Hello, fellow cryptocurrency traders! Today we are going to analyze a big player in the options trading industry, Long Xinyan (@ssslumdunk). By analyzing his tweets on X, I summarized his options trading characteristics and compiled some tips for ordinary investors.
1. User portrait: Dragon Heart Salt’s trading style
First, let’s look at the user portrait. Based on the big data analysis of his Twitter posts, the conclusions are as follows:
Identity : Male, 30-45 years old, options trader and possible fintech practitioner, with a higher education background (possibly finance or STEM related).
Occupation : Professional options trader, may have been involved in Web2 startups or fintech projects, and has experience in the intersection of technology and finance.
Behavior : Short-term trading expert, good at anti-calendar spreads and volatility arbitrage, dynamically adjusts positions, and pays attention to risk management; regularly shares professional trading content on X and is active during market trading hours.
Social : Have certain connections in the financial and technology circles, interact with trading teams and sponsors, target audience is options trading and quantitative finance enthusiasts, and influence tends to be professional rather than popular.
Motivation : To build personal brand, expand industry network, seek business cooperation opportunities and participate in professional community by sharing trading strategies.
His trading style can be summarized in three words: short-term , volatility-driven , and dynamically adjusted .
He is not the kind of "Buddhist" investor who holds a bunch of stocks and waits for dividends, but is like a precise hunter, watching the market fluctuations and waiting for opportunities to act. The following are his core characteristics:
Judging from his tweets, Longxin Salt's trading cycle is extremely short, mainly within a day or a few days . For example, he mentioned "starting to roll this inter-period strategy today", which means that he will quickly adjust his position to seize the opportunity of short-term market fluctuations. This fast-in and fast-out style is particularly suitable for traders who like high-frequency operations and pursue fast feedback.
He has a keen sense of volatility arbitrage. He mentioned the IV difference between near-month and far-month options many times in his tweets, such as "IV at the near end is not high, continue to use the anti-calendar strategy." This shows that he is particularly good at finding arbitrage opportunities by observing the changes in the IV curve. His strategy is not to simply guess the rise and fall, but to make money by using the "price difference" of volatility. He is a technical expert!
The options market is changing rapidly, and Longxinyan's way of dealing with it is to adjust dynamically . He will frequently "roll" his positions according to market conditions, such as closing out options that are about to expire and re-opening positions with new expiration dates or strike prices. This flexibility allows him to stay proactive in market fluctuations, locking in profits or reducing losses. For example, he mentioned "spitting out a little theta to ensure safety", indicating that he will sacrifice some time value to reduce risks, and has a strong sense of risk management.
Overall, Longxinyan's style is a bit like a "sprinter" in the options market: fast, accurate, and ruthless, relying on volatility arbitrage and dynamic adjustments to navigate the market with ease. His trading philosophy can be summed up in one sentence: make money with volatility and protect with flexibility.
2. Core Strategy: Inverse Calendar Spread is the "Trump Card"
The charm of option trading lies in the diversity of strategies, and Longxinyan’s “ace” strategy is the anti-calendar spread ! In addition, he occasionally uses some combination strategies such as vertical spreads. Let’s break them down one by one:
Reverse Calendar Spread is Mr. Long’s favorite strategy. He mentioned in his tweet that “sell the call spread far and buy the near segment, betting on the far IV to slowly decrease”, which is a typical reverse calendar spread play. Specifically:
Buy near-month options (such as calls expiring next week) and sell far-month options (such as calls expiring next month). The core of this strategy is to bet that the volatility of near-month options will increase, or the volatility of far-month options will decrease, thereby widening the spread.
This strategy is particularly effective when market expectations for short-term volatility increase or when the IV of far-month options is high. For example, he mentioned that "the near-term IV is not high", indicating that he has identified the potential for "explosion" in near-month options.
The inverse calendar spread is very sensitive to volatility changes and has great profit potential, but if the IV forecast is wrong, you may lose money. Therefore, this is a strategy that requires precise judgment.
In addition to the reverse calendar spread, Long Xinyan also mentioned "call spread", suggesting that he is also familiar with vertical spreads. For example, buying a call with a low strike price and selling a call with a high strike price to build a bull call spread.
3. Profit model: volatility + time value + dynamic management
Longxin Salt's profit model can be divided into three parts: volatility arbitrage , time value capture and dynamic management . These three complement each other, allowing him to operate with ease in the options market.
1. Volatility arbitrage: Seizing the “price gap” of IV
His core profit source is volatility arbitrage. For example, through the reverse calendar spread, he bets that the far month IV will fall or the near month IV will rise, and earns the widening of the spread. For example, he mentioned "betting that the far IV will slowly decrease", which is a typical IV arbitrage idea. This model requires a deep understanding of the volatility curve (term structure) and is suitable for technical players. **
2. Time value capture: let theta work for you
For example, in the reverse calendar spread, he sold the far-month options to obtain higher theta returns, and bought near-month options to hedge risks. He mentioned "spitting out a little theta to ensure safety", which means that he would earn premiums by selling options while controlling risks. This kind of "steady stream" of income is an important part of his profit.
3. Dynamic management: flexible adjustment to lock in profits
The options market is volatile, and the way to deal with it is to adjust dynamically. He will roll positions frequently, such as "roll this inter-period strategy today", and lock in profits or reduce losses by adjusting the expiration date or strike price. This flexibility allows him to stay proactive when the market changes rapidly.
4. How to learn and refer to his style? Four tips for learning from him
1. Learn some volatility knowledge and understand the IV “routine”
Recommended textbooks include "Options, Futures, and Other Derivatives" (John C. Hull) or "Option Volatility and Pricing" (Sheldon Natenberg) to understand the concepts of IV and volatility curves.
Practice with real money, start with a small amount of money, and try a simple inverse calendar spread, such as a cross-period call spread on BTC options, to feel the impact of IV changes on the strategy.
2. Practice short-term trading and develop market sensitivity
Pay attention to market sentiment, browse X platform more often, pay attention to the comments of big Vs on market fluctuations, and learn how to judge short-term trends.
Use a demo account to practice short-term options trading, such as trying a 1-3 day vertical spread, and observe how market volatility affects your strategy.
Short-term trading is prone to impulsiveness, so it is recommended to set clear take-profit and stop-loss points, such as closing the position at a profit of 20% or a loss of 10%.
3. Master dynamic adjustments and learn to “roll” positions
When options are about to expire or the market direction changes, try to roll your position to a new expiration date or strike price. For example, when a call spread is about to lose money, you can close the position and then re-open it with a further expiration date.
In terms of risk management, you can "spit out some theta to ensure safety" like him, and add selling options (such as covered calls) to the strategy to reduce costs or hedge risks.
4. Start small and work your way up
Beginners can first practice simple vertical spreads with a small amount of funds (such as $1,000) to become familiar with the operation of option combinations.
Choose highly liquid targets such as SPX, QQQ, AAPL, BTC, and ETH, which have small option spreads and are suitable for novice practice.
Record and review. Record strategies, profits and losses, and market background after each transaction, and analyze what went well and what needs improvement.
In short, Longxinyan's option trading style is like a wonderful basketball game: fast-paced, accurate judgment, and flexible. For ordinary coin friends like us, although his style is advanced, by learning volatility knowledge, practicing short-term trading, and mastering dynamic adjustments, we can slowly get the hang of it. Learn the trading methods of the big guys day by day, and I wish you all success on the road to wealth freedom.
