I know an old hand in the crypto circle who has been immersed for many years. He entered the market with 100,000 in the early days, and now his account balance has jumped to over 75 million. He said something that enlightened me: the essence of the crypto circle is an amusement park of emotions; most people are just tourists randomly following the crowd. If you can hold onto your own temperament, this place is a treasure trove.
According to his way of thinking, if you want to make real money in the crypto circle, the key lies in these few points:
Firstly, do not be greedy for small profits and do not take catastrophic risks.
This sounds easy, just eight words, but 80% of people can’t get past this in their lifetime. It's like you opened a long position at 20,000 USD, and just when it rose to 21,000, you hurriedly took profits, feeling pleased with a 5% gain. As a result, the market skyrocketed to 25,000, and you only got a little taste while watching the big profits slip away. Next time, you learned your lesson, entering long again at 20,000, holding on stubbornly when it hit 21,000, determined to make big money, only to see it drop back to 20,000 or even 19,500, leaving you with no choice but to cut losses. How many people are stuck in this vicious cycle of being slapped in the face over and over, unable to break free.
Secondly, focus on mainstream coins that have been deeply oversold and are gradually recovering.
Don't touch those flashy new coins. First, take a 10% position as a base, don't guess where the bottom is, and wait for it to stabilize before taking action. The method may seem clumsy, but it is steady.
Thirdly, wait until the trend is established, and then add 20%-30% to your position during the pullback.
Others always think about buying at the bottom, but I prefer to wait until the trend is clear before adding, even if the price is higher, it's still much better than being caught in the middle.
Fourthly, after each rise, first withdraw the principal and half the profit.
Let the remaining position fluctuate as it pleases. Regardless of how crazy the market gets, when it reaches the line you drew, act decisively and never be greedy for a bit more. Only when the money is in your pocket can you truly consider it earned.
Relying on this practical principle, last year he helped a friend who had previously lost over 600,000 to operate; within six months, not only did he recover the losses, but he also gained enough to buy a family car.
It's not an exaggeration; there are many smart people in the crypto space. What is lacking are the 'down-to-earth' individuals who can hold their ground and remain calm. While everyone else is chasing gains and cutting losses, you can pick up the chips that others hastily throw away by following the trend steadily.
Without further ado, let me ask a question first.
Question: Can the payoff of inverse contract butterfly options be constructed through other combinations, and what are the differences?
Conclusion: It can be constructed; the difference mainly manifests in the elimination of convexity and theta.
First, let's look at an inverse call butterfly with no convexity (not all butterflies have no convexity).
Let's look at a similar butterfly construction (theoretically, it should achieve a completely consistent payoff combination).
This utilizes the convexity hedging rules mentioned earlier. If convexity hedging is not performed, the result will be:
You can see that, despite having four options and the same butterfly structure, under similar payoffs, what exactly is the difference?
Difference one: a certain degree of elimination of convexity #Crypto market pullback.
First, consider the source of convexity, which means dynamic leverage brought about by currency-based settlement but quoted in fiat currency (Delta changes).
The convexity of Bitcoin inverse contracts (more accurately, negative convexity) is primarily driven by the interaction between its fixed dollar risk exposure and the fluctuating BTC margin value. This leads to:
Dynamic Delta: Your position's sensitivity (Delta) to changes in the dollar price will vary with the price itself. #Gold price hits a four-month high.
Negative convexity (for the bulls): When prices rise, the acceleration of dollar profits decreases; when prices fall, the acceleration of dollar losses increases. This is unfavorable for you.
Risk: This negative convexity means that during a crash, your position will face tremendous risk, and the margin may be quickly breached, even if you think you are using 'low leverage'. #Can the crypto market break through in September?
You can see that traditional butterflies are entirely composed of same-direction contracts, and their pnl is:
max(S-106k,0)/S-C_106-2*max(S-112k,0)/S+2*C_112+max(S-118k,0)/S-C_118
The maximum loss can be simplified to:
2*C_112-C_118-C_106
All are valued in BTC, completely eliminating convexity. Let's assume the example changes to asymmetric strikes:
max(S-104k,0)/S-C_104-2*max(S-112k,0)/S+2*C_112+max(S-116k,0)/S-C_116 The maximum loss can be simplified to: when S<104k, pnl=2*C_112-C_116-C_104 when S>116k, pnl=4k/S+2*C_112-C_116-C_104 Single-sided complete elimination of convexity.
