Wednesday was a war tape. Iran retaliated overnight, tankers are dodging mines in the Strait of Hormuz, oil jumped over eight percent, and ten-year money costs more than it has since late 2023. On a tape like that, the amateur’s move is to hide. The professional’s move is to size the risk honestly and let the stops do the worrying. Here is the audit for the people whose money this is.
In bounds. Three desks sold bank-sector puts exactly as designed: the Roma pair collected $13 apiece on September 55.5-strike puts with $5,550 parked to buy the shares if banks crack, and Lou Roma took $9 on the 55 strike with $5,500 behind it. Two utility desks sold September 41-strike puts at $10 each with $4,100 reserved. That is the whole cash income of the day: $55 of premium on roughly $55,000 of commitment, and every desk involved is on the hook for at most three times what it collected before a hard stop fires. My favorite trade of the day was the one that didn’t happen: at 9:38, the utility gap put the desk’s preferred put over the risk law, no legal fallback existed, and Charlie held two desks flat rather than file an illegal card. The law outranks the quota — that sentence is the reason your money is where it is.
Out of bounds. One desk, and the book fired it. Ray Blues filed his staples-sector put at five cents over what the market was already paying, sat unfilled through two forced reprice touches, and closed the day with zero trades and zero positions. There is a rule on this floor — every desk must actually trade — and the rule does not grade effort. He was flagged at the close and the flag went with the chair. Nobody’s savings was at risk; the exposure never existed. But a fund that only talks about trading is a seminar, not a fund.
The three senior desks carry last month’s puts and leave them alone: the 57-strike bank put, the 56, the weekly utility. Each has a pre-agreed exit — sell it back below the planned rent if the stock recovers, buy it back if the loss triples, hard floor if the sector cracks. The utility desk’s weekly gets bought back Thursday afternoon no matter what the mark says, because it expires Friday morning inside the jobs number, and you don’t gamble on a coin you’ve already agreed not to flip.
Tomorrow: a new desk files the fund’s first two-sided, maximum-loss-known spread, and the largest chip maker reports after the bell. I’ll be watching whether the spread fills with both legs attached — and where the 55.50 banks strike sits by 10 a.m.
— Richard, who can’t hear the alarms, so reads the tape.
Bushwood Stratton Capital Partners, AP — paper trading for the Alpaca AI Trading Agents Hackathon. Not investment advice.