sold for $0.10 maximum value is $1. It doesn't have this infinite, you know, the hockey stick payoff people think about if you're short a put. So I was short a put, I was short a binary put that has a max value of $1. That's different than being short a put that has a max value of 00:23:27.000 --> 00:23:30.000 Basically, the strike itself, if you were to go all the way down to 0. So 00:23:30.000 --> 00:23:41.000 Yeah, let me jump in for a second here, just so people understand a little bit. Let me ask a couple questions. So you mentioned earlier things expire at zero or a dollar 00:23:41.000 --> 00:23:49.000 Right? Okay. Is that dollar in options parlance times 100? If I play a one lot, am I getting $100, or am I getting that dollar 00:23:49.000 --> 00:23:53.000 You're getting $100. 00:23:53.000 --> 00:23:55.000 Yeah 00:23:55.000 --> 00:23:56.000 Yeah. 00:23:56.000 --> 00:24:05.000 Okay, so it converts like normal options do. So it keeps it consistent. Okay. And then it sounds like on the left graph here where you have the spread, you guys list certain spread patterns that you can you can play 00:24:05.000 --> 00:24:06.000 Or trade 00:24:06.000 --> 00:24:15.000 Yeah, so yeah, so it's really pretty interesting. So the binaries, you know, we know some people, and this is kind of for 00:24:15.000 --> 00:24:27.000 It's not really intended to get 00:24:27.000 --> 00:24:28.000 Sure. 00:24:28.000 --> 00:24:35.000 Customers who trade options to start trading binaries, although it worked on me. It's a little bit more of, like, listen, if you're uncomfortable trying to pick your strike or, you know, create a spread, like, you just… it's one thing. You buy it or you sell it, and you know basically what your payoff's 00:24:35.000 --> 00:24:54.000 It looks just like that. The vertical spread, which is a little bit more, you know, especially kind of for your community, what people are pretty familiar with is if you buy the 679 call and you sell the 680 call, you're going to make, you know, penny for penny from 679 up to 680 in the underlying 00:24:54.000 --> 00:25:16.000 And then you don't make any more, okay, because you're long a 679 call, which has, you know, infinite upside, technically, but you're short a 680, the difference between the two has to stop at $1, and this is the most 00:25:16.000 --> 00:25:17.000 Sure. 00:25:17.000 --> 00:25:25.000 Popular vertical spread across the entire market. It's basically about, it's almost 50% of all complex order trading. And so these things, I was just talking to a colleague earlier on this, these things kind of go together in a weird way, in that 00:25:25.000 --> 00:25:40.000 A binary is a yes or no, okay? It's above 680 or it's not. The vertical spread, which starts at 679 and finishes at 680, can actually make you money if we close at 679.50, it'll be worth 50 cents, right? 00:25:40.000 --> 00:25:56.000 So, the way SIBO's kind of framing this is you now have the choice, you can buy a binary, but you can also buy vertical spread that is equivalent to the binary at the maximum, but gives you the participation as if you get close, is the way we talk 00:25:56.000 --> 00:26:16.000 Yeah, yeah. Okay, so, what's in Siebo parlance? What are we officially calling these from your angle there? I know we've talked about prediction markets. I know that's a popular term in the industry. Are you guys going to use a different term or is it going to be prediction markets or not 00:26:16.000 --> 00:26:17.000 Okay. 00:26:17.000 --> 00:26:20.000 We are calling them binary options. And 00:26:20.000 --> 00:26:48.000 And the vertical spreads, we are calling vertical spreads. In some cases, especially, we're kind of, like, creating this environment for the end user and the brokerage community to kind of package these and make them very accessible to customers so that they can say, here's my view today 00:26:48.000 --> 00:26:49.000 Yeah. 00:26:49.000 --> 00:27:03.000 And you don't need to go pick your strike and figure out which option you're buying, which option you're selling. However, when you actually execute the trade, that is what you're doing. And the difference in, kind of, execution style is, these binary… sorry, these vertical spreads are being quoted dynamically 00:27:03.000 --> 00:27:04.000 Sure. 00:27:04.000 --> 00:27:17.000 in the complex order book, which is actually, that's very new. The complex order book used to be just a place for orders to rest, and then you could kind of get hit out by a market maker or a liquidity provider. If the market moved on you. But in this case, we're now telling the liquidity community, you guys can go ahead and quote these things dynamically. So as the market's moving around. 00:27:17.000 --> 00:27:35.000 Let's say we're in the last few minutes of the day and the market's at 679.50, that spread's going to be worth 50 cents more or less, right? We actually are letting the market makers start quoting, you know, 45, 55, 45, 55, and move that as the market moves up and the market moves down 00:27:35.000 --> 00:27:59.000 Which creates a whole new kind of 00:27:59.000 --> 00:28:00.000 Right. 