Difference two: similar but different greeks at the time of opening a position.
In a butterfly combination formed by single-sided contracts, you can obtain the following greeks chart.
A similar butterfly combination formed by two-way contracts yields the following payoff and greeks chart.
You can see that the changes in greeks brought by different combinations are similar; they are essentially influenced by the payoff. When ensuring that all points' IV forms a surface, their greeks should be highly similar. However, we can observe that there are slight differences in the greeks at the moment of opening the position, and the reasons for these differences are twofold: 1. The IV surfaces of calls and puts do not overlap. The theoretically priced no-arbitrage IV surface should be simultaneously used for pricing calls and puts at that point, which can be inferred from the PCP principle, where K and S are constant and linear. Simple empirical research also shows that the IV of calls and puts at the same strike price is not the same, so a call-put IV spread exists, and it will be amplified in OTM. 2. IV skew can also affect similar combinations by influencing the price difference between calls and puts due to different construction methods. As expiration approaches, due to the narrowing of the IV smile, its slope decreases, and the smile rotation caused by sudden volatility will be magnified. At this time, the butterfly combination constructed by the two-way contract is likely to have a greater impact on Greeks. Difference three: radically different theta single-way contract butterfly combinations at expiration.
Two-way contract butterfly combination
You can see that the theta of similar combinations has a completely different change and nature of positivity and negativity, which is related to its construction nature. The two-way combination completely shorts the volatility and theta in the middle, earning money from the gradual decline of vol and t, while the other does not fully short theta. A more intuitive explanation is that the left side of the single-sided combination is completed through a long call spread, while the two-way combination is completed through a short put spread; the theta differs in different combinations of Greeks.
In conclusion, choose as needed. Currently, it seems that in similar combinations, the expiration of the two-way combination will have its non-exercise profit enhanced by a better theta structure, allowing it to extend the threshold of loss on both sides by about a thousandth.
If you are also a tech enthusiast and wish for this type of article, take a look at the picture:
The last iron rule to remember when trading coins:
1. If a strong coin has fallen for nine consecutive days from a high position, make sure to follow up in time.
2. Any coin that has risen for two consecutive days should promptly reduce the position.
3. Any coin that rises more than 7% should still have a chance to rise the next day; continue to observe.
4. For strong bull coins, make sure to wait until the pullback ends before entering.
5. If any coin has stable fluctuations for three consecutive days, observe for another three days. If there are no changes, consider switching to another.
6. If any coin fails to recover the previous day's cost on the next day, it should exit promptly.
7. If there are three on the gain list, there will be five, and if there are five, there will be seven. Coins that have risen for two consecutive days should be bought on dips; the fifth day is usually a good selling point.
8. Volume-price indicators are crucial; trading volume is considered the soul of the crypto space. When the coin price breaks out at a low level during consolidation, it needs attention. When there is a significant volume stagnation at a high level, decisively exit.
9. Only choose coins that are in an upward trend for trading, as this maximizes your chances and won't waste time. When the 3-day line turns upwards, it indicates a short-term rise; when the 30-day line turns upwards, it signifies a medium-term rise; the 80-day line turning upwards indicates a main upward trend; the 120-day moving average turning upwards indicates a long-term rise.
10. In the crypto space, small capital does not mean no opportunities. As long as you master the correct methods, maintain a rational mindset, and strictly execute strategies while patiently waiting for opportunities, you can also achieve a wealth reversal in this land full of opportunities.
Finally, keep in mind:
The crypto space is a marathon; stability far surpasses quick wins. Gains based on luck will ultimately be lost due to lack of skill. Only by integrating position management into your instinct can you survive in a brutal market.
Remember: as long as you are alive, you have the right to wait for the next turnaround.
Even the most diligent fishermen wouldn't go out to sea during stormy seasons, but rather focus on taking good care of their fishing boats. This season will eventually pass, and a sunny day will come! Follow Lao Chen; he will teach you how to fish and also how to fish. The door to the crypto space is always open, and only by going with the flow can you have a life that flows with the current. Save this and keep it in mind!
$ETH $BTC #加密市场回调
