You may know this week’s guest as a Kansas City Chief and sometime Royals fan on Twitter, but he has more than one connection to Kansas City. Jay Soloff (@jsoloff), an options volatility analyst, former CBOE market maker, pirate, and seller of uncapped forward variance swaps, joins us this week to discuss covering calls and charting curves.
Jay brings an exciting twist to this episode and talks about options education and where to find the premium, is the VIX broken (did we create a monster? + curve doodles), retail vs. investing (an exclusive look into what retail investors are getting wrong), and more. Plus, Jay gets put into the hot seat, where he provides his take on how The Fed is doing — SEND IT!
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Check out the complete Transcript from this week’s podcast below:
Covering Calls and Charting Curves with Jay Soloff of Investors Alley
Jeff Malec 00:07
Welcome to the derivative by our RCM Alternatives, where we dive into what makes alternative investments go analyze the strategies of unique hedge fund managers and chat with interesting guests from across the investment world. Happy Best Deal Day, everyone. I’m about 50 hours of watch time into the Tour de France. So Bon jour and BM Ben. Stay tuned to this channel. The rest of July. We’ve got Adam coming on to talk through some private equity stuff. Then we’re going to get certified and Ben Eifert scheduled for a unique classroom type format should be fun. On this episode, we’re Jay Soloff. He of the VIX curve doodles and KCTS fandom helped us out on short notice and came talking market making education covered calls to financial innovation. Send it This episode is brought to you by RCMs managed futures group. Go to our Sam alts.com To learn more about how we help investors access unique hedge fund strategies. And now back to the show. Okay, everyone, we’re here with Jay Soloff. Welcome, Jay. Hey, thanks, Jeff. No worries. I get your last name, correct. Yes. And where in the world are you? Looks like you’re in the world’s best conference room. But everyone left for the day.
Jay Soloff 01:24
Yes. Sunny, Sunny conference room. Actually. I’m in Gilbert, Arizona, which is a suburb of Phoenix.
Jeff Malec 01:32
Gilbert wears, which was that
Jay Soloff 01:34
southeast so just do south of Mesa. Alright,
Jeff Malec 01:38
on the way to Tucson. On the way to Tucson. Exactly. My dad is out in Tucson. So next time I go out we’ll stop have a beer. Absolutely. What do you golf out there?
Jay Soloff 01:50
I golf. So I went to grad school got my MBA at Arizona State and we golf regularly but then I hurt my lower back pretty soon after and I can’t swing a club anymore, which is fine because my swing was terrible anyways.
Jeff Malec 02:07
had hurt your back.
Jay Soloff 02:11
doing the wrong thing. Basically, I mean, weightlifting and football and stuff that I was never any good at. And I just probably didn’t do things properly for a very long time and it caught up with me.
Jeff Malec 02:23
I have a bad back which I attribute to those two same exact things weightlifting and football. I’m like I have to do these exercises for the rest of my life every night. I like pretty much like come on. It’s no good. And so what’s the Kansas City affiliation? You from there originally? Yeah,
Jay Soloff 02:42
yeah, I grew up. I grew up in Kansas City. I’ve been in Arizona for 20 years. But up until just recently, I had been in Kansas City the longest portion of of my life. So basically Kansas City Chicago and then Arizona.
Jeff Malec 02:58
But from your Twitter avatar, rabid chiefs fan
Jay Soloff 03:01
Yeah. Chief chiefs and Royals that mean that’s you don’t meet many Royals fans. But yeah, you know, and for the longest time I Avatar was the Royals. But I was very disappointed in them this year. They were supposed to be competitive this year, and they are not and so I’m like, You know what I’m gonna get the chiefs are run for a while but yeah, I mean, Royals are that’s what I grew up watching. And then, you know, chiefs, I mean, every everybody in Kansas City is a chiefs fan, of course,
Jeff Malec 03:30
and even ever seen those like NFL fan maps of the whole country. Right. And like the whole center of the country used to be Denver, really, all the Dakotas and Montana is but I bet a lot of that’s turning chiefs these days, probably Yeah,
Jay Soloff 03:42
yeah. When I was a kid, it was Elway, you know, I mean, he would always beat the chiefs.
Jeff Malec 03:48
So we were joking around on Twitter, like what do you what are your thoughts? Tyreke Hills gone to Miami? They broke up the trio second to be good, bad, indifferent.
Jay Soloff 03:57
Yeah, my initial reaction was, you know, was definitely negative. But, and then I saw he signed for, like, 30 million a year. And I’m like, you know, there’s so much the Chiefs could do with that. And they ended up having basically an ideal draft and, and, you know, a couple solid free agent signings, and it’s one of those things where I feel like mahomes elevates, elevates everyone on the team. So I think there’ll be all right.
Jeff Malec 04:21
And if you had your choice, you’re there and Kyler Murray, territory mahomes or Kyler Murray.
Jay Soloff 04:27
I still I mean, I like I like Kyler Murray, but mahomes I mean, you know, I that to me, that’s he’s the top quarterback versus anyone you know, I just don’t think that it’s particularly close. I mean, you have Josh Allen, maybe but I’m a huge mom’s.
Jeff Malec 04:48
I mean, what’s not the leg, but I feel like that trio should have gotten what they get one championship. Right of mahomes. Kelsey and
Jay Soloff 04:56
Tyree. Yeah, one champion I mean, you know, the They had a they had they had a pretty bad game in the Super Bowl against Tampa and then this year was the early exit but I don’t think they’re done. You know, that read is read always keeps them competitive.
Jeff Malec 05:14
So I was just pulling up my FanDuel account here there’s still plus 950 to win the Super Bowl. They the favorites. Yeah. Or they’re the third bills. bucks. Tampa and then Casey then the Rams so they’re still got rid of him. They’re still favored over the Rams. But anyway, yeah, I’ve never been to a game how are the games? Awesome.
Jay Soloff 05:37
Yeah, you know, and I pretty much only went for the playoff games when I lived there. And it was always a you know, a fantastic experience. I prefer generally to watch it on TV. I mean, weather can get pretty, pretty crowded in Kansas City. And so I preferred to generally watch them at home, but I you know, we’d always go to the playoff games and back, like even when Joe Montana was there. And it’s I mean, it’s an amazing environment you know, makes you forget about the cold and the you know, the rain or snow or whatever it happens to be doing.
Jeff Malec 06:12
Awesome. Well, I’m jealous being a lifelong Bears fan. They’ve never had a quarterback of that caliber. So get share the share the love show the wealth. So, you do some options education now. But before that, you got your start in the option space in at on the floor CBOE floor.
Jay Soloff 06:37
Yeah. And actually, you know, one more relevant connection to Kansas City. I actually started on the Kansas City Board of Trade, which most people don’t even really know about. But yeah, we exactly. Yeah, I mean, in your Euro futures guy, so. But yeah, I mean, we it was really big there, there was a couple other products. But wheat was really the reason it existed. And, and I didn’t, that I didn’t know, I got my econ degree from University of Illinois, and I really had no idea what I wanted to do. And my dad like, knew the CEO of the Kansas City Board of Trade. And he’s like, Hey, why don’t you you know, you have a you know, you’re in economics once you go work for the board of trade. So, yeah, so I went and actually worked for the exchange, like pit reporting and collecting data and that sort of thing. And, and then and then I’m like, I want to do this and they’re like going, well, you need to go to Chicago because there are no jobs.