00:28:00.000 --> 00:28:16.000 Level of quality because, you know, I mean, spread's been around since the very early days of options, but looking at one option, taking the offer, and then subtracting the bid for the other option, and trying to figure out, oh geez, I better look at midpoints and the bid to offer is going to be kind of wide, because you're paying two spreads, but the market isn't really going to require you to pay two spreads usually 00:28:16.000 --> 00:28:17.000 Sure. 00:28:17.000 --> 00:28:35.000 So, allowing people to quote the complex order, actually, it's a very cool thing because that's what's trading, at least it's basically kind of half of the activity in some products. So that's kind of the dynamic. So we're calling it binary options for on XSP 00:28:35.000 --> 00:28:36.000 Sure. 00:28:36.000 --> 00:28:42.000 We may kind of morph this as, you know, as the market evolves, because we also, you know, we try not to confuse, you know, the end user. If they're like, hang on, is a prediction market, you know, an event contract the same as a binary? An event contract and a binary, those terms are kind of interchangeable 00:28:42.000 --> 00:28:44.000 Sure, sure. 00:28:44.000 --> 00:29:02.000 And so a binary option, it makes a little bit more sense when you're coming from the options space. And so I encourage people to look for them. They're brand new. These things have only been listed for about a week. In fact, we listed them on Monday right before SpaceX options 00:29:02.000 --> 00:29:06.000 Kind of a soft launch. And 00:29:06.000 --> 00:29:23.000 And many brokerage platforms are still getting up to speed on them. I know they're not currently available through you guys yet, but this one I was able to kind of access the market, and I think it'll be really interesting. There's obviously an ARB between the regular listed options and the binaries 00:29:23.000 --> 00:29:38.000 And some the other kind of fun thing to do is talk to like, you know, AI, Claude or ChatGPT and have run through like, okay, explain binary options to me compared to listed options. And, you know, in the end, there's a, you know, in the Black-Scholes model, there is a. 00:29:38.000 --> 00:29:54.000 Part of the formula that is, it's not the delta that's close to the delta, the N of D2 is basically the probability of expiring above the strike, and that becomes basically the price that you pay on a binary. It's really, really interesting stuff 00:29:54.000 --> 00:30:01.000 Yeah, it's cool. And what's also neat about it is that you could technically 00:30:01.000 --> 00:30:08.000 sell one of the, you know, the binaries, not the spread part of it, and it's… it's like selling a naked call that has a ceiling 00:30:08.000 --> 00:30:09.000 Exactly. That is what I did 00:30:09.000 --> 00:30:25.000 So now you don't have to margin a naked call with all the money and all the fancy margin requirement. You're going to margin up to a dollar times the number of contracts you trade, obviously. But that makes life a lot easier to understand for certain folks, right? 00:30:25.000 --> 00:30:26.000 I think. 00:30:26.000 --> 00:30:53.000 Yeah, well, absolutely, and you, you know there there's when you have two legs of an option and a spread and one might not have a bid because the market's about to close and it's out of the money, like a binary is really, it's one unit. You don't have to worry about closing one leg or the other 00:30:53.000 --> 00:30:54.000 Yep. 00:30:54.000 --> 00:31:00.000 Or any sort of, like, liquidation of just the short leg, like, there's none of that in there. This is, as you said, the maximum value of these things is a buck, that's what the market maker… that's what the broker's gonna charge as margin, and that's it. And, you know, currently we only have them on the 00:31:00.000 --> 00:31:02.000 Yep. 00:31:02.000 --> 00:31:03.000 That's great 00:31:03.000 --> 00:31:12.000 The current day and the next day expiration, so these are very short-dated trades, and, you know, we're gonna kind of see how they, you know, what kind of traction we get, and 00:31:12.000 --> 00:31:13.000 Sure. 00:31:13.000 --> 00:31:17.000 I think they're really interesting. They really kind of fit into the puzzle of, you know, options and everything. 00:31:17.000 --> 00:31:23.000 Sure. 00:31:23.000 --> 00:31:24.000 Yeah 00:31:24.000 --> 00:31:40.000 Okay, let's tackle a few questions here real quick, Henry. I know you got a couple more to go through here, and we're getting about 406. We got maybe 10 minutes or so. Is there any data on retail versus professional trader volume that the public can access live 00:31:40.000 --> 00:31:41.000 Okay. 00:31:41.000 --> 00:31:48.000 The answer is very nice. No. There's not. But wait, I have a slide. Check this out. Okay, this is new and we're turning this into a dashboard that is not yet public, but I decided that 00:31:48.000 --> 00:31:51.000 You guys qualify as 00:31:51.000 --> 00:32:07.000 smart enough to make some sense out of it. So, the reason that the answer