The Derivative - Valuing VIX and Volatility with Joe Tigay

Episode Date: April 25, 2020

VIX and volatility guru (who also sidelines as CBOE & CNBC contributor and an RIA and CFO) Joe Tigay is on our pod to share some nuggets of VIX and vol expertise with our listeners. In addition to vix & vol, we’re also talking about Michigan sports teams, the early days in the pit, Equity Armor’s four strateiges, SPX vs S&P, the risk behind options, Pequod’s pizza, trading volatility through EAVOL, negative return expectations, gamma scalping, panic selling, Moneyball, and poker to trading parallels. About Equity Armor Investments: Equity Armor Investments is a wealth management firm offering advisory services to both retail and institutional investors. Their goal is to provide superior risk-adjusted returns through effective and efficient risk management. EAI seeks to provide investors and institutions with low volatility consistent advisory solutions. Our products and strategies seek to reduce many of the convexity issues plaguing investors. Follow along with Joe Tigay LinkedIn and Twitter, and check out the four strategies highlighted in this podcast by visiting the Equity Armor website. And last but not least, don't forget to subscribe to The Derivative, and follow us on Twitter, or LinkedIn, and Facebook, and sign-up for our blog digest. Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit www.rcmalternatives.com/disclaimer

Thanks for listening to The Derivative. Please note that due to COVID-19, we are recording The Derivative podcast remotely. We apologize in advance for the possibility of lower quality audio, but hope that you can enjoy our content just the same. Thank you. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations nor reference past or

potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. Welcome to The Derivative by RCM Alternatives, where we dive into what makes alternative investments go, analyze the strategies of unique hedge fund managers, and chat with interesting guests from across the investment world. If you go back all the time, it's down 99% since inception. It makes a new all-time low every three days, even with this recent three-month flip. So it's not a very good product. Ours currently would be up since inception. Thank you for tuning in to The Derivative by RCM Alternatives.

As always, I'm your host, Jeff Malek, and today we have a man who wears many hats, including portfolio manager, VIX analyst, CBOE and CNBC contributor, along with so much more. Welcome to Joe T. Gay. Hi, thank you for having me. So, Joe, you're the chief trading officer at Equity Armor Investments, a registered investment advisor and commodity trading advisor who's become known in the space for your expertise on VIX and volatility through your work with the Equity Armor Vol Index and custom overlays you do for

clients. So it's a perfect time, given the record vol we've seen this year, to have you on with us. So thanks again for joining us, Joe. Yeah, thanks again for having me. This is our time to shine. This is a lot of interest is coming into the vol, of course, all of a sudden. But for us, this is something that we've been doing for years and this is nothing new. And this is something that we expect to happen periodically, maybe once every 10 years. But it sure seems to me like these once-in-a-lifetime vol events are happening a little bit more frequently than once-in-a-lifetime. We'll just say that. In my trading career, there's at least a couple that are coming to mind.

Seems like it. So Joe, you're a Chicago guy now, right? But you grew up in Michigan? Grew up in West Bloomfield, Michigan. I've been in Chicago since 2005. Can't believe it's been that long already. It's been quite a time here, yeah. I call Chicago Island now for sure. Nice, but still

a Michigan sports fan? Michigan State all the way and all the sports teams Detroit Tigers, Red Wings, Lions unfortunately but I have adopted the Cubs as my National League team. sports teams, Detroit Tigers, Red Wings, Lions, unfortunately. But I have adopted the Cubs as my National League team. There you go. All right. Because there's no competition there.

So didn't the Spartans just hire a new football coach, like right before this crash happened? They did. And, yeah, that's a sore subject right now. The money that D'Antonio got to walk away with there just by waiting an extra week. And they went out and paid the new coach a whole bunch of money. And to be honest with you,

with the recent allegations against the school and the money they're paying this coach and the money they're paying D'Antonio still, it's just a bitter pill right now because we're fighting these lawsuits and not wanting to pay any money, which I was defending because I thought, oh, this is good for the university

because there's other people at the university that need that money. And then they're going to go away and it just seems like throwing away money. And yes, it's really hard to defend right now. It's obviously not a defensible act to begin with. So it's a tough time. I'm sure we'll get through this, but just like everything else in the world.