Jeff Malec 07:34
And I think Casey was one of the first to go electronic
Jay Soloff 07:37
they got purchased by was at the CBOT or the CME what and then they they moved all the same thing now, but yeah, yeah, it’s all the same thing. It was It hadn’t merged yet, but it was about two and that was like 2017 or something. And then they it had already gone mostly electronic at that point anyways,
Jeff Malec 07:56
but and I never actually realized there was an actual pit there. How big of a How big was the building?
Jay Soloff 08:03
Yeah, it was, it was pretty small. I mean, there were basically two kind of bigger there was this really big pit for wheat, and then there was another bigger area and when I was down there, it was half kind of the value line. So people don’t really Yeah, the first actual derivatives on an on an on an index on a stock index actually started in Kansas City on the value line, but then soon after s&p decided they want to get in that game and they obviously had a much more popular product but actually that happened the Value Line index on the Kansas Board of Trade was actually the first one and most people had no idea that that’s actually your first tradable index future. And it stuck around for a while. There’s also like a natural gas product that didn’t really trade and so I mean, the whole thing was like, you know, picture two pits from the CBOT like that, you know, that’s about the size of
Jeff Malec 08:59
- The if we need one to get one of my ag guys on here, I can’t remember exactly which one it is which right but there’s hard red winter wheat, I think is that’s Kansas City. Yeah, that’s a Kansas City. Alright, and because winter is Minneapolis,
Jay Soloff 09:12
yeah, soft winter is Chicago. Well, there’s soft or spring is spring. Yeah, and then
Jeff Malec 09:21
come after us on Twitter. We’re butchering this but
Jay Soloff 09:23
yeah, no, we are but Kansas is like the number one like the biggest provider in the world of like the hard red winter wheat. So that’s why it got developed there. So
Jeff Malec 09:34
yeah, so So then on to Chicago into the CBOE pit What did you do? So you weren’t you’re just working for the exchange, you weren’t trading right. And then you get to Chicago and you get thrown in the fire?
Jay Soloff 09:45
Yeah, I you know, I wanted to obviously I wanted to trade in and you know, and I just kind of sat you know, did what you had to do back in the days was just knock on doors and hand out resumes and someone needed a clerk was black. COC financial, which is just a small SPX options trading firm that happened to need a clerk. So then that was it that I spent a year and a half or so clerking and setting, setting prices for the index group. And then we kind of were full on our number of people, we could send in the index. So they started sending new traders out to the single stocks, single stock options. So for me, it was Amazon and WorldCom. Were the big ones that I traded
Jeff Malec 10:30
Worldcom Yeah, well, here’s this Oh, one ish.
Jay Soloff 10:34
This was 99 2000. Like, right, right. It’s rockin and rollin. Yeah, it was. Yeah. And then it died. Yeah. So it was like, right, right before the, you know, the.com Bust? And then the opening of electronics exchanges, and we
Jeff Malec 10:50
you had the sheets in your pocket there? Or were you had a handheld?
Jay Soloff 10:55
Yeah, no, I didn’t even have I mean, well, so when I started, they actually had the exchange started handing out handhelds for entering trades. But when I was a clerk that didn’t, you know, literally, I was taking tickets from my, from my traders and entering manually into the computer and printing out reports and running it back to him. So
Jeff Malec 11:17
that get his Greeks and whatnot of like, okay, let me plug you Yeah, see where you’re at?
Jay Soloff 11:21
Exactly. Like they had a little matrix of, you know, there’s their risk based on, you know, prices and volatility. And, yeah, and I had this big, you know, thing sheets that I brought into the pit. And, and, and my traders in SPX had, you know, when I was a clerk had these massive, like, two foot long sheets that all these prices that might, you know, they go out there, like 30 minutes later, there’ll be like, A, you need to go redo the curve, because everything’s changed. Can you print out some new sheets, like run across the street to the office and print them and run them back and
Jeff Malec 11:54
I was a clerk in the bond futures pay at my broker where I was back my backs to him and I’m staring at the options bid bond options. So they were are been in their orders to Delta hedge and whatnot to me. But yeah, I tell people all the time, like, the amount of paper on these trading floors would blow your mind like you can’t even fathom right at the end of the day, there’s two inches of paper on the ground. But those option guys I was in for those you listening, not on YouTube, right, I’m putting this huge slit sleeve of paper in my pocket. And they’d have all the strikes all the shocks each way ball moves, price moves, to see where their models thought the options should be priced. Given those moves.
Jay Soloff 12:31
Yeah, computers didn’t have the, you know, handheld computers, if they existed, did not have the computing power to be able to do that sort of thing back then.
Jeff Malec 12:40
Now you pull up your, your Thinkorswim, or you can literally
Jay Soloff 12:43
do it on your phone. So you know, all the art, you know, so you had all the arbing and yeah, all that I had to learn that too. It was a lost art, right?
Jeff Malec 12:55
Well, the YouTube is towards buying 12345 Turn your hand sideways, 6789 on your head, 1011 1214. And then palm away is selling, selling, selling five,
Jay Soloff 13:12
and then hundreds and 1000s. On the butt, I actually almost went, I was supposed to go on the bond options pit actually that was and then at the last minute, they decided to put me into equity. So actually, I was over there scouting that that territory, you know, right? Maybe around the time that you were?
Jeff Malec 13:32
Yeah, that would be I’d love to do a little once we get a time machine well grab some super good prop trader these days, right whose so screen bass plug came into the middle of the bond options pit in circa like 98. Right. And like he think he was in a different Alien Universe, right? You had to learn a new language with your hands. You had to write everything on paper, you had to keep track your positions in your head, and cards,
Jay Soloff 13:58
and you had to do the math in your head. That’s what they used to tell clerks. I mean, we used to sit there and have mock trading where they would, you know, give spreads, and you’d have to do you know, and things traded in sixteenths. And so I had to memorize, like all the decimals for sixteenths and be able to quickly do that math in my head. That’s what I was good at. I’m not even sure if I would make it as a market maker today. You know, I don’t, I don’t have a computer science degree. I don’t have a PhD in math. Like, I was really good at quick math. You know, I can think on my feet, but that’s not really a skill that you need anymore. Yeah.
Jeff Malec 14:31
The human computer. And so I was thinking about this if you worked as a market maker, right? I’m always talking to guys who were at prop firms or were market makers. But it’s always past tense. There’s rarely rarely are there guys, unless they now own the prop firms that are like, Oh, I’ve been at a prop firm 20 years or I’ve been at a market maker 20 years. Why do you why do you think that is?