is no is that the exchanges do not know the specific customer. We don't know… in some cases, we know the brokerage house that's sending the order to the exchange, but remember, also, you've 00:32:07.000 --> 00:32:22.000 You've got 18 different exchanges. So in SpaceX, for example, the order flow, which has been close to 2 million contracts a day, is split across 18 different exchanges. Now, CIBO runs four of them. Together, we do about 22% of the market 00:32:22.000 --> 00:32:30.000 And what we're looking at here, and so in terms of like, well, ProCust versus Cust. 00:32:30.000 --> 00:32:47.000 you know, big account versus small account, we don't have any of that. Institutional customer versus retail customer, we have a little bit of information, and then you can also do things like exclude big trades or something. So, what we're doing in this little dashboard on SpaceX, and this is… there are only 4 trading days 00:32:47.000 --> 00:32:54.000 Till today's the 5th and I don't have today in there. But so overall, okay, the green 00:32:54.000 --> 00:33:10.000 Section is calls and the blue section is puts, and this is a delta-weighted net position. Okay, so basically if you've got a call being bought, it's a positive delta, it's going to be weighted times that delta. If you have a call spread being bought 00:33:10.000 --> 00:33:25.000 You know, so one's got a 50 delta, the other one's got a 20 delta, you're actually still gonna get the 30 delta out of it, okay, which is, and so what you can actually see here is the net on that very first day was call selling 00:33:25.000 --> 00:33:38.000 Okay, there it's under zero. It was also called selling on the second day and also some put selling on the third day, it was put buying. Okay because 00:33:38.000 --> 00:33:53.000 The… because it's above the line and then, and then on the on Friday the Thursday, you had basically call buying and put buying, but the call buying was a little bit heavier. So, 00:33:53.000 --> 00:34:09.000 And now, let me just walk through the bottom part. We are able to break off retail versus non-retail. There's a lot of limitations. One is this is only based on SIBO activity, okay? So you can extrapolate to the others, but it's not perfect 00:34:09.000 --> 00:34:24.000 That very first day from the retail brokers that we're able to kind of accumulate together, we saw call buying, okay? We saw call buying of kind of a net of 6,000 contracts in a delta-weighted 00:34:24.000 --> 00:34:34.000 That was the first day the thing was listed. Stock traded up, I think, to almost 220 on that day. 00:34:34.000 --> 00:34:52.000 The… and then a little bit of put buying as well, but mostly call buying. The next day, from the retail community, very little, net call activity, so basically kind of balanced out, it kind of canceled out. And a little bit of put buying. The next day, more put buying, 00:34:52.000 --> 00:34:56.000 And a little bit of call buying and then Friday kind of 00:34:56.000 --> 00:35:11.000 More on the call buying side. If you compare that to what the institutional customers were doing, this is kind of a wild mirror. The customers are buying calls on day one, and the institutions were selling calls on day one 00:35:11.000 --> 00:35:28.000 Okay, that's telling you something. The next day, you basically kind of had something similar. Then on the last day, they're actually kind of both doing something. They're both kind of doing something similar, which is basically kind of net buying of both 00:35:28.000 --> 00:35:39.000 There's a lot to kind of understand here, but I will point out a couple things. It's not so much that retail was just, you know. 00:35:39.000 --> 00:35:54.000 crazy to get upside exposure, and they were doing it in the form of calls or call spreads. That actually might be part of that first boost, but the reason that the institutions were selling had a little bit more to do with, kind of, volatility than the fact that the stock 00:35:54.000 --> 00:36:09.000 Was shooting up from the IPO price to a level where I think it had a bigger market cap than Amazon, right? So, there was a little bit of a hint there of, like, this is getting awfully out of hand, but I think this is, you know, so basically, as the 00:36:09.000 --> 00:36:23.000 Volatility started out, you know, pretty high. You had customers aren't thinking too much involved terms, but the institutions are. And so they were kind of selling into that. So that's a really long answer for the kind of concept of customer versus 00:36:23.000 --> 00:36:25.000 Yep. 00:36:25.000 --> 00:36:32.000 Versus, institutions. We are working on kind of some other… some other goodies in terms of 00:36:32.000 --> 00:36:48.000 Characterizing the activity, because I think it's, you know, with retail customers or, you know, a non-institutional clients making up about half of the volume these days, you can't ignore it. And COVID was the perfect example of that, like it was 00:36:48.000 --> 00:37:13.000 It was very specifically retail customer traders were driving the market for a couple of