But, yeah, it's not the rosiest picture there. Tough time to be a Spartan. You guys sort of overrun Chicago too. There's a lot of Spartans in Chicago. But so growing up in Michigan, you play any high school sports or anything? Yeah, I was really big into hockey as a very young lad. Got into it, played travel hockey all throughout my youth. Went everywhere, all throughout the Great Lakes.

Went to play in Chicago and Wisconsin, St. Louis and Pittsburgh, Toledo. And, of course, all throughout Canada Canada doing all those tournaments and everything. So that was a blast and eventually quick travel in high school to play for my high school team. I also got to play football with my friends so that was a good time and yeah that worked out well and I had a blast playing hockey with my buddies and looking like a superstar, I guess, in the high school arena. My wife said right from the beginning before kids, she's like, we're not going to play hockey.

Our kids aren't going to play hockey. I don't want to be driving all over the country and doing all that stuff, carrying around the smelly gear. So I said, fine by me. I grew up in Florida, so there was no hockey. We miss that, but a lot of people think it's a fun life. It's certainly super expensive. Definitely a lot of credit to my parents.

A lot of my competition and, you know, just that competitive, that athletic side of me just really got to be expressed there. There's nothing like team sports, I'll just say that. That whole camaraderie and teamwork and solving problems and building it together and really fighting through adversity, too. There's really nothing like that. And so I'm very grateful for my parents. And now as a father myself, I'm just thinking, I don't want to do that.

There's so much travel. It's so expensive. Uh, the gear is really, uh, really stinky. I don't know where I put it. So, yeah, so I, I'm with you on that. And then on the opposite end of the spectrum, you're a bit of a poker player for a while there. Yeah.

Uh, I was really interested in poker in college um and uh i really got into in the heyday of the online poker day you know i was really into that back boat when it was legal in the in the states uh i was playing uh far more for my own good um and i probably played for about nine months in party poker and poker stars just all day for about nine months. And I really thought it was a job and I was feeling so good. And, you know, there was a website that you can track your performance and everything. And I, you know, was grinding long playing these tournaments. And I realized that I had made like $14,000 in nine months. And I thought, wow, that's great. And that dawned on me like $14,000 in nine months.

I thought, wow, that's great. It dawned on me, wow, I'm working really hard. These are long hours. This isn't going to work out. I either got to interrupt the stakes or get something different. It was that time I said, you know, I'm going to get a new job. I looked into trading and the way we went there. You were making like $5 an hour when you broke it all down?

Yeah, I was so proud of myself. Then I did the math real quick and I was like, oh God, this is terrible. I should just get a real job. But we've seen, I know some guys at some prop firms and they seek out these online players and bring them in as traders because they have that game theory mindset and trying to not just beat the game but the other players. So I think a lot of it transfers over to the trading space. Yeah, I think there's a lot of parallels to trading as in poker.

You know, first of all is if you get in a bad stretch, you know, in poker. First of all, if you get in a bad stretch in poker, they call that going on tilt. If you lose a hand where you should have won, you might play the next hand poorly. In trading, if you close a winner too soon or you decide not to put a trade on, you might make that same mistake. You might make the next trade poorly. You might try to chase those gains that you missed. So going on tilt is a real thing in trading, too, just as it is in poker. So that's true. And I also feel like the style of trading in poker is similar, too, in that, at least

for me, and I think for successful traders and successful poker players, is that you can't play the same style every day and expect to be successful over time. You have to really, in poker it's called reading the table and kind of play the opposite. So if the table's playing fast, that means that players are playing really aggressively, they're playing more hands that they shouldn't necessarily be playing, then you should do the opposite and you should play slow. That means be more conservative and a little tighter and play only really premium cards. And the reverse is true. In poker, when players are playing only premium cards, you should play more hands and be a

little more aggressive. Well, in trading, it's very similar and you just have to kind of read the market and bottom line is you have to follow the market you're trading closely to see when this is the case. But you should know what's a good price on an option, what's a good price on a future compared to other levels. So for me, I watched the VIX and I watched the S&P 500 and I watched the Dow Jones and the Semi-Dadet Index and oil. And you kind of put those all together.

And, you know, a recent example is the March future just recently expired. I think it expired 69-76 was a recent record for a settlement. So that expired at 70 and it never really fully traded up to 70 up until the last few days of the trading cycle. So that future, even though the VIX was 90 at a point, the future was always at 65, well below where the actual cash was until the very last second. The very first week of the April future was already trading 70. So that was a sign to me that I'd been watching this March future when that was the front one. It never got to 70 up until the last second. The April futures at 70, that was a sign to me,

oh, you know, something's different here, paying attention to this market. Oh, this probably is not something I'd want to buy. In fact, it's probably something I'd want to sell at 70. And so you mentioned you went to look for a real job. After your little poker stint, you eventually ended up at the CBOE, Chicago Options Board. What does CBOE stand for? Chicago Board Options Exchange.