Jay Soloff 14:53
Yeah, I mean it well, if it’s anything like the experience I had, it’s it’s really it’s An amazing experience, but it’s very draining, right, like I had a lot of, I had a lot of sleepless nights, I had a lot of mornings where I woke up, like sweating over what Amazon was gonna be doing in the after hours. And do I need to get to the floor at six in the morning and, and trade before the market opens. I mean, it’s, it’s a little different now with, you know, screen trading, and also you have algorithms that can handle a lot of your action, but you know, back then it was a very, it was a physical thing you were standing all day, you were, you know, you’re, you know, you’d be sometimes you’d be done after a busy day, and you’d be exhausted, you wouldn’t want to do anything. But I think it’s just a stressful thing. And a lot of people who started on the floor may have moved off floor. So either you burn out, and you know, you go a different direction, you start, you know, you start on the floor, then go off the floor. And if you’re managed to be around that long, you probably made enough money where you could probably do whatever you want, like switch careers or just
Jeff Malec 16:00
get why am i right? Why it’s almost NFL ish, right? Like, why am I going in there and getting my head bashed in every day, right? made enough money, just get out of the game.
Jay Soloff 16:08
But small market making firms no longer exists. There’s like a handful of market makers. And it’s a very, you know, it’s a very different, you know, I dealt with, you know, basically two stocks with a maximum of five now you can trade 1000, right, because of the software and technology. So it’s a different game, like you could probably be a market maker long term, although it’s still from people I’ve talked to, it’s still plenty stressful. I mean, there’s still, you know, it’s just not maybe the sort of thing that you’re, you’re mentally you can handle over the course of 10 or 20 years.
Jeff Malec 16:41
Do you ever go up against some of our other podcasts on here, Gem Carsan, or Noah Smith, or
Jay Soloff 16:47
Jim was down there when I was and knows some of the same people that I know, but I never I never met him I would have been, I think he got on he might have been gone on when I was a trader, but I was already away from the SPX, at that point. Some of the, you know, there’s definitely some other Twitter presences that that we’re at a Dennis, Dennis dabit, he was he was actually the Amazon Pitt after I was and he was in the SPX there, he was in this kind of the same place. And, and maybe I knew of him in passing. And I mean, there’s a few people, definitely that like I probably interacted with, but I didn’t really know till later on in life.
Jeff Malec 17:25
And what had you transition from moving off to Florida? So did you still trade your own account when you left the floor?
Jay Soloff 17:31
No, you know, it was it was actually kind of kind of a weird and unexpected path, like, volume dried up. So Worldcom started going downhill, they were starting to get in trouble. They didn’t disappear till 2004. But they already started to have trouble around like 99 2000. So volume start drying up there, Amazon just before the.com, bust started, you know, went from whatever was high of 110, back down to like 10. And there was no options volume and, and I wasn’t really sure. And this was my first pit and there was no volume. And I was like, you know, super stressed out. I’m like, how am I gonna make money and, and the specialist in the pit was Eddie Boyle, who’s now actually the CEO of box, which is the exchange that also has a little floor there in Chicago. He was like, hey, some guys were when I was wrapping up my position and like saying, I’m not really sure what I’m going to do. He’s like, Well, they’re these guys from Switzerland with this really cool market making software. And that’s the direction the markets are heading. Maybe you should talk to them. And they were talking to me about needing someone who understood American markets. And so I contacted them and they they hired me like they’re like, oh, yeah, we need we could use a, you know, we could use someone who really understands that you’ve been there and done that. So I went to Wall Street for like, about a year and then back to Chicago with these guys. Actin helping, you know, like, basically on the floor of bear JPMorgan stuff like working with these traders on how we can improve the software. So that was cool, because I got to see the floor stuff. And I wasn’t training. I was more of like a software consultant. And
Jeff Malec 19:08
so what happened to that group? They didn’t make it. Yeah, they did.
Jay Soloff 19:11
They’re still around. I had some kind of weird desire to get my MBA after five years from undergrad I honestly, to this day, I don’t really know. I think maybe I was on the business side and the software area and I’m like, You know what, maybe I want to manage a company. I don’t I don’t know. I don’t remember what it was thinking. But also I was tired of winters and I and I applied to one place I thought Arizona State. I’m like, I want to go someplace that’s warm, and you know, and they had a pretty decent MBA program. So
Jeff Malec 19:43
who’s your Coach Bobby Hurley? See the basketball coach?
Jay Soloff 19:47
Yeah, that’s right. He that’s pretty relatively recent. I you know, I still don’t really follow I’d follow. You have i Illinois, where I went to undergrad, but I’ve never really gotten into ASU sports much
Jeff Malec 20:00
Herm Edwards might be their football coach changing gears a little bit so I’ve been seeing a lot of vol twit, and less so those pros but more so sign up kind of some tangential people being like CBOE should have never created the VIX. The VIX should be at 45 Why is the VIX only up? 10%? So a lot of these like, might call them dumb comments, for lack of a better word, but just weigh in if you can on, you know, what’s your take? Why isn’t vix at 45? When the markets down? Is it broken? Give us
Jay Soloff 20:41
Yeah, I you know, and it’s you know, and I hesitate to say, I mean, I think you know, there are some certainly some some very some comments on the VIX where people clearly just don’t understand the product. I mean, a lot of those but on the other hand, like, the VIX doesn’t necessarily I mean, the VIX can do weird things. And so sometimes they’re, you know, sometimes people are right to ask questions. But a lot of times I think it shows a lack of understanding. It’s, first of all, I think it was what you know, I’m a big fan of, of finite financial innovation. Now that I work mostly with retail. I like that, that there’s access to stuff that you could trade, you know, VIX, VIX, etps, VIX, ETFs, things like that. The fact that that stuff exists, the fact that volatility is almost its own asset class. I mean, I think this these were all great innovations, I think you should be able to trade just about anything, as long as you can understand it. So I’ve always been on that kind of side of the fence.
Jeff Malec 21:43
Set, but then coin ETFs if you’re the SEC, but yeah, I mean, for another. Yeah,
Jay Soloff 21:49
yeah. I mean, and I’m not, you know, I’m not a fan of cryptocurrency per se. But uh, yeah, you should be able to trade it if it’s something that’s, you know, if it’s something that’s out there and liquid, then you should be able to trade it. That’s kind of my belief. You know, Ben i for i Tell him, we should have a variant swap ETF and, but that part I’m kidding about those aren’t. But, yeah, so the question is, I mean, there’s a lot of things that go into it, right, there’s, there’s the supply demand aspect of it, of just just the, you know, the SPX options themselves, but I mean, you also have to take into account like, what’s going on with realized volatility? So I mean, for instance, if you look over the last 10 days, I think we’re at, like, 16. And so, and although it’s not a direct comparison of realized volatility, and and the VIX, it’s a ballpark, right? If the VIX is at 26, or whatever, and, and the last 10 days, we’ve been trading at 16, I’d tell you, something’s gonna, something’s gonna give there, right, eventually. Now, if the VIX is forward looking and so if you’re looking at something like if you, like, back in 2020, you might look at the presidential election, you knew was coming down the pipeline. So no matter how, how slow, the market was, vix was staying at a certain level, because options had to price in that uncertainty of the election. Right. But, you know, during the summer months, you know, your head into the summer months, and, and, you know, realize about volatility slows down, you know, even if the market starts moving a lot, it’s just, it doesn’t necessarily mean that people are really going to buy into it. Another thing, you know, and this has been talked about, probably, you know, probably ad nauseam, but there’s a lot of front month options selling as part of systematic programs, right, a lot of put writing a lot of covered call, action that happens even at the, you know, at the pension level. So that’s going to that part is the demand, you know, the demand is there to sell options. So that’s gonna also kind of depress prices in the front month. You know, so I mean, there’s these other components, components that go in, there’s institutional flows, there’s forward looking, there’s what the market is actually doing. And all these things kind of have to be taken into account when you’re when you’re looking at this stuff.