years there. Institutional flow actually dipped during COVID, at least for the first 6 months, while the retail flow was exploding and that, and the market was moving the way that the retail was kind of, you know, we all saw it, right? The meme 00:37:13.000 --> 00:37:14.000 Yep. 00:37:14.000 --> 00:37:27.000 Grazin just the freaking you know growth in the, you know, in the market was amazing. So that's, you know, so people are paying a lot of attention, but the, the, you know, that's a really long answer to no, there's nothing public available. What we're able to do here is we're aggregating 00:37:27.000 --> 00:37:37.000 flow across the retail brokers space, and we're doing a few other data tricks to kind of clean it up. And we're confident this makes, this is a good way to look at it. So 00:37:37.000 --> 00:37:38.000 Good. 00:37:38.000 --> 00:37:52.000 This slide is a similar kind of look. So this is just the institutional versus retail in SpaceX for those first few days. So it actually was more institutional activity out of the gate, which I think is interesting 00:37:52.000 --> 00:37:56.000 You know, I think it has to do with the pricing dynamics 00:37:56.000 --> 00:38:16.000 At the time and retail, you know, in the market in general, retail makes up kind of closer to 50% of the flow, so what we're seeing is SpaceX is actually a little bit lighter retail flow than you'd expect. 00:38:16.000 --> 00:38:17.000 Yeah. 00:38:17.000 --> 00:38:20.000 I'm sure that's going to change as pricing gets, you know, somewhat normalized, and implied volatility does, and you know, if you looked at SKU early on 00:38:20.000 --> 00:38:29.000 Upside call SKU is way, way higher than downside put. So 00:38:29.000 --> 00:38:30.000 Oh, cool. 00:38:30.000 --> 00:38:42.000 Yeah. Well, that's what this slide here, which I grabbed out of LiveVol. So the one on the left is day one at SpaceX option pricing. At the end of the day. And so there's a couple things and I just, I made the July term white. The only reason I have the decent there is to kind of make the scale make sense 00:38:42.000 --> 00:38:43.000 Yep. 00:38:43.000 --> 00:39:09.000 But you can see, you know, as you said, super-duper high call SKU, okay? You know, and if you look at, you know, there's a couple things actually going on here. One is that the at the money vol was kind of around 110% in the July 00:39:09.000 --> 00:39:10.000 Right. 00:39:10.000 --> 00:39:15.000 And if you look at where we are now, this is yesterday actually, the abdomen evolves around 90, so that's 20 vol points of difference, so it came out very, very hot and there wasn't a ton of reason of justification for it. 00:39:15.000 --> 00:39:28.000 You don't, you know, when you have a new IPO, you don't have a big track record for how the stock behaves. But what I thought was really interesting, specifically for SpaceX, is because there were perpetual futures trading before the stock IPOed. 00:39:28.000 --> 00:39:50.000 You knew where the stock was gonna trade, and you also could actually look at some closing price data from these perpetuals and say, all right, fine, it was realizing, at least in that first week or two. 00:39:50.000 --> 00:39:51.000 Sure. 00:39:51.000 --> 00:39:59.000 About 70 vol, so you actually had a little… that's the first time in history that you've had something to go off of rather than just kind of like a guesstimate of, oh, well, it's going to kind of perform a little like an NVIDIA. And then that call SKU, which on these charts, maybe it's kind of 00:39:59.000 --> 00:40:13.000 It's not as obvious, but the call SKU was so ramped up for that first couple of days that I looked at it, we closed at 2.05 on the second day, and the 185 00:40:13.000 --> 00:40:25.000 215… no, wait a second. The one that the… I looked at it, basically, you could call her in July and keep… and get a 10% hedge 00:40:25.000 --> 00:40:40.000 And you would only have to… and you could keep 18% to the upside. So, that's what this, you know, we talk about inverted skew, right? Like, when the call skew is so much in demand, the out-of-money calls are priced so high in vol terms. 00:40:40.000 --> 00:40:58.000 You could basically hedge 00:40:58.000 --> 00:40:59.000 Yeah. 00:40:59.000 --> 00:41:05.000 Get, you know hedge for a credit or do a zero-cost hedge, a zero-cost collar, and maintain 18% upside, and be limited to 10% downside, which, as the stock has, you know, got really pounded yesterday, back down to 150, 00:41:05.000 --> 00:41:06.000 Sure. 00:41:06.000 --> 00:41:24.000 That hedge was huge. The hedge would have made, and that's actually, I think, why we saw so much institutional flow that first day is they were like, okay, listen, we got, you know, we've had a great out-of-the-gate run, let's lock this in. And you know what, if it goes up to 350 in the first month 00:41:24.000 --> 00:41:25.000 Sure. 00:41:25.000 --> 00:41:26.000 They would have given up all that upside, but most people were looking at it as an awfully hyped IPO. 00:41:26.000 --> 00:41:33.000 Yeah, you don't see that kind of collar activity in a regular equity. That's very unusual. 