Eric, you consider yourself first and foremost
an option trader.
Can you tell us a little bit what it means?
So where I come from is actually as a market
maker in equity options user term of the floor
of New York Stock Change, Arca, and that’s
kind of how I got my start.
So I’m most familiar with options, and option
trading is different from, well, first we
should define them all, right.
The first one is what everyone knows, just
regular spot trading.
That’s when you go on to insert random exchange
here, like Coinbase, perhaps.
And if you’re just buying and selling there,
that’s what we call spot trading.
Then you have futures which are derivative
products, which essentially are kind of like
but in agreement at a later date with an expiration
for a price right now, usually
trading at some sort of premium or just count.
And then options is where we take that and
pervert it just one more step further and
Not only an expiration date, but we also add
on different strike prices at which these
derivative products, you know, go into the
money, become actually active.
Now, the problem or what gets a little bit
confusing about options is that you have both
calls and puts, you could both be a buyer
or seller of calls and puts.
So calls essentially if you’re a buyer, you’re
looking for price to go up.
If you’re buying puts you’re doing the opposite,
you’re looking for price go down.
But like I said, you can sell them both as
So, there’s also a different arbitrage plays
And for myself, I would always be looking
to lock in some arbitrage.
So let’s say someone comes in, wants to buy
a call for me, I’ll go out and if my models
could do, I’ll do it.
And then I’ll pull on the other side by perhaps
selling a put and then selling some stock
And then you can kind of find these little
arbitrage plays like that.
So when I say that I’m an options trader first,
I’m typically thinking in that sort of mode
I want to be locking in all sorts of sides
and making sure that I’m keeping relatively
So I’m never really looking for like the big
home run play, even though on my YouTube channel
I will show a few positions like that here
and there, but those are very few and far
between, because they really just don’t happen
all that often.
More often than not, things are rangy and
caught in like a, you know, in a nice little
zone, kind of like we are right now.
And that’s the beauty of options, because
I can construct a zone of profit essentially,
where as long as you stay within that zone,
I can make money off that.
And if we go outside of that zone and I start
to lose money, but because options are so
magical in a way, you know, there are plenty
of ways to cover yourself if that happens.
You mentioned in one of your
You said that this is not an appropriate time
to go bearish.
This by the fact that during the weekend we
experienced some significant losses.
But you said that even in case you want to
short on bitcoin, you better do it with options.
So why do you think options are the best to
go short on Bitcoin in the current situation?
The reason why I’d rather do with options
is because anytime I’m trading against the
overall macro trend, I don’t want to put that
position on spot.
So I really don’t want to be short spot in
an overall upward market just like last year,
I didn’t want to be long spot while we were
in a downwards market.
So if I am going to have any sort of counter
trend exposure, I’d rather do with options
because one, it’s easier to cover.
I can specify that strike and then I can then
cover in advance, it’s all well out, well
played in accordance to the levels that we
were looking at running over there.
So, say like the $10,000 shortage areas where
I start to get bearish once again, if we actually
break down, I can say, OK, well, then I’ll
sell some, if I want to have some downside
exposure, we break that I’ll sell some $10,500
calls or something like that.
Or maybe I’ll pick the next resistance like
$11,000 or $11,500 is what I have right now
of which we were just looking, so $11,200
is kind of where I see the short term in the
medium term change.
So that’s why short of the $11,500 strike
calls, because I know that if we get back
above 11 too just cover those still make money,
then still take profit and I can actually
keep a spot underlying position as well long
without ever going short.
So that’s the beauty of it is I don’t actually
have to risk having that counter trend position,
which for me typically doesn’t work out too
Of course, everyone’s got their own secret
You know, I’m not saying anything too crazy
here, but that’s just my style, what’s worked
best for me.
I’ve had very little success trading against
the overall macro trend.
And you also said that the one we experience
on the weekend can be considered like bearish
trap, a bear trap.
What do you mean by bear trap?
Yes, so bear traps.
Essentially, we had some quote unquote bearish
views come out right in the United States.
I think Trump put out a tweet saying he basically
doesn’t like Bitcoin.
It seemed like more of a political thing to
me between him and Facebook, because he and
Zuckerberg don’t like each other.
So, you know, those sorts of news articles
in the, you know, in the market are classic.
When I was I was in traditional markets, you
know, anytime you have a news article like
that, it’s usually a counter trade type idea.
People, retailers will kind of treat it as
They’ll sell in.
And then what can happen and what I think
is probably likely happening right now, as
long as we don’t take out that next level
that we spoke about, tend to I would say that,
you know, that sort of news, that sort of
price activity is promoted by the people who
actually do move the markets.
And what they know is that, hey, if we create
a little bit of emotion, if we get people
a little bit, you know, on edge and they start
reading the news and they say, oh, Trump doesn’t
like Bitcoin, he’s going to ban Bitcoin, whatever
that means, you know, it means nothing.
And so I better sell now.
Well, they can drive it down, make you think
that that’s actually going to happen and then,
you know, flip it around.
And now you’ve got a lot of people chasing
who are very emotional and too, can add fuel
on to like an already burning fire if they
do want to throw on some upward momentum.