Jeff Malec 24:12
Right, which is sort of the the gripe I think, for a lot of people have, like, you gave us this one indicator to understand this stuff. And then all the explanations are like, well, it’s more than just one indicators, a ton of nuance involved in there. So it’s kind of like, should we even be looking at that if there’s so much nuance that it’s hard to even understand it as a single indicator? So it’s like, yeah, yeah, like it works most of the time, some of the time. Right,
Jay Soloff 24:36
right. I mean, it’s some sometimes it does when you expect other times yeah, you’re right. Like it can be very nuanced. So it’s, uh, you know, if it was easy to understand, it means you know, just like stock picking, right stock picking you make guess what, uh, what do you think a stock should do? It doesn’t mean it’s going to do it. If any of that stuff was easy, then there would be no, you know, the nobody would make any money which is hard to do. Anyway. So,
Jeff Malec 25:00
yeah. And when you were, how did you guys use vix back in the day on the as a market maker? Were you using it all? Or was it more a single name?
Jay Soloff 25:09
No. You know, we did actually look at it, although it wasn’t like, I don’t even know if I mean, I think it was publicly disseminated. It definitely wasn’t tradable. But we were aware of it, you know, we would look at it, it might have still been the XO, or whatever they call it. Now, it might have been the one that was based on the OE X, I can’t remember when they changed that over. So they used to SP 100 used to be how they calculated that used to be the bigger product. And then they switched over s&p 500. And then they went from, and then they also changed the methodology to the variant swap methodology. So there, it was a little bit different back then I don’t remember the exact timeline, they changed the product. And then they change the calculation from basically and at the money straddle to a variance swap. And so that all happened, like around the time I was down there, but we did with something we kept an eye on for sure.
Jeff Malec 26:02
And dig into that a little bit. You’re we’re delving into benign territory here. But the the at the money swap versus, or at the money straddle versus the variant swap, dig into that a little if you can,
Jay Soloff 26:14
yeah, sure. So you know, there’s certainly nothing wrong with looking at at an at the money straddle that gives you your, you know, general idea of what your implied volatility is for, for any product, right. But there are other factors involved with with, you know, with a straddle, particularly if you move away from it, it no longer really reflects, you know, the, you know, then you’re dealing with basically, options, if you move away from the straddle and and you’re not dealing with an accurate picture of what volatility is doing any more. So, charges.
Jeff Malec 26:51
Example, if we’re 3800 in the s&p, what’s my, at the money straddle look like?
Jay Soloff 26:58
I’m not, you know, I haven’t looked in a long time. I’m not sure what,
Jeff Malec 27:02
what am I buying and selling? I’m saying, Yeah,
Jay Soloff 27:03
so you’re buying and selling? Gets? I haven’t, I don’t even know what the prices are anymore. But yeah, you’re buying and selling this. So it’s 30 100 you’re buying and selling the 30 100 column put, right? So you’re buying one each of the call on the put. That’s funny, like, I have no idea when just rattles trade out these
Jeff Malec 27:20
days. Last time I looked, it might have been like, 21, or something. Light, but um, but those things.
Jay Soloff 27:27
Yeah, that’s that sounds right. But those things, you know, they, it’s a convention you’re buying, you’re buying that straddle, it’s, it’s a convex product. So as you move away from it, you have these other factors, gamma, and you have these things that are that are impacting it. And as you move away, it’s just no longer necessarily an indicator of what of what actual volatility is doing. So the variance swap methodology uses like, a strip of options. So it’s a little, it’s more, so what goes on in the wings, so to speak. So the out of the money options on the call and put side as those. As those change, those can change. Sometimes you’ll have the at the money not changed that much in the wings will change a lot like that could be reflected in the variant swap calculation where if you just have the straddle, it’s not it may or may not be reflected in there. And there’s nothing again, there’s nothing wrong with using a straddle. It’s just it’s not really a pure measure of volatility, where the VIX based on the variant swap, and basically the way that any new volatility index for the most part, you know, when they come out, like spikes, or whatever, which used to spy it’s a variant swap calculation. Now, if you like vol Q, which is for NASDAQ is this is a straddle like they want theirs to be the that Scott nations they wanted theirs to be the straddle. So I mean, there was a conscious decision, though, right? That’s the way they wanted to show express their so.
Jeff Malec 28:58
And to me, that’s more how retail thinks about it. Right. I think they think of it more, or would I think it would help them better understand. If there were maybe there should be two products right of like vol Q in the s&p, s&p, SP Q and VIX, or vix skew or something will come up with the name but whatever I’m like, Okay, I have these two measures. Here’s the basically the floating strike volatility number. And here’s the fixed strike volatility number, right. That’s kind of what we’re saying. Like, if I bought volatility at the beginning of the month with these with this straddle, did I make or lose money, right? Did it expand or contract from where I bought it versus the floating strike? is where a lot of that nuance, I think, is that people have trouble understanding.
Jay Soloff 29:39
Yeah, and I’m sure that someone like, like Ben eifert, could, you know, could explain it a lot more. I mean, this is stuff that he deals with on a regular basis. I guess you could, you could probably explain it, you know, to where it goes into, you know, Encyclopedia somewhere, but yeah, I mean, that’s, I think that’s a good way of looking at it.
Jeff Malec 30:00
Well, we’ll bring it back to him later. And so it kind of like, I don’t know, if I’m pulling that through a little more of like, do you think we created a monster with the VIX or you’re thinking Overall, it’s a good thing. Let people have the ability to trade it.
Jay Soloff 30:15
Like, yeah, no, I think it’s a good thing. I think volatility personally, you know, I think volatility is easier to trade than stock direction, because it, it follows characteristics that are more predictable, clustering, mean reversion, it’s got some stuff that you can do. And so if you study it, I think there’s more opportunity there. And used properly with proper risk management, I think it’s a really good addition to a portfolio. And you know, like, I mean, in particularly now with, we’re going into, you know, potentially an era of low expected returns from bonds from stocks, and you could need to get into alternatives to really, you know, to really juice up your portfolio and that you know, that something like managed futures, or you know, or maybe some style premia, well, momentum, things like that, but then one of those is carry, and in short volatility essentially carry so I mean, that some spit, specifically speaking to short volatility, I think something like that is extremely important, you know, again, maybe not for person just learning to trade. But as you start to get more sophisticated, and I know, plenty of retail traders who are definitely sophisticated enough to do you know, some basic short volatility strategies. I think that’s something that should be a part of just about every portfolio, you’re when you’re trying to hit certain certain yield numbers, right? Or certain percentage return numbers. So
Jeff Malec 31:41
yeah, and then the glory is, of course, like a Feb. 18 happens and, and you get, right terminal breakeven trade, some would say, so you can collect that, collect that collect that, and then boom, something happens and you lose all of the previous gains.