00:41:33.000 --> 00:41:36.000 So 00:41:36.000 --> 00:41:37.000 Sure. 00:41:37.000 --> 00:41:51.000 Right. Yeah, we see it in speculative names. That's the point. And it makes sense what if you think about it, you know, sometimes I think about the other way is the wings are translate to fat tails, right? The higher the wings, the fatter the tails. That's in terms of the probability distribution that the market is pricing in. So 00:41:51.000 --> 00:42:08.000 When the wings start to lift up, whether it's, you know, if both lift up, you're saying, well, there's a bigger probability of ending up in a tail. If it's only the call wing that's getting bid to the moon, the market is saying the upside probability is higher than the downside probability 00:42:08.000 --> 00:42:13.000 Which, in some cases, is totally valid, but it's not really how the market behaves. 00:42:13.000 --> 00:42:15.000 Right, okay. 00:42:15.000 --> 00:42:20.000 Great, great, great. Well, we're getting close to time. You have a couple more. One more you want to just go 00:42:20.000 --> 00:42:39.000 Let me see… Yeah, I will actually… there's two things I want to mention. So everybody I believe out there has heard of the VIX. It's on TV. They call it the fear index sometimes. SIBO, you know, my colleague Ed Tom has come up with this VIX decomposition model, which is a 00:42:39.000 --> 00:42:43.000 public, this web page is public at CIBO. 00:42:43.000 --> 00:43:00.000 The idea here, VIX is, you know, calculated through a whole strip of SPX options, right? That's where the number comes from. But those options, sometimes they all go at more expensive together, that's when VIX goes up, sometimes they all get cheaper, but sometimes they twist a little bit and the puts get more expensive, and the calls don't. 00:43:00.000 --> 00:43:14.000 And so decomposing the input prices into out-of-the-money puts and in-the-money puts and out-of-the-money calls, and the out-of-the-money section basically is something that people have kind of done 00:43:14.000 --> 00:43:32.000 in some way over time because they get… intuitively, you're like, okay, yeah, I get it, if all the options get more expensive, VIX will go up. But what if only the calls get more expensive? Well, VIX also gonna go up, okay? But that's a very different story from the sentiment standpoint, because if all the calls go up in value 00:43:32.000 --> 00:43:43.000 Then in volatility terms, that's telling you the market is looking for kind of an upside move. And this was really, really interesting into the tariff 00:43:43.000 --> 00:43:58.000 The April tariff reaction that that August yen carry sell off like totally different drivers of why VIX spiked. And so this is now available to customers. You can basically look at one to anybody out there. You can look at one day versus the next 00:43:58.000 --> 00:44:05.000 And I look at this thing every day because, you know, today VIX was up, whatever, maybe 2 points. I know we got up to 20 briefly. 00:44:05.000 --> 00:44:17.000 To be able to say, well, how much of that just came from the fact that market went down a little bit? How much of it came from scare, you know, from fear? And how much of it came from, you know, maybe some upside on, you know, some 00:44:17.000 --> 00:44:22.000 Anticipation of, you know, the oil prices coming down and, you know. 00:44:22.000 --> 00:44:38.000 Profitability going up. So if you just Google VIX decomposition, you'll end up there. So, and then the last one I'll show is kind of connects to that SpaceX that we were just talking about. So, one thing I track, because, you know, like I said, I'm lucky enough to 00:44:38.000 --> 00:45:03.000 Like an insane amount of data here at SIBO, if you look at single stocks, we actually can track how many of them have that inverted call SKU over time. So on a daily basis, going back to pre-COVID 00:45:03.000 --> 00:45:04.000 Wow 00:45:04.000 --> 00:45:05.000 You can basically see the green line is the percentage of single stocks that were inverted, that had a high call skew. It used to kind of hang around 10%, during COVID, it got over 50% for a little while. 00:45:05.000 --> 00:45:20.000 And then it kind of came back to 10% in 2023. It's lately kind of jacked back up, okay? So, I need to update this to get us kind of where we are, but I think we're actually still kind of hanging out in the 30% range currently, and that tells you that 00:45:20.000 --> 00:45:29.000 You know, that there are more, kind of, upside call buyers, or the market view of stocks going up is still very, very strong. 00:45:29.000 --> 00:45:31.000 Right. 