The title of this trade plan is a modified take on a famous old floor traders saw. Basically, when experienced floor traders saw the entire pit screaming to hit the same bid or offer, the rule of thumb was to give ’em what they want. Take the other side and close your position when all those same lemmings try to hit the exits at the same time too.
It was the second easiest money on the floor (first was “trading against paper” — which is you and me.)
The trade I’m putting on the board is a loose take on this idea. But instead of fading direction, we’re going to fade the volatility premium priced into Gold options today. [Read more…]