Jay Soloff 31:56
Yeah, that’s the counter. But I mean, you know, something like, you know, something like, like covered calls is not really going to have that kind of risk and will potentially smooth your returns along the way. So I, you know, and I don’t I don’t, I don’t disagree with you, in the sense like, I mean, I wouldn’t necessarily just do a straight up put writing program and set it and forget it. Like maybe you can’t, if you’re a pension fund and your and your view is very long term, and you need to meet cash obligations and things like that, but I mean, it’s nothing like cover calls like it wouldn’t really, you know, Feb 18th would have been a blip or I’m sorry, Feb, Feb 18 would have been a blip.
Jeff Malec 32:36
Yeah, exactly. Well, they would have got called No, yeah, wouldn’t have even really matter. And then so you do a lot of these vix curve doodles. I don’t know if anyone’s ever seen him go check out Jays Twitter at J S O L O FF go through the timeline. You’ll see some of these what tell us couple of your favorites. Doodle was there on the curve?
Jay Soloff 33:03
Yeah, you know, that was funny. I just there there was you know, I was looking at Vic Central and like one of them look like a like the Batmobile or something. So I just kind of drew that on there for fun. And I posted it and it got like a ton of likes, right? I got all of a sudden that was being retweeted. I’m like, why do people like this stuff? There’s nothing. But, but that was it? Right? So I’m like, I gotta try this a few times. I think I did. I think sort of the quintessential one was like a dinosaur. Yeah. You know, eating something, you know? And, yeah. And, yeah, so then, you know, then and some in you know, Jim Carroll and some of that some of the other guys in the volatility space. You know, whenever it’s kind of a funky curve shape. They’re like, Hey, you should draw something here. And, and I started just keeping an eye on it whenever I saw something, and it popped in my head like, Hey, that looks like a, you know, flying saucer or that looks like a snake or something. So yeah, I try not to take myself too seriously.
Jeff Malec 34:09
He was one of the reasons unladen Vics tortoise.
Jay Soloff 34:15
Yeah, there’s been some Monty Python references floating around for a while.
Jeff Malec 34:21
But then how do you think about the curve and how it looking now versus the past? It’s had some weird shapes to it this year. Right.
Jay Soloff 34:28
Yeah, I mean, but a lot of that. I mean, a lot of the, you know, a lot of the stuff that I draw on is like a zoomed in. And if you zoom out, it’s basically like a straight line. But we’re back to you know, we’re back to kind of standard contango. I think you’re, you’re seeing the vol selling programs, you know, in full swing again, with you know, the reason why we’re sloping up, you know, you have that dip in December. It’s funny because every time a year ever at this time of year, there’s always all the comments on Twitter about why What’s going on in December people? Like, is it the election? And it’s like, Nah, now it’s just a day count convention, there are less trading days and in December, and it always makes this, this bump in the curve. And and, you know, it’s like as people, it’s good to see, I think that people are actually looking at the term structure and stuff like that and saying, hey, you know, what’s fixed trying to say about the market? And, and actually thinking about it even even if it’s not obvious, it’s I like to see that, you know, like, you know, hey, what’s the saying with what’s what, this is another point of analysis, I like to have as many possible data points that could be relevant as after so you know, when people asking questions, I think that’s really good. But again, you know, as new people get in, you see the same questions. What’s going on in December? Is it broken? No, no, no, just take out convention.
Jeff Malec 35:49
And dive into that a little more. I don’t know if people understand that. So there’s, right. It’s all in the math of the calculation. But there’s so many December as fewer trading days because of the holiday.
Jay Soloff 35:59
Yeah. Because of the holidays. And and that’s yeah, it’s literally, it’s literally that the math part, like fewer trading days, lower number, you know, it’s not? Yeah, it’s it’s a simple like, mathematical property almost out of the equation.
Jeff Malec 36:14
Right? If you if you put the variance there. So if you moved 2% a day, divided by X days, you have such and such variance, if you have it, the lower the denominator, the lower that total number. Yeah. Interesting. So right, then that’s where we tend to get scared of like, Oh, look at it, I found a little gem here. It’s it’s trading at a discount? Nope, it’s trading mathematically where it should be trading.
Jay Soloff 36:38
Right? Right. And it’ll be priced in. And even though it’s, you know, you can say, well, maybe I sell November by December, but um, now that stuff is already priced in, right. So it doesn’t mean it won’t work, but it’s going to if it works, it’s going to work for a different reason.
Jeff Malec 36:58
Switching gears here. So a lot of your stuffs on options, education. I asked anyone with even slight options knowledge of where do you stand on the whole? Gamma? Hedging dealer, gamma hedging is the one force that rules of the market galaxy? What’s your stance on
Jay Soloff 37:20
that? So if we, if we give it a scale out of 10, on importance, I’d probably give it a five. And I know that’s, that’s kind of a cop out. But sometimes it is important, and sometimes it isn’t, right. But I think that the reason that it’s not is because there’s always so much going on beneath the surface that we don’t see. And, and you might see something that shows up in, you know, in the listed markets, that’s related to something that’s happening off the market. OTC. And so you’re may be seeing part of a much more complex thing going on. And that probably happens quite a bit. You know, on the other hand, it’s important for, you know, something like, you know, JP Morgan hedged equity, you know, you this is another thing that you see on Twitter these days, every quarter, you know, you have this, whatever, $15 billion fund that does a, you know, put spread collar, basically, you know, they’re selling calls, and they’re buying a put spread, and, and they roll that on $15 billion of SPX options and they’re rolling that every quarter, everyone knows it’s coming, and it kind of changes the prices of the curve. That’s where it’s important, right? Like, if you haven’t known, and there’s not too many of those, most people don’t want it to be known.
Jeff Malec 38:39
At the same time, that seemed like a bit of a nothing burger so far, right? Like, everyone gets all hyped up for it, and then they’ve done some, then they basically synthetically roll their strike by doing different strikes and
Jay Soloff 38:49
think, Well, they caught on to the fact right, that, you know, I’m sure that after, you know, after a while of doing it, and people, you know, changing the pricing, because they knew it was coming, I think they’ve started to adjust or maybe not do it all at once or do it synthetically or whatever, you know, I’m sure that they don’t, they don’t appreciate people from the trade. And maybe when it was small, it probably didn’t matter. But then when it’s publicized on Twitter, and you can, you know, have millions of people, like potentially trading ahead of it, but you know, there are situations like that where I think, you know, like in the ETF space, like you have covered call ETFs and some of them have gotten quite big, and you’ll see, you know, that by in their prospectus that, you know, a week before expiration, they start rolling the 3% out of the money call or whatever. So, I mean, there are things out there where, you know, seeing that flow matters, and, you know, certainly, uh, you know, we saw what happened during the meme stock, the whole gamma squeeze stuff with with Gamestop and, and AMC and how the dealer hedging, you know, mattered, but that mattered for a very short time. And then they adjusted right. So I mean, anything that happens there is pretty quickly, you know, pretty quickly take us for the market makers will find a way to use it to their advantage, basically,
Jeff Malec 40:12
it’s the mantra of this pod. So it’s complicated, right? It works some of the time some of the to the end. So coming back to options. What do you write mostly on this kind of retail stuff? Like covered calls? Selling puts straddles condors? What? What kind of your is your go to? on the education side? What are you making sure people know about the option space?
