Here’s some common sense – if actual events aren’t priced in, how can future events be?
- Is Hilton’s closing all around the country and laying off thousands of workers “priced in” for it to go up today?
- Is Boeing halting production a reason for it to go 11% up today?
- Is Zillow shutting down “priced in” for it to go up 8% today?
- Is SPCE going to make a profit, now that it went up 15%? They must know it’ll be essential to COVID-19, quick, buy some calls!
- Is the increase from two to three Uber Eats drivers “priced in” from 5 days ago to have a delayed +5% effect on it today? Ooh, Lyft must have a better plan because they’re +6.3%.
- Is the new MGM CEO announced today “priced in” to the flatness of today? How about that 10% increase on Friday – they must have had insider information of virtual casinos, I’m sure of it.
- Is Vol going down with price “priced into” puts now? I bet they are – especially since it’s… not… usual.
Listen, I’ll going to explain all of the profound events above, if you haven’t gotten the message already, in ELI5 fashion. Markets can be, and will be, completely irrational. There’s no reason for any of the above to occur, and yet it does – if history tells us anything, it’s that hopefully it doesn’t stay irrational over the long run. We may break that record, but if Trump’s BMI support holds, we’ll test it and put it back on the shelf. See, colors and lines.
You lost 30% on calls/puts/stocks today? Guess what, so did I, nobody cares. But here’s the real DD – there is no “priced in” when markets are irrational. You can’t create patterns when things don’t line up for a few days. A “dead cat bounce” means just that – something irrational, like today. Given the lukewarm response over the last few trading days, despite the influx of bad news, this is the first dead cat bounce. It doesn’t always have to be positive.
TL;DR – Hold your stupid 4/17 puts, if you think the market will wake up and act normal in a few days.
TL;DR #2 – If some conspiracy theory about “MM”s can make DD, a basic lesson in actual due diligence can. So take the flair and sod off.
Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.