PaperFlow

ex tradfi options-mm of 4 years. oxford alum

[PaperFlow @PaperFlow8]

Toying around with a peanut sized portfolio on deribit. Mainly to show my normie friends that making the first $1m can be done with any starting stack. Your brain is the product.

10k -> 1m challenge completed in 7 months.
+534k usd august 2024
+592k usd feb 2025

[PaperFlow @PaperFlow8]

a whole country index went 4x in 1 year
intel, a boomer stock that my dad bought and held since 1993 went 4x in the span of 2 months
gold, a 30t monolith went nearly 4x since the 2022 lows

and your assumption is that btc and eth, some of the most reflexive and volatile underlyings since the inception of modern finance, cannot go 4x from here?

[PaperFlow @PaperFlow8]

@doof_doofie no

[PaperFlow @PaperFlow8]

get out of the way

[PaperFlow @PaperFlow8]

@dirtyspritehero Yes that is correct if we can tolerate the bankroll variance

[PaperFlow @PaperFlow8]

playing long vol in a high EV spot but in a slow winter market - as it was all of August (low IV, huge build-up of short options by greedier and greedier takers) - is more a mental game where you see your portfolio lose 8-12k daily (in my case) but you know that the position has edge. You get paid when the realized happens (kind of like set mining where you call a 4bb raise in poker with a low pair)

in a bull or faster market its different, everyone is playing long vol by default and at some point it becomes a little too expensive to call. we are not close to that point yet. i think the default bias that participants have today is still to find ways to fade the upside or find good entries for when bitcoin "eventually goes lower"

[PaperFlow @PaperFlow8]

I think the eth 8k calls are very cheap here

[PaperFlow @PaperFlow8]

This is still live, and ive added to some shorter dated (30-60 day calls/cs) on both btc and eth

From a delta perspective I think we trend higher slowly with pullbacks that make short-term traders think we have topped multiple times through the second half of the year. If the trend turns sour i think it will be very obvious and I will call it out but the bad news has played out. I personally expected the feb downturn. Didnt play may well (personally thought mstr fud was overblown), but played july so far quite well.

The vol is easier, I think there is very limited r/r going short, especially the upside (5-30delta) here. Vol of vol in crypto is traditionally very high and if we ever unpin to the upside (driven heavily by call covering) atm IV can easily double WHILE the call wings start to get elevated as a ratio to the atm vol. Selling calls have done well for the past year (although buying puts were a far better trade); but the more crowded a trade is the bigger the reaction if it reverses out. Especially if realized comes back

[PaperFlow @PaperFlow8]

There's a structural reason on why we are getting today's move in the shape it is going.

Higher btw

[PaperFlow @PaperFlow8]

Eth 90day+ upside is more interesting to me versus btc 90day+ upside for the simple reason vol is higher and many mms are running long btc vs short eth type of spreads for efficiency

[PaperFlow @PaperFlow8]

@0xTDG is it still buyers market over there?

[PaperFlow @PaperFlow8]

@overlettuce Eth the asset looks good
The state of the community looks atrocious
All great signs for appreciation

[PaperFlow @PaperFlow8]

Higher. Also eth lisbon was so bearish that it has to be the bottom

[PaperFlow @PaperFlow8]

@veiledquant Efficient greeks mathematically speaking, an example might be a position where your book is both long gamma, collecting theta

[PaperFlow @PaperFlow8]

Eth 90day+ upside is more interesting to me versus btc 90day+ upside for the simple reason vol is higher and many mms are running long btc vs short eth type of spreads for efficiency

[PaperFlow @PaperFlow8]

@LilQwantXBT the best use case for eth is that it is a uselss pos but everyone trades it like its the future of global settlement or dogshit so it has such violent swings 😂😂

[PaperFlow @PaperFlow8]

@econoar I think you need to get over your ptsd and not let it jade potential future paths

[PaperFlow @PaperFlow8]

@JeffLia12309881 Food for thought. I want to see how transitory it is. A lot of bullruns since 2021 started with a huge movement in skew akin to this

[PaperFlow @PaperFlow8]

@linzhiyang7 Not a problem we are always exploring and learning together

It is a beautiful game

[PaperFlow @PaperFlow8]

This is still live, and ive added to some shorter dated (30-60 day calls/cs) on both btc and eth

From a delta perspective I think we trend higher slowly with pullbacks that make short-term traders think we have topped multiple times through the second half of the year. If the trend turns sour i think it will be very obvious and I will call it out but the bad news has played out. I personally expected the feb downturn. Didnt play may well (personally thought mstr fud was overblown), but played july so far quite well.

The vol is easier, I think there is very limited r/r going short, especially the upside (5-30delta) here. Vol of vol in crypto is traditionally very high and if we ever unpin to the upside (driven heavily by call covering) atm IV can easily double WHILE the call wings start to get elevated as a ratio to the atm vol. Selling calls have done well for the past year (although buying puts were a far better trade); but the more crowded a trade is the bigger the reaction if it reverses out. Especially if realized comes back

[PaperFlow @PaperFlow8]

To be fully transparent im long the 2.2/3.2 dec on eth, with a ratio of roughly 1:1.5. my thoughts are similar, vol comes off sharply on the rally but my general thesis for the year is that any retrace will be quite violent (not a dribble) into general stabilisation... the long leg will trade more itm (i.e. delta 1) and I'll make on the vol component the short leg dominates the vega if we stabilise higher

Obviously a lot of if-thens here but im happy to play this into q2... the decay is manageable at the moment as the short upside decays harder relative to the atms, especially with the current vol dynamics

[PaperFlow @PaperFlow8]

transitions from being supplied in size to not supplied at all. Part of why 2021 was so explosive and 2024 q1 to a lesser extent, but obviously conditions v different now. Nevertheless markets rhyme, especially in vol space

Call sellers buy back either due to margin requirements (deribit short margins very onerous), or just risk managers tapping their shoulders. Or they stop seeing value in short upside

Market makers could transition from being net long gamma (currently pinning vol) to flat gamma as vol goes bid and participants scramble to cover

In more recent times and in a different market, a lot of traders look at kospi as one big memory trade but under the hood a lot of was opportunistic short calls getting baptized again and again on the way up

Not saying it plays out that way but its a scenario that has a small-medium probability and that needs to factor into vol pricing.

[PaperFlow @PaperFlow8]

@based16z A lot of 70ks. But have some shorts higher to manage my theta here but quite a gamma/theta efficient book resulting. Really targeting a particular gamma/theta profile than strikes. Letting deltas run wide but will hedge the gamma deltas around 70k

[PaperFlow @PaperFlow8]

Playing long vol requires precise timing, naked long vol without considering the background of why you are going long vol is generally a losing strategy

In saying that crypto is one of the best asset classes to be generally long vol in due to the absence of circuit breakers combined with predatory flow and higher use of leverage versus traditional products

We've caught most of the big long vol shifts in the last 2 years, with our biggest wins being July 2025, October 2025 and February 2026.

However, this requires precise timing and while I'm long vol biased, I'm not always long vol. However, I exercise a lot of caution going short vol because when things shift, the vol of vol can really accelerate due to the above dynamics.