Jay Soloff 40:38
Yeah, you know, so I started out being you know, when I got into this industry thinking, like, Hey, I know about sophisticated stuff, I used to be a floor trader, let me share with you the sophisticated stuff, because you’re not going to get it elsewhere. And I thought that was pretty cool. But it turns out that it’s just like, there’s, there’s only and it’s grown over time, but there’s just not that many people that are that really want to get into the weeds of volatility and, and fancy trades. And, and even stuff like iron condors. That’s the very first like, like, you know, so I do have I started out with just like, newsletters, like recommending, you know, trade ideas, and I did it with like iron condors. And, and it was cool. And there was no, there was like, 100 people very interested in it, but it’s just like, that was like the limit and ever grew, there was, you know, like, 100 people interested in trading iron condors, you know, and then I, but ultimately, what changed? I think, over time, just just my own knowledge of the industry and reading about it, and I’ve, and if you know, un Sinclair, he’s written several, you know, he’s written three books, three very popular books on option trading, and I’ve started doing webinars with him. And, and, you know, I learned a lot, you know, over the years, I’ve learned a lot of what I know about options from you, and in his books, and he, you know, he wouldn’t when there were people on Twitter, basically the same Yeah, covered calls, that’s, you know, it’s, it’s, it’s a garbage strategy, it’s not, you know, it’s not what people make it out to be, and you and what they’re saying, no, it’s actually really good, particularly for retail, because it’s something that they can easily do. And it’s something that takes advantage of the equity risk premium, basically owning stocks, and also the volatility, risk premium selling options, and doing so in a relatively safe manner. And so listening to him, I’m like, I mean, I’ve kind of felt that way. And I maybe I was, like, skeptical, because of all the comments. I was reading on Twitter, but then I have, like, you know, this, you know, my mentor, basically saying, no, no, that’s fine. So, so I’ve really gotten into that, I think, you know, the last couple years have focused on on covered calls or similar type stuff, and how, you know, retail can use it to improve themselves without taking on too much risk, improve their portfolio.
Jeff Malec 42:59
And so what would you say? Right, the cons on covered calls are like, well just do less equity. Right. It’s it’s basically just a, you’re reducing your equity exposure. Yeah, no,
Jay Soloff 43:09
exactly. Yeah. I mean, you know, if you’re in a runaway bull market, you know, you’re, you’re going to underperform stocks. If you’re in a, you know, I not a big fan of using an index is because or, like, you know, popular index products like, like, you know, SPX, because you know, that premiums have been sold. So it’s such a popular trade, that it’s just not worth it, right, you don’t even need a runaway bull market, any sort of bull market, and you probably would be doing better just holding it. But, you know, I focusing on single stocks, and, you know, doing kind of a mix of single stocks with high premiums, but not a whole ton of volatility. Like I mean, obviously, that that sounds like an oxymoron, high premiums, but not a ton of volatility. But there is like a, there’s a middle ground where you can find decent premiums without finding something that’s, you know, has it has a chance of going to zero, but there’s
Jeff Malec 44:04
no middle ground there. Yeah, that seems counterintuitive, right? Like, I feel like I want to sell calls on the Super volatile stock.
Jay Soloff 44:13
You do to some extent, but only you know, only if you I mean, you don’t want to sell something that’s gonna go from, you know, you know, 50 to 100 in a month, and you don’t want to, or something that’s gonna go from 50 to 25. But if you think it’s gonna go from 50 to 60, that’s still relatively volatile, let’s say just in a month period, and there might be decent premiums on it, but you’re also not going to, you know, it’s the it’s the sort of thing where, you know, you can capture some ups upside without leaving too much on the table, but also not the sort of stock that’s going to, you know, have the bottom fall out because, you know, they’ve sold one electric vehicle and they’re worth $2 billion, you know,
Jeff Malec 44:51
we got it we got a handful of those. So if you view it more as an income producing strategy or like an equity replacement or absolute return? Like, what? What do you view the covered call strategy as of? I mean, what I put it in,
Jay Soloff 45:07
you know, again, like, like, you’ll, you’ll hear naysayers but I do think it is an income type of strategy. I mean, it’s in the sense that I focus on the premium, it’s like so so, you know, while I enjoy stock picking, it’s it’s not, you know, it’s not my specialty, like I, I, you know, whatever, I went to business school, like, I know how to analyze companies, but that’s not what I’ve specialized in, what I know about is, you know, is volatility and option premiums. And so I really try to focus on that and find like, these really, you know, these premiums that I feel are overvalued, and then I look at the stock and say, Okay, now is is, you know, is this company going to be, you know, is their biggest revenue generator in Bitcoin or is on, you know, tires. And the one, the one with tires is not going to zero, like, they may have a rough period. But, you know, they’re not going out of business, right.
Jeff Malec 46:03
And I was view this a little weird because in my brain, just what I’ve done over the years, personally, right, I’m like a stock gets to a certain point, I feel it’s getting riskier, then I saw the cause you’re talking about more of just, you find a premium, you don’t like you buy the stock, sell the call simultaneously. Right. So what what are the differences there? If you’re saying as a strategy as an income producer, find the premium in the stocks, basically, to make it a Delta neutral trade, essentially, yeah,
Jay Soloff 46:30
the stock is your collateral. So you can collect the premium. I mean, there are times where I do think there’s upside, you know, upside in the stock. And we and, you know, we’ll sell 30 Delta calls and try to capture some of that, but that’s, you know, yeah, generally, I like, like you said, I like to look at it from from the premium standpoint, I, I don’t, I do think there is a place for doing what you’re talking about, where you have this, you know, stock and it’s, you know, whatever, it’s gone way up, and the premiums are crazy. I mean, you could have done that with something like AMC, and it’s like a $20 stock, and you could sell a $30 call for whatever 10% premiums or whatever it was, that’s it, that’s a good trade. I mean, it’s a good trade that’s worth the risk, but that’s not really, you know, the clients I deal with are generally either retired or close to retirement, you know, they don’t want to look at their portfolio every day. If they can make, you know, if they can capture 3% a month in premium without risk of a stock going to zero. You know, they can they can use that in their retirement, they can take that 3% and put it into something safer, they can use it to freakin pay electric bills or whatever it is. That’s important to them as having that steady cash flow. So I mean, you know, they don’t want to be looking at their you know, you know, they don’t be looking like AMC. Isn’t that a movie theater? Why is it moving? You know, 10 bucks a day that’s
Jeff Malec 47:44
more volatile than Bitcoin? And what about the other side you do put REITs as well.