00:45:31.000 --> 00:45:50.000 And, you know, paying attention to this and kind of, you know, processing it and trying to think about, well, what's this tell me in the market? Whether you do it at, like, the single stock level, and you try to look at, you know, like, in SpaceX today, the SKU is actually back to… it's not inverted anymore. So the downside puts costs more than the upside calls slightly 00:45:50.000 --> 00:46:11.000 That works, you know, we watch that on a single stock basis all the time, and basically you can kind of use it to time, like, hey, you know, this might be a nice time to collar a stock, because the calls are so bid up. At the aggregate level, it's also very useful because this obviously tells you the market is very, very 00:46:11.000 --> 00:46:31.000 I'm optimistic, okay? During COVID, it turned out to be absolutely true. All this upside call skew, you know turned into a market that basically, you know, went from 2,000 to 4,000. The question is kind of like, well, what's it mean now? And, you know, I mean, we had a pretty sharp sell-off today, so 00:46:31.000 --> 00:46:32.000 Sure. 00:46:32.000 --> 00:46:38.000 I think people are probably recalibrating a little bit their expectations, but, you know, I mean, you know how things turn on a dime, so we will see. 00:46:38.000 --> 00:46:39.000 Sure. 00:46:39.000 --> 00:46:47.000 Okay, good. Let's do a question. So someone's asking, what are the changes in the trading hours you mentioned in the invite? So I think that's the GTH maybe you have some words on that? 00:46:47.000 --> 00:46:57.000 Yeah, I did have a GTH slide somewhere, but I'm not going to make you look at all of them to find it. So we've had here we are. 00:46:57.000 --> 00:47:19.000 So SPX and VIX and XSP have traded overnight, basically starting at 815 New York time PM all the way till 9:25 in the morning, stopping for five minutes before the market opens. And they actually also go from 415 to 5 o'clock. They used to close at 4:15. So now you only have a three hour and 15 minute window that the market's not open 00:47:19.000 --> 00:47:35.000 For index options. And you can see a couple of dynamics here. One is that the activity is continuing to grow, so this year we're seeing around 2% of the daily volume, 2.5% is trading in these overnight hours, okay? But what's also really interesting is 00:47:35.000 --> 00:47:51.000 It's actually, you can see this bottom chart is showing you kind of the minute volume on average. It's kind of dead until around 3 in the morning, okay, so these Asian hours, we call them, because it's starting 8:15 at night, that's morning in, you know, in 00:47:51.000 --> 00:48:09.000 Asia, we're not getting a lot of kind of inbound activity from that kind of trading base. When Europe opens, which is kind of when you see the first bump, things pick up, and then the biggest kind of spike in activity is around 8:30 in the morning, when economic releases come out. So 00:48:09.000 --> 00:48:27.000 But what's pretty exciting is in later this summer, I believe we just announced the tentative date is mid-August, we actually are going to open up some liquid ETFs starting at 7.15 in the morning New York time. Don't hold me to that, but 00:48:27.000 --> 00:48:39.000 It's pending regulatory approval and everything else, but you should be able to trade options on some of the most liquid ETFs we're talking about, like SPYs and Q's 00:48:39.000 --> 00:48:48.000 An IWM, I don't know what else is on the list currently, possibly some stocks as well, so Apple, Nvidia, Tesla. 00:48:48.000 --> 00:49:04.000 Pre-market, because basically what you've had is, you know, one of the other big move, you know, developments is 24-hour trading of equities, right? It's, you know, it kind of comes piecemeal, but now, you know, you can… you certainly can trade pre-market without, you know, the liquidity's a little different, but most 00:49:04.000 --> 00:49:22.000 Most customers do have access to that pre-market trading. And as that continues to kind of, you know, roll forward, liquidity gets better, it can support options trading, and that's what we're going to be bringing. So, you know, this will be really interesting because right now it's all just, you know, it's almost all SPX 00:49:22.000 --> 00:49:36.000 VIXSP and Russell, we just added recently, it's not trading much yet. But when you start to see some single stocks and some ETFs in there as well, especially when you have things like earnings, pre-open earnings 00:49:36.000 --> 00:49:39.000 We will see some pretty cool 00:49:39.000 --> 00:49:41.000 Pretty cool use cases, I think. 00:49:41.000 --> 00:49:56.000 Good. Okay. This is probably a question for me, but I'm going to answer it anyway. How do you find the video archive of the previous meetings like this? I put two things in the chat. One is hub.tradier.com. You can go there, you can subscribe. It costs you nothing 00:49:56.000 --> 00:50:12.000 You will get updates of when we're live during the week on our shows. You can also view previously recorded things at Tradier Hub YouTube. So just search it for that, and go to the playlist section in Trade Your Hub 00:50:12.000 --> 00:50:30.000 And you'll see there's an Ask Lex series, and there's summits and all that sort of thing. So you can view previously live events and recorded events there as well. So that is where that is. Henry, you got one closing slide, and then I think we've probably 00:50:30.000 --> 00:50:33.000 Have to say night