Chicago Board Options Exchange, yeah. CBOE. CBOE, as we all call it. There you go. So you eventually ended up at the CBOE. What were you doing there? Yeah, I started off as a clerk for Brian Suttman at Suttman Equities, and I can very vividly remember my first day on the job as I went up the escalators, which

the escalators are still there, but the floor is not there anymore, but you go up the escalators, and the floor would just be right up to the edge of the wall and thousands of people on the floor uh just screaming yelling uh you see like tape uh you know take tickets so trade tickets like flying through the air uh the monitors are all flashing i'm changing and just the second i stepped foot on the floor i was just absolutely hooked i just knew that this was for me um just there was just the electricity and a buzz in the air that um yeah just well there was just something to it and i was just like yeah this is this is my spot right and as a sports guy which was pretty common thread amongst all the traders and clerks and everything right that they had played sports and it was like a live sporting event but with money instead of a ball and a score.

That's a good example. It's being in the pit. You know, there's some people that are super competitive and just want to crush all the other traders in the pit. There are other guys that kind of view it more as like a team. We're working it together against the customers. But, I mean, there's obviously more than one way to make money but it does feel it does feel like you know the big leagues like when you get up there and you know there's real money at stake and you know you're watching you're literally watching you know your P&L for your job it's just your job is just make money like you just

watch it and like make a bad trade and you'll instantly know it like was that good or bad um so yeah it's uh it's not for the faint of heart it's it's uh it's exciting but also uh also can bring back some uh, I guess. Yeah. And so what years were you down there? What kind of crazy stuff did you see? I saw all sorts of interesting things. See, the first event that comes to mind was the London bombing. There was a bus bombing.

I think it was 7-7-07. I remember I was clerking in the VIX bit at that time. It was in the VIX bit, or in the SPX bit from 08 to 09. Clearly, I remember the 09 low in the SPX bit. That was just a really bizarre scene. The market makers just all standing there we're just kind of like a lull in the action just on the low that march day and uh we were just watching the futures tick lower in the mark you could just kind of feel the market makers were kind of like willing it to say that number six six six that the sign of the devil and you know it's good six six seven you know six six eight six six nine six six seven and it was just kind of ticking around and

they were just kind of cheering for it and it touched 666 there was kind of like a somber cheer or something from the market market makers just like uh just maybe just an exhaustion or just like can you believe this or this is just uh insanity this has gone on forever and lo and behold that actually turned out to be the low in the market, which is kind of a bizarre spot. Explain to us for a second the SPX and the options there versus S&P futures and SPY, PF and that whole dynamic. Yeah, I mean, it's also important people understand market makers in this day and age because it's kind of gone away.

It's kind of a rare breed. A market maker is someone who's willing to go out and make a market, and that means he's willing or she is willing to buy or sell it. And in the options world, there are literally thousands of markets you can make on any product. So the SPX pit on the CBO is actually the largest open outcry pit in the world. At that time when I was in it, there was 600 people in it, tightly packed in, it was really noisy, really smelly, and fighting to get on trade. So there's a broker, the two members of the market of an option that are a broker and the market maker. The brokers get customer orders and they come in, they ask.

So the customer says, I'm interested in this option. And they ask the market makers, what's their market on it? So, you know, there's, you know, again, there's maybe 500 strikes for puts, 500 strikes for calls. There's 12 months to trade. So you can imagine how many different markets can be made. And of course, there's spreads, and everything could be spread off. So the market makers will make the market. And the market makers, just another side spot is I really miss being in the pit

because you really get a great feel for the market in the pit. Number one, you see the order flow, but number two, you get how the market makers are responding to the order flow. So it's just an instant pull of, you know, 300 people or whoever can hear that quote of what's their opinion on the market? So it's just an instant snap poll. It's all totally going up or down. And how aggressive do they want to sell it?

How aggressive are they on buying it? And you really get a feel for it, be a standing there. You're going to see it moving real time. And so when you first got in there, you were a clerk, and then you moved to being a market maker on SPX? Yeah, and I was really thrown to the wolves in the SPX. SPX has, like I said, 500 or had at the time 500 traders in it. All those traders are trading as part of a group.