Jay Soloff 47:50
I do you know, just puts you know, obviously well obviously if you if you’re in the business you know, that puts tend to have more premium just because people use them for hedging so there’s more demand and and you know, when the market tends to go down faster down then it goes up when it goes up so you have you know, you have more premium and puts the difference is though is that you know, when you sell a put you don’t it’s it’s not the same as doing so the doing an app the money covered call is the same as selling a put right to say the same same p&l graph but usually you sell put in that case because the premiums are higher but if you’re doing an out of the money call and you have the chance for it to go up then if you think something’s got some upside then you probably want to do the out of the money call because you want to try to capture that that you know upside and like during during a you know the last several years when the market was mostly going up that was the better strategy now in times like this selling puts you know mid mixed and not fully because we you know we there obviously with the VIX has been 2530 Plus like there always is that that possibility of a 5% down day or whatever you don’t want to go crazy with it but you know clearly here the premiums are very high on the put side so makes a lot of sense to sell you know targeted put selling you can go pretty far out of the money and still get pretty good premium or at least you could you know things have started to come back down to earth recently
Jeff Malec 49:26
and then my worry again I know that it’s like the terminal break even eventually that’ll catch up so you gotta either
Jay Soloff 49:32
Yeah, I yeah if you’re just you know if you’re just selling puts you know willy nilly eventually you’re gonna have a big down move and you’ll probably give back all your gains. That’s why you know, targeting that stuff. And, you know, or maybe having doing single stock, short puts and then having maybe an equity hedge or this is where you’re talking about having the VIX having like a vix or you know, a U vix which is a 2x vix ETF call in there to you know to potentially hedge yourself, I mean, you know that there are ways to do it to where it’s not, you know, it’s not the the cliche, pennies in front of the steamroller trade, right? Like, like, you don’t have to do it that way.
Jeff Malec 50:21
And what do you think of youth, listen a few of our pods with some of these pros, right? That do this for a living instructor these things and are looking at it day in day out, like, I don’t want you to talk against your book. But right, like, at the end of the day, it’s like better to hand it off to the pros, right? Like, if you’re retail, and you’re just playing around, you’re learning. But if this is truly to, like, generate a return for retirement or whatnot, what are your thoughts on being retail versus investing with some of the pros?
Jay Soloff 50:47
Yeah. Oh, certainly, you know, certainly, you know, certainly using pros, I mean, particularly, if you’re, you know, if you, you’re looking to have a, you know, a solid long term portfolio, and you want to make sure, it’s going to be there 30 years from now, like what I do, I generally recommend, you know, a small portion, and this isn’t for the people who want to trade actively, particularly, you know, they have the time or they’re very interested in the markets, and take a section of your portfolio that you don’t have with the pros that you could trade for yourself. You know, I mean, certainly, it’s like, if I want a, you know, if I want to, just, for example, I want a proper tail hedge, and I, you know, I’ve come across, you know, a ton of money, and I haven’t invested and I want a proper tail edge. Yeah, I’m gonna go to bed ifer, you know. So, you know, but I think there’s nothing wrong with having a, you know, an allocation towards something like cover calls that you can do it yourself. You know, I’m not going to do manage futures myself, that’s for sure. I’m going to hire a professional.
Jeff Malec 51:54
Yeah. Well, I look at it as like, Oh, I’m going to invest some money in my buddies restaurant, or I’m going to do right, I’m going to pick one of these Oklahoma MLPs. Take a flight, right. Like, it’s just kind of play fun money. Not necessarily fun, but right money you can afford to lose. And it’s but in the option space is particularly interesting, because it’s what I don’t think if I’m investing in my buddy’s restaurant, if I’m buying MLPs, I’m not really out there to learn a lot. I feel like a lot of the option investors have a dual mandate, right? Like, I’m sure if I make some money, great, but I also want to really learn what’s going on here in the option space, do you tend to get that out of the people you talk to have?
Jay Soloff 52:34
Yes. You know, the most of my, you know, most of my longtime clients, and you know, and the ones that if I introduce a new product or have a webinar, and they basically show up to all of them, they’re there to learn, you know, and, and certainly some, you know, some of them are, are not doing, they’re doing everything themselves, like they really enjoy that aspect of it.
Jeff Malec 52:59
Showing up you’re not doing a great job.
Jay Soloff 53:02
It’s my it’s my charming personality. Oh, my comedic say, I mean, you’ve seen my Vic’s doodles. I mean, they just, I tried to cover a lot of time. And you know, I talked about zeigen I have the degree in economics and the business school degree. So I mean, I try to talk about stuff like central bank policy, and, you know, how, you know, alternative investing and diversify your portfolio, I tried to mix it up to where it’s like, hey, let’s learn something different about options. We’re gonna focus on options. But hey, here’s some other things I’m interested in. I’m reading about. So I tried to mix it up a little bit, just because, you know, fortunately, I have a background that I can talk about a few different things. Maybe that’s why they come back.
Jeff Malec 53:41
No, I’m giving you a hard time. I want to come back to that we’ll get your takes on the economy and where we’re headed here. But I’m sticking on this retail thread. Like what what the most retail option traders get wrong. What’s What’s the biggest mistake you see them make out there that if you could just grab each of them by the scruff, you’d say stop doing this.
Jay Soloff 54:03
It’s mostly like they get they get really enamored by high returns and so so we’ll we’ll do a thing where we’ll like, hey, send in some cover call ideas, and we’ll publish our favorite ones. And just like, you know, so you can share with the group and, and people will send in stuff And inevitably, it’s going to be like, stuff that I would never recommend because it’s it’s too risky. And it’s like, hey, I can make in two weeks, I can make you know, 8% with a chance of if it gets called away, I’ve made 30 I’m like, But you’re forgetting the fact that this could also go down 50% over that period. I’m like, you know that there’s a reason why, you know, we use Ford instead of Nikola for a cover call trade, you know, even though it’s not as sexy right? And so that’s generally the biggest thing at least with cover calls is that people you know, people really get excited when they learn how to do it about like, making these really you know, high pre mi m trades and I think that’s fine. Every once in a while or you know, like of if you’re doing 10 trades, and one of them could be that way, right? But it’s just, it ends up being a big part of someone’s portfolio. And then as you said, you have that tail event and, and they give back all their gains, right in one period. Whereas the stuff that I generally recommend is, you know, we’re still significantly outperforming the market this year with with our recommendations, even though most stocks are down, right.
Jeff Malec 55:28
So do you think a lot of the platforms, right, and the proliferation of like, I don’t know if Robin Hood even has this, but I know E trade does, I know some of the others might have like, you just click on the tab income producers or something, I can’t remember what it’s called, right. But it’ll just give you the list, you can move the slider and right, I want to make more than 50% will be like, cool, here’s the options in the stocks that’ll let you allow you to do that. But to your point, it really kind of masks the risks. And it’s good
Jay Soloff 55:55
and bad, right? It’s good. Because, again, like, like if you can do the research and realize that, hey, these first five are not good. But the sixth one actually is a really good idea. And I would have thought about that had I not seen this. But again, like it needs to come with education. Like I like, note, you know, I like to know, no commission, easy access. You know, I in theory, I like what Robin Hood is doing. The problem is, is that it doesn’t have you don’t have the education component. And that’s, you know, that’s I think that’s really what I tried to do like, and it’s like I, you know, I mean, I love what I do. I also really like helping people I love when people write me an email that said, hey, because of you, I can retire. Literally, I’ve had the writing and because of you I can retire earlier than I planned, you know, and I feel comfortable with it. That is why you know, 100% why I’m doing right. Because as a floor trader, yes, you’re doing something you’re not providing any of those calls. Well, you’re providing liquidity, you’re you have a you have you’re doing something useful.
