a cool way to track your portfolio
Friends,
A little change of pace.
We are working on a couple new pages in moontower.ai
Cockpit
This is a page that I used and explained in A Cockpit View Of Q3. A very moontowery view into what’s happening in the market.
Moontower Portfolio
This need a better name but it’s great fun. You input your assets. Everything. Primary home, angel investment, VTI. Whatever.
You decide if you want to proxy a holding by something that liquid. For example, you can proxy your bond cusip with TLT.
Then we can use our volatility and market data to estimate the risk and performance of the portion of your portfolio deemed “measurable”.
Some portion of your portfolio has unmeasurable risk. That angel investment or loan to a friend. But just getting a handle on your measurable risk with current data is enlightening and satisfying (possibly addicting).
I made a screenshare that walks you through it…but even better — it’s really an educational video that gets into understanding portfolio volatility.
You’ll learn how to go from the formula to actually computing it step by step for a portfolio of N assets.
In the process, you’ll find the entire idea of implied index correlation demystified.
[If you prefer a blog version of that, you’re covered. See Dispersion Trading For The Uninitiated]
Let’s just get to it. I hope you dig it and learn a lot!
I had to record this 4x so if you like moontower in video format feel free to tell me but I can’t say I’ll make a habit of it.
(if the embed isn’t working here’s the link to the Youtube video directly)
I sent this to the moontower.ai list
One of our pro subs sent us a note this weekend:
Subscriber update:
I've had a really successful first month with my moontower built trades. I've just been buying cheap vol verticals and diagonals, time spreads and selling expensive credit spreads, fine-tuning with the skew screen, playing the macro uptrend.
Been helping me see the surface better, especially because never knew how to look at the surface before. Same with skew.
This is my novice approach (8 year experience, retail).
Thanks for constantly improving the site.
A challenge that we totally anticipated in opening moontower to subscribers is retail options trading tools are incentivized to dumb down options. We are always trying to balance the challenge of simplification with the reality of options -- they are always about volatility.
The primer and mission plan documents are a bridge between a vol-lens understanding of options and actually using them. They outline a step-by-step progression that constructs your vol opinion so you can marry it to your directional bias.
If you are bullish and vol is high you can sell OTM puts or covered calls. If the vol was cheap you could buy puts and stock or you can buy OTM calls. If vol is cheap and call skew is expensive you can buy call spreads. Regardless of your directional bias, if the vol stands out is cheap or expensive you can create an expression of the the trade that aligns both a stock and vol opinion.
If the vol isn't interesting or highly ambiguous, you'll see that too in our cross-sectional lens. Passing on a trade that you would otherwise would have done if you had less info is a profitable counterfactual. With the tools I've shown people "If you like selling X, you must LOVE selling Y" which is another way to say -- "hey that thing you want to sell is relatively cheap and now you can see why".
So when our subscriber sent that message, I wanted to know specifically how the tools helped. Here's the response [symbols redacted]:
To be honest. I literally just followed the explainers you guys made. I focus on cheap long term, cheap short term, and expensive short term. Then check the skew for 30 day or 180 day then 60 day.
I found [ABC] and [XYZ] (underlying I will trade often cuz of liquidity) both were in the cheap long term basket. ITM was cheap by skew. Then looked at short term skew and found it was expensive OTM, so sold short term, hence the diagonals. [XYZ] is always on my radar, but I never really new what was cheap or expensive. I loved that the software quantitatively showed me that. [ABC] is not always on my radar, but the site pointed me in the right direction and I did the same thing.
Also traded an [QRS] iron condor for profit. Found it was expensive short term ATM. Saw that it was cheaper relatively OTM. Boom iron condor for me.
Then I saw [XYZ]'s profile changed. Short term became cheap ATM. OTM became relatively more expensive. Bought an inverse condor. Did not hold it to profit. Sold it cuz of bleed. Next day it moved into a profit zone (my bad).
I have some [DEF] calendars that are green, but not closed. Software helped me formulate the hypothesis of selling elevated vol before the election and buying post election vol. We'll see on that one.
Had a very profitable [LMN] credit spread. Again, software showed me that ATM was expensive and 25 Delta was relatively cheap, so I did a credit spread between those deltas. Then I had a profitable debit spread just from buying cheaper skew and selling more expensive skew all in an elevated IV time series. That also worked for me.
The main things I feel I did right was 1) not try to fight an broad market up trend. 2) opened my mind 3) took some risk employing stuff that I am learning (but always wanted to understand better).
This reply highlights a point I make to people that ask me if it's the right tool for them.
If you are serious about using options the direct cost of the sub is irrelevant. It's a dime on 100 equity option contracts over the course of a year. Just as the cost of a book is irrelevant. The true cost is in the time to invest in examining markets. But if you're serious, you are already through that gate.
There is no version of actual options or any trading that doesn't take effort. This is an irreducible truth. I've had consulting calls with people who hated that message -- but so and so says X is possible. And just like the realtor who promises the highest price for listing your house, it's more profitable to tell people what they want to hear.
I've refunded those consulting calls graciously. I'm not trying to convert anyone.
If you are serious, moontower.ai is here to help.
We offer 2 pricing plans:
$100/month billed annually
$150/month billed quarterly
A premium subscription to moontower.substack is included for free ($180/yr value).
Paid subs get the spreadsheet.
There’s no way to update the vol data because that comes from our backend scripts but the VBA and pivot table trickery is all useful if you want to upgrade your Excel skills or just get your hands dirty with portfolio vol.
The daily prices will update because that just relies on Excel’s built-in links.