So there's probably each group has seven or eight traders in that pit. So I went in there by myself looking to just scrape some nickels together, but really trying to trade against the VIX positions that our group had in the VIX pit. Awesome. So 08, 09,

I'm sure they're, besides the 666 story, any other good ones? Going back into the VIX bit in 2011, I can tell you about the flash crash. That one comes to mind for sure. I don't remember what the VIX was doing during the flash crash. Was it going nuts? It was. So it hadn't quite yet gone nuts yet um and the market makers we all

got kind of caught at the wrong time at the wrong the wrong spot the wrong time um and you know me me in particular i guess you could say and uh and so the vix was trading around 25 but the market had just kind of unraveled. You remember it was a time of when European debt was really iffy. So you got the Greek bailout was going on, and there was a vote in Greece. Are they going to say yes or no? And there was civil unrest in Greece. And the market at the time, trading around $1,200,

was down 50 handles in the S&P 500. And that was a really bad day. And I was looking down at my sheets and, you know, I was just like, I had just lost like three months worth of trading. And an order came into the VIX pit to buy the 35 calls. And, you know, they were just the only order, I'm sorry, to sell the 35 calls. And that was the only order to sell an option that anyone had seen in some time. And Vol had just exploded.

And I would be buying Vol at a very high price. and i had just lost money because my ball had gone up and if i made the trade it essentially would have been i locked in the loser um to have lost that so i ultimately decided i'm going to make this trade because if we don't go any further lower the VIX goes higher like it's not gonna matter that I locked in it's literally like I'm gonna be done trading like that's the end of my career so yeah I just remember none of the market makers wanted to buy those calls they were you know offered on the same spot where we wanted to sell them but I went up and I bought 2,000 of them. It was a very big order.

And that kind of set everything off. Everyone else started buying them. And that also set off a trade in the S&P 500 pit, which was to buy puts. And that put by, people are saying, was tied to that call sale in the VIX, is what set off the market. And of course, the market flash crashed down another 50 handles.

So we're down 100 intraday. And of course, the VIX ultimately popped up above 40. And what was that move? It was down 9% or something in a few hours? Yeah, down 9% on the day. It was down another 5% on a clip. Right. Which, until until this march seemed like pure craziness i haven't heard any like flash crash comparisons but they should have been

haven't been made cool so then somewhere in there you left the floor and joined Equity Armor, had a couple daughters. When did you decide to move off the floor and what was the impetus there? Just everybody was? Yeah, so there were more and more traders that got into the VIX bit. The competition started heating up. The cost for trading VIX had started heating up. and we kind of were watching this new thing called VXX trading. We saw the popularity of it. We kind of thought we could do something better and I also personally felt like that would be a good trade to just do on my own, just kind of take advantage

of the contango in those futures when I could. So I started trading for myself off the floor for after that. And you know, I started a resident or registered investment advisor, looking for individual clients to take on to do option overlay strategies, use our options expertise for clients to, you know, minimize the risk to their portfolio. Now, I know a lot of people think of options as an extremely risky investment, which is true. They are extremely risky, but they also can be used to reduce the risk to investing, which is the skills that we wanted to bring to the registered investment space. And now we're here in the time of coronavirus. You're working from home. I'm working from home. Yeah, you mentioned I had two daughters. Yeah, I just had my second daughter, December 19th, and she came four weeks early.

And she happened to come three days after I took over as the portfolio manager of the Rational Equity Armor Fund so that was a very busy time for me not a lot of sleep but a lot of joy and I treat them both like my babies and I love them equally as well as my third daughter. How's it been working from home with them in the house and all that it's been a little crazy here in my life but uh my kids are a little older doing their school work but yeah it's been pretty crazy uh in my life too yeah all my friends are talking about all this netflix they're watching that's that's not happening in my house uh uh we're watching over the kids it's you know i feel i actually feel for my two and a half year old i want her to get outside and play with

her friends. And I know she misses that. So I want to give her as much time as I can, which just means a little less time for myself because I'm still watching the markets. And also the markets are making things a little more tiring. I actually will say that having an infant for the last two months has actually been beneficial, getting up at 2 in the morning and making some hedging trays. So that's worked out in my favor.