Jeff Malec 56:54
Pension doesn’t send you a letter, thanks for writing liquidity. And yeah,
Jay Soloff 56:57
you know, people think you’re the bad guy. And sometimes maybe you are in something, but I mean, you know, it’s like, legitimately it’s like, like, the best part of this is really helping people understand and doing better. And so you know that that part is done again, Robin Hood, I think, helps to some extent. But if you don’t have the education component, then then you’re probably gonna screw it up. Yeah.
Jeff Malec 57:21
But it feels to me do you feel like we’re in the golden age of options training, right of like, the amount of tools and info and everything out there to really, if you wanted to, right, you could become PhD level and in a couple in a year or something, right, and have all the tools at your fingertips and the knowledge
Jay Soloff 57:37
is unbelievable. Like, you should have seen like the subscriber growth in my products once basically COVID hit and commissions went away. I mean, it was reading now it’s obviously slowed. Because, yeah, people don’t have money to invest,
Jeff Malec 57:52
but getting free checks from the government. Yes, exactly.
Jay Soloff 57:55
You know, and they need to spend, you know, money to $500 to fill up their gas tank, but I mean, that’s, you know, it’s it’s, the growth over that period was insane. Like, I never thought it would, it would happen the way it did. It was you know, and again, it was
Jeff Malec 58:10
unmatched by the volume, right? All the volume charts are showing like record option. volumes. Yeah. I got a quick Worldcom story for the what was the guy’s name Bernie Ebert? Yeah. So I was talking with this, I think he’s coach on my kids baseball game, we were having a beer and he was the he would sell, right? He was selling whatever they were selling Worldcom services, telephone services. And Jordan, Belfort of the right in New York was in Wall Street was the largest was one of the best revenue producers for WorldCom. Right, because they were just had the boiler room and they’re pounding the phones and dialing long distance essentially. So this, this guy I’m having a beer with would bring the his bill into Jordan Belfort. And it was like, right, it was like a couple of dictionaries stacked on top of each other. He’s like, here’s the monthly bill. So he’d say Bernie Evers would come to New York and just grab him out of the office be like, Let’s go time to like, take them out big steak dinners and be like, keep that keep that Wolf of Wall Street account going that thinks great. So when that was one of the biggest revenues might have been a red flag of that the company? Yes. Not long for this way. Too bad. I didn’t know that at the time. I know. But it’s also hard to believe like you used to charge us for long distance, but it’s no, it’s no extra unit of work. So let’s finish off with kind of your hottest take or some of the stuff you’ve been thinking of in terms of you said kind of global macro ish or central bank ish if some of the themes you’ve been seeing and tying in with some of your stuff.
Jay Soloff 59:52
Yeah, I mean, I’m actually reasonably optimistic that we’re not going to have some kind of prolonged recession. I as, you know, the Fed gets a lot of gets a lot of criticism and and some of it is deserved. But I think they’ve basically done a solid job, and it couldn’t raise rates too soon because of COVID. And, you know, we just didn’t know how bad you know. And if it came back, would it be, you know, would it be delta? Or would it be Omicron? Right? Is it going to be something that, you know, ends up keeping your kid out of school for a week? Or is it something that’s gonna put you in a hospital? And we didn’t really know. And so I think they did the best they could given that, you know, I,
Jeff Malec 1:00:37
this is a joke take, right? Nobody on Finto it’s like, Feds doing pretty good.
Jay Soloff 1:00:41
I really think that I mean, I, you know, I think that yeah, I mean, maybe they’re focusing a little bit too much on gas prices and stuff like that. But I mean, you know, it’s for the most part, like, you know, I mean, you’re it’s a tough situation, right? You don’t want to don’t want, you want employment levels to stay high, particularly post COVID. Right, after everything that happened, you want people to have jobs, on the other hand, but you know, you hear everyone complaining about, they’re showing their screenshots of their gas prices and their food prices. And, and, you know, the ironic thing is that the Fed has very little control over any of that stuff anyways, I mean, that’s really more of a fiscal policy thing rather than a monetary monetary policy thing. But still, I mean, you know, they’re still, you know, that, that they hear they hear the criticism on that stuff. And, and also gas prices do certainly, oil prices, certainly filter over into into the core CPI stuff, for sure. Because everything needs to be shipped, and, you know, power and all that other, you know, good stuff that we rely on. So yeah, but you know, I think that they’re doing a reasonable, I think they’re doing a reasonable job, I don’t know about like, the whole, you know, leaking the article, supposedly, to the Wall Street Journal, and then hiking 75 You know, what I, you know, who knows? I’m not a conspiracy theorist. But, you know, I mean, I felt like maybe the last month or two, they, the messaging could have been a little bit better, but for the most part, you know, I think they’ll get to whatever it is 3%. And I think prices will come down. And I think the economy will, you know, unemployment will rise, but I don’t think we’re due for some kind of, you know, some kind of like, major recession or even, you know, I think it’s going to be really, you know, I think it’s going to be a relatively soft landing. My only concern really, is the supply chain stuff. I mean, is, is how long is it going to take and how and then is the basically the war Ukraine? And is that going to drag on? For, you know, how long is that going to drag on? Yeah, I mean, so, you know, there’s a, there’s certainly a couple things going on there that can’t be controlled, but I mean, I’ve just like, I’m never the person in there saying, Oh, the Fed should have done this, or should have done that, like, I mean, it’s it’s, I know, that’s not a popular take, but
Jeff Malec 1:03:08
And what, how much does volatilities behavior over the last three, six months inform that take, right? Because, like, it’s basically saying what you’re saying, right? I’m like, Hey, there’s not a huge problem here. That’s why we’re hanging out in the 20s. Not the 40s.
Jay Soloff 1:03:21
Yeah. And then volatility, volatility of volatility, like the V VIX, or whatever you want to look at us has been really low. Like it’s been pretty stable, like people are like, Okay, I’m preparing for roughly 2% moves per day. And that’s it. Right? That’s I’m not preparing for 4% moves today. But I’m also not preparing for 1% moves. Yeah. Now if we keep realizing 16% eventually that’ll that’ll drop down but again, summer months, people on vacation, all the all that good stuff. So we’ll see.
Jeff Malec 1:03:50
Well, thanks, Jay. It’s been fun. The things. Any last thoughts before we go? Tell everyone where to get your stuff? We’ll put it in the show notes too. But oh, yeah.
Jay Soloff 1:04:01
Yeah. If you if if I said anything that at all interests you, you can check. You go to investors alley, investors. allday.com. Is Where? Where I am. And, you know, and I’m not the only I’m not the only one there we have all kinds of great writers and interesting people. So check us out. Beyond that, I hope to not be proven wrong on the Fed stuff and the soft landing. If not, then I’ll I’m sure I’ll just draw a picture on vix and blame Ben eifert for it. So that’s
Jeff Malec 1:04:33
be like a Godzilla something right. Big, big, tall something in the front. And follow the Godzilla one. I love it. Well, thanks. We’ll talk to you soon. Thanks for coming on short notice here. J helped us out. We had a drop out this week. So he decided to come on. So round of applause for Jay. And keep doing what you’re doing, man. Thanks, Jeff. All right. Thanks so much.