night 00:50:33.000 --> 00:50:34.000 Okay. 00:50:34.000 --> 00:50:44.000 Let me just show this one. I like this one. It's just a simple way of thinking about volatility. I get it. Volatility is kind of the most complicated kind of piece of the options pricing concept 00:50:44.000 --> 00:51:00.000 But it's really, you know, this book called Smile, right? Which, like I said, translates into a distribution. It's impacted by supply and demand, and I like this slide. I copied it from a hedge fund client 00:51:00.000 --> 00:51:15.000 If you have speculators buying out of many calls, it bids up the shape of this curve, and trading this curve and basically identifying, okay, when it's kind of flat, and when it's kind of steep, and what trades make the most sense during these conditions 00:51:15.000 --> 00:51:29.000 And what that's telling you about kind of the market expectations is really useful, and it doesn't have to be that complicated, you know, and you'll see it. You'll see days where, you know, out of the money puts get really bid up. You can see it in that VIX decomposition tool too 00:51:29.000 --> 00:51:39.000 Sure. 00:51:39.000 --> 00:51:40.000 Yep. 00:51:40.000 --> 00:51:46.000 That's because we're seeing, you know, big hedgers or big, you know, put buyers and vice versa when it comes around the other way is if you see people selling out-of-money puts because they are confident that we're not going to kind of have a big giant crash in whatever timeframe they're looking at 00:51:46.000 --> 00:51:47.000 Right. 00:51:47.000 --> 00:51:50.000 It's gonna impact the shape of the curve and the option prices 00:51:50.000 --> 00:52:02.000 Yeah, no, I love this. And incidentally, as an announcement again for the trader folks who are here, we are building out a SKU analysis tool within TradeYear Pro. 00:52:02.000 --> 00:52:10.000 It's similar to what Henry just talked about. It will give you indications of steepness, flatness, in the skew 00:52:10.000 --> 00:52:25.000 We're even making it so that you can put in your own coefficients, let's call it, to create a skew curve and come up with your own value and see how the applied in the marketplace differs from that value. Now, what I'll tell you about this is that it sounds complicated 00:52:25.000 --> 00:52:41.000 But once you get used to the stocks you trade, you'll get a feel for where, you know, where things kind of generally hang out, what the SKU should be, what little smirk should be, and they're just numbers, right? And let's just take an example real quick. Apple, a 00:52:41.000 --> 00:52:58.000 is the SKU. I'm making that up. Well, if it's 8, you're saying, that's really high, and you're going to be able to see that on the screen in color. If it's a 2, it's really flat, and you're going to be able to see that in color on the screen. It'll give you indications, as Henry just mentioned, as to what sort of trades and spreads you might want to take advantage of 00:52:58.000 --> 00:53:15.000 Based on how that SKU is behaving. And don't forget, each month has this too, but we're going to normalize it with some fancy mathematics that no one has to know about. And so that any one of these coefficients could be pertinent across time as well. So it's pretty neat. We did that in our pro lives in the past, and I think we're going to 00:53:15.000 --> 00:53:25.000 add it back in. Sounds complicated, but like everything else, you don't have to know how to build a car engine and drive a car. That's how it's going to be for you. It's going to be very simple. 00:53:25.000 --> 00:53:47.000 So that's coming. And the other thing, too, for you, Henry, one last question is, you know, have you found that when you notice flattening skew or steepening skew that it might kind of be a little bit of an indicator of sorts potentially of a move in a direction? Is it an anti-indicator? And this is an investment advice. This is an opinion from Henry 00:53:47.000 --> 00:53:48.000 Yeah. 00:53:48.000 --> 00:53:51.000 So have you ever noticed that at all, or has it just kind of gobbledygook? 00:53:51.000 --> 00:54:09.000 I don't think it's gobbledygook. I think that when it comes to kind of vol trading, it's to me, it's a little bit defensive. Like, if the skew is very, very steep, right, it can't go that much steeper, right? Like, if you… especially if you think about it in percentiles, right? If 00:54:09.000 --> 00:54:30.000 The skew is the steepest we've ever seen it, or we've seen it in the last year. Well, that means there's certain trades that actually, like, well, it might stay there, it absolutely might, but it actually might, you know, revert as well. And so there's to me, that tells you there's one trade that's wrong, which is buying that and expecting it to go much steeper. It's not gonna happen, at least historically, if it hasn't 00:54:30.000 --> 00:54:51.000 You know, I think that it's not very likely, so I like to use kind of the SKU analysis to basically say, well, if the SKU is very, very flat or super jacked to the upside, like what we saw in SpaceX, I mean, I put a note out on Apple one time because Apple was inverted, and we're heading into some announcement of some sort, but 00:54:51.000 --> 00:55:11.000 I was like, listen, if you own Apple and you love Apple, you know, it might be a nice time to color it because it's incredibly attractive in terms of pricing. So, like, it doesn't mean it's not gonna go up or that it's gonna go down, but it means that, like, you know, it's 00:55:11.000 --> 00:55:12.000 Right? That's true. 00:55:12.000 --> 00:55:27.000 It's like fire insurance. You know, you buy it when you can, not when you have to. And keeping an eye on SKU basically gives you kind of a feeling of when the pricing is kind of favorable. In terms of predictive ability, I actually do think that in the… if you especially look at SPX, which is a hedging product, right? 00:55:27.000 --> 00:55:45.000 When, you know, there's, you know, you and I know all the old trader adages, right? One is that hedged markets don't crash because you don't have the panic. And when skew is very, very steep, it tells you people have been buying puts, okay? It tells you there's a lot of, kind of, fear out there 00:55:45.000 --> 00:56:02.000 And that fear has translated into demand. And so, in the index, I kind of look at it as a contrarian. So, like, when the skew in SPX is very flat, which we actually saw in April, it kind of tells you, like, there could be some complacency out there because it's 00:56:02.000 --> 00:56:20.000 flat, nobody's buying puts, nobody has puts in their portfolio, or, you know, not to the extremes. And if we do get a sharp sell-off, you're going to get some reactions that you might not get if people are pretty well hedged. So, Ed Tom actually and Mandy Zhu, my partners in market intelligence. 00:56:20.000 --> 00:56:37.000 We kind of keep an eye on that. We talk about, you know, and that fixed decomposition model ties right into that, because basically, if you see the… if you see the skew flattening, you know, we talk about it as, you know, hedges might be being unwound, people are actually selling out of these puts they had 00:56:37.000 --> 00:56:46.000 So when you have steep skew, and that market does sell off, then, you know, people are like, okay, I gotta get out of these things. And that's how you kind of see that 00:56:46.000 --> 00:56:53.000 That kind of order flow 00:56:53.000 --> 00:56:54.000 More. 00:56:54.000 --> 00:57:09.000 Right, right. Okay, fair. I will, Henry, thanks for coming on as always. You know, I could listen to you for hours, my goodness. This is fantastic. Everyone, thanks for coming. We appreciate this will be on the YouTube and on trading your hub, probably not right away. Give it a couple days 00:57:09.000 --> 00:57:26.000 So you can… you can view this again if you'd like to work through it as you know a little slower. Don't always, always, always, and Henry, you're not going to do this, but I'm going to do it. I love emails. Send me an email. Lex at tradier.com. If you have questions 00:57:26.000 --> 00:57:43.000 If you want to see certain things on Ask Lex, I'd love to hear from you. You're not getting in my way, and you're not, you know, making me busy. I'd love to hear from people, so feel free to do that. Also, go to the website, trader.com. You can set up a personal appointment with me online 00:57:43.000 --> 00:57:57.000 If you'd like to talk more about options or see the platforms, get demos, etc, etc. I cannot give investment advice, which I will not do, but we can chat about options and all that kind of fun stuff. Okay, Henry, anything else from you before we say night night 00:57:57.000 --> 00:58:04.000 No, thank you, just head over to CBO.com and look around. We got a lot of good content there. 00:58:04.000 --> 00:58:14.000 Yeah. 00:58:14.000 --> 00:58:15.000 Yep. 00:58:15.000 --> 00:58:19.000 And, you know, including the platforms and the datasets that we sell as well, which, you know, nowadays with, you know, AI and Claude code and everything else, people can do kind of amazing things that are unique, like never before, and it really is kind of a golden age when it comes to 00:58:19.000 --> 00:58:20.000 Yeah 00:58:20.000 --> 00:58:23.000 You know, some kind of proprietary analytics and just exploring the data. 00:58:23.000 --> 00:58:41.000 Yeah, it's terrific. It really is. It's quite a time. And be ready because Henry and I just came off the Trifest summit that was sponsored by CBO. We are already in the works of playing the second one, which is going to be next year early, but we're going to get out in front of this one way in time, okay? 00:58:41.000 --> 00:58:48.000 So we're working on a new venue. Look for it on the email. It was… Henry, would you say that was a good time? That was a heck of a good time. 00:58:48.000 --> 00:58:52.000 It was great. Can I suggest Tahiti for this year? 00:58:52.000 --> 00:58:53.000 All right. 00:58:53.000 --> 00:58:54.000 Paying for everyone's flights, don't worry. 00:58:54.000 --> 00:58:56.000 Okay. 00:58:56.000 --> 00:58:58.000 Alright. 00:58:58.000 --> 00:59:02.000 All right, thanks