There you go. Yeah, it's been a crazy time with all the Zoom meetings. We're having, like, Zoom dinner parties, Zoom wine, Zoom beer, happy hours. Yeah, I'm having those too. I think it's fun. And it might be the case that this event is kind of pushing us closer to that technological future. We're going to see more and more of that going on. So, yeah, Zoom has been a fantastic device for all of us, really supplanting Skype.

Skype used to be the name of the game but uh zoom is a superior in my world i was tweeting out that zoom should buy one of the online poker sites and do a quick uh quick integration right so do you know of is there anywhere out there where i can have like a 10 man home game and we can all see each other but the bottom i think i i think i saw something i yeah it's not popping in my room i think i saw something briefly like i'm on my feet uh still flying which i didn't read i know the uh because you can do it on poker stars but it's clunky and you can't see each other you're just playing a home game and they still make you pay

for stuff so anyone listening out there start that business up real quick. You can make some money. All right, let's take a quick break, and then we'll get into the strategy a little bit. All right, welcome back, everybody. We're back with Joe T. Gay from Equity Armor Investments, and I want to get into what you guys are up to over there. But first, tell me about the name.

You guys are hinting not to convert. First, tell me. One more time. First, tell me about the name. You guys are hinting not to covertly that your products are sort of an armor for equity exposure. Yes, you hit the nail on the head there. Just wanted to have the nail on the head there. Just wanted to have the product and the description all together.

Got it. So give me the quick elevator pitch on what you guys do at Equity Armor. Yes, so we discovered early on we're good at trading and we're just going to go ahead and do that. We're going to let advisors be the advisors to clients want to be sub advisors and uh primarily we do trade volatility uh and the main uh vehicle we trade volatility through uh is uh there is an index disseminated called eavol that's the equity armor volatility index it's the Equity Armor Volatility Index. It's the Vault 365 Index. It's volatility you can hold every day.

It is a VIX futures strategy, which we think is a strategy that you can hold without the decay associated with typically holding VIX futures. So we all know that these times are different. Currently, the VIX future is above or below where the stock cash is, and the second month is below where the front month is. But typically, the VIX future trades above where the cash is, and the second month trades above where the front month is. And if you were to just hold those futures and trade them the typical fashion where you roll into the second month, you're going to have decay on that position.

So we do a snapshot every day on the close of what the VIX futures curve looks like, and we come up with a better way of being long those VIX futures. And so that's the impetus, that's the core of everything you're doing, is that concept of replicating the VIX futures? That's the concept of how we're trading our long ball, yeah. So we have all the strategies we use off of that. That's essentially our hedge in our main core strategies. So walk me through, so you were telling me earlier there's four different strategies, so just list the four for us and then we can dive into each one.

Yeah, first and foremost, you can have that one strategy on its own. I think it's not a strategy I would suggest to buy and hold over time, so again, that's the EA vol. You can look at the index value, that's what the CBO disseminates. We trade it in an SMA. Also, it's not a strategy I think we'll appreciate over time, although obviously this year it has, but you know we expect the VIX to revert to the mean. Now that it's kind of high, it's well off its high, but I still think it'll go back to its historical meter around 20. So that's the first product, but I actually like it better as

a hedge and I'll tell you why. So another product we call it a managed futures product where we trade the S&P 500 versus that product and why I like it better as a hedge is very simple because we keep the weighting the same and rebalance the portfolio. So that means that when the stock market goes up, so this is in a strategy where we own S&P 500 futures. And when the S&P 500 future goes up, we sell out some of that notional value and we use that to buy more VIX futures. Now V VIX futures, obviously, are usually going lower when the stock market is going higher. So that allows us to buy more, something low, sell something high. And then when the stock market goes lower, again, we expect the VIX to go higher.

So that allows us to sell the VIX out on the high and buy the stock market lower. It's a built-in buy low, sell high strategy. If you're familiar with options trading, if you're familiar with Greeks, you can kind of see this as a long gamma strategy. I think your viewers will kind of understand that a little more in the weeds. Yeah, your listeners. Right, so you're harvesting a rebalanced premium basically by doing that. Yeah, so essentially we get to be long gamma, and we're not paying the premium to do so. Got it. So that was one and three. You skipped over two. Which one's?

So two, we call it the Armory Alpha. That's another SMA program we have going on. We use our volatility strategy and we opportunistically buy and sell volatility around it. So again, we get to have our free gamma and we just kind of pick our spots, look for opportunistic place to sell some vol and look for opportunities to get in and out of the market. Again, just capitalizing off of that free gamma, but also more opportunistically and taking it off and on and just looking for intraday swings when the market lines up right.

We'll put it on when it's lining up wrong. We'll keep it off, or when we see that it goes our way, we'll take it off and just call it a day, take our nice little profit and move on. And then number four. Number four is the easiest way to invest with me. It's in the mutual fund, which, again, is just three and a half months old, just like my baby girl, is a hedge equity strategy. The equities are composing of between 80 to 88% of the portfolio,

and the vol is between 12 and 20% of the portfolio. We are long S&P 500 names with a dividend lien. We have our partnership with economic professors out of Cal State Northridge that have about 250 patents on economic models, and they do the stock research for us. They've been picking these stocks in a hedge fund for over five years. They have S&P 500 returns, and they have about 60% of the data to to the downside that's one of the factors they choose while looking at uh picking stocks um which is a quarterly rebalance so yeah go ahead i'll cut you out there we'll circle back on that one as we get to it but i was just thinking you should

have had your daughter before um the mutual fund launch and then you could have named the mutual fund launch, and then you could have named the mutual fund after your daughter. What's her name? Her name is Abigail. I call her Abby. The Abby fund. The Abigail fund. The Abby fund, yeah. That would have been good.

A-B-B-Y. So let's go unpack each of the different strategies. So starting with the Equity Armor Investment Fall 365 Index. So that's an actual index. You publish it, what, at a Bloomberg or something? So starting would be the Equity Armor Investment Vault 365 Index. So that's an actual index. You publish it, what, at a Bloomberg or something? Yeah, you can see it on Yahoo, Finance, Google. It's on TD Ameritrade Network.

What's the symbol? The symbol is E-A-V-O-L, Equity Armor Vault. So you can see how our strategy is performing this year uh we're actually beating that index in in our fund just because um you know vol is very high we kind of opportunistically took some off when it was a little higher um yeah but as you can see go ahead just how is the index comparing with the actual VIX index or unpack that for me? You're not trying to replicate the VIX. So, yeah, so we're trying to we're trying to more accurately trade the VIX futures. So I can just see, you know, this is current data. The VIX is up about 350 percent of the year.

Our index is up about 150 percent of the year. Our index is up about 150% of the year. So we're underperforming the VIX. But the index itself is up 150%. So we're not complaining in either our clients. And what is the VIX ETF up on there? That is 200. So is that, but that's the competition, so to speak, for the index? That'd be the competition, yeah. We're definitely underperforming on the upside, but we're

able to get this 150% return when we don't have that dramatic decay that you see on normal years. Got it. Because the five-year VXX performance is like negative 98% or something, right? Yeah, even still with this huge bump. If you go back all-time, it's down 99% since inception. It makes a new all-time low every three days even with this recent three-month flip. So it's an ideal product. Ours currently would be up since inception. That's amazing. I never had looked at it that closely. So it makes a new low every three days

on average? Yeah. And that's just totally from the naive rolling of the futures contracts and paying the, that fix is normally in contango? The front month usually drifts down into where the cash is and the second month usually drifts down to where the second month is or the front month is. And then you also on top of that have to pay that contango premium which is usually around six to seven percent a day and then if they just tried to fix that by saying oh i'm just going to buy out further months they might not capture the the spike in the front month when it happens and they'll they'll trail the vix index right so what what's their logic as far as know, of why they don't spread out the... Oh, it's just a very simple trade.

They're not trying to do anything other than keep a rolling balance of the front two months future. I think they understand that they're going to be losing over time. They might just be looking at people who want to hold it for a week or people who want to hold it for a couple days, looking for a short-term hedge i think what we have is something you can hold forever and continue to get that hedge but do you think i i would disagree with you that people using that know that it's only supposed to be like fixed exposure for tomorrow i don't know if at this time uh they would know that but you're right i'm sure there for tomorrow i don't know if at this time uh they would know that but you're right i'm sure there are people that don't know it i'm sure there are people that are confused because the dicks is a very confusing product in general uh people could scratch your

head why is it it's moving this way or that way i feel like the word has gotten out because this has been out since uh this since eight for eight years and I think the secret's out, or 10 years in the DXX, I think the secret's out that what's in it, and it's a very bad product. I think there are many, many custodians warn people when they buy it that it has to continue, and it will go down over time. And so would it be fair to say that the ETFs are more of a retail product and you guys have developed more of an institutional product to give a similar exposure but in a more intelligent way? It's a more sophisticated way. We don't want to make it available to the ETF world

because we don't want our strategy published and we don't want it listed and we don't want our strategy published. We don't want it listed, and we don't want people getting out ahead of us and trading. If they know what the trade we're going to do before us and all that. Right. And do you feel like that's got to be some of the underperformance of the ETFs as well? It could be. There was a lot of movement going on this week. The TVIX, if you were following it, that asset's ballooned, which is the double VIX future. That asset's ballooned to like $6 billion last week.

And then just by the virtue of it going down, it lost so much value, it made us sell a whole bunch of it out, which made the futures go even lower. So yeah, that is certainly possible that it's just kind of cannibalizing itself with all of the front burning that happens. And then what's your thoughts on, it seems weird, right, for someone to look at a product, but you're saying it doesn't have, your index has a negative overall return expectation or no? No. I think my expectation would be to be flat over a long period of time.

Okay. But it'll be up when you want it and down when the rest of the market is going up. If it's going down when the market's crawling up, just because the VIX is going down, it's going to have a negative expectation, right? Right. So without giving away too much of the secret sauce, how do you guys do that? So we don't systematically buy the second month and sell them front month every day. We take a look at what is the contango, how steep is that contango, how steep is that curve, is it flat today? We also take a look at where the spot cache is.

We have a few other indicators we look at, and we can be long the mixed futures in a couple of different fashions, which necessarily uh always always the same every day there's about you know 10 different ways we can be long them um and without getting into too much on air without giving away too much of the secret sauce yeah uh we we we have different methods of being that and in essence like we which are different products, though? No, it's VIX futures. But you don't have to be long. The front month can be long.

The second month, you can be long. You could have a roll-on. You could be... You're not buying SPX puts or something because they're cheaper, give you the same exposure. It's still all in the future. Right, that's in that index, yeah. All right, so any other comments

before we move on to strategy number two? Yeah, I mean I'll just say that index, like I said, I don't expect to be up over time. Practically though, how we're trading it now for our clients is that we know VIX is very high, and we're not long the futures in the same fashion as the indexes, which is why I think our accounts are doing a little better than index. So we kind of are using a slightly different model now that the VIX is in the 40s and 50s and 60s. And you would expect, right, like you want to go into a pension and say,

hey, instead of naively buying and rolling puts for 5%, 6%, 7% a year or whatever, like use this instead and you can get similar protection without that bleed. That's the concept. Yeah, I mean, if I were going to a pension, I would say, here's a strategy that you can use in conjunction with some of your other strategies to protect your downside. Now, I think that the way that we trade it in some of our other strategies is a little bit more sophisticated and a little bit better for a pension investment just because

we can do that rebalance for them. When we see that big spike, we see that future at 70, like it was over the weekend, we can say, we'll sell that, we'll buy more equities, just because we have the opportunity, we can trade it. Which is a great segue into some of those strategies where you're using it a little better. Number two we talk about is the Vol-Arb. So tell me what you're doing in Vol-Arb. So the Vol-Arb, we're just using the volatility strategy as our volatility hedge. And we can opportunistically sell volatility in the S&P 500 around that.

So we're long vol via the VIX futures, and we can be short vol versus the S&P 500. Similarly, we can kind of turn strategies on and off. We can wait and see, is it lining up good today? Do the futures look lower versus the vol of the S&P today than they did yesterday? So it really takes an understanding of the curve and the skew and just watching everything all at once and looking for timing, which is absolutely what we're doing here.

So we're just watching that, looking to get in and out and trade it effectively. And your short vol there is just being long the S&P or you're doing options? We can be long the S&P versus options, long the S&P versus short puts. We can have a long call if it plays for it. I think this is the perfect strategy where you can say this is us playing the poker table and just seeing how the rest of the crowd is playing it and kind of being contrarian. Again, our big crutch is that we have the advantage of being able to own volatility in our fashion, which no one else has.

That's kind of like our edge in the marketplace, but just watching the volatility space as a whole and seeing when's a good time, what's a good option to buy, what's a good option to sell. If I sell that one, is it going to pair well against the volatility future? So the classic trade in that Vol-Arp space would be long S&P, long VIX, and just getting the ratio right and trying to capture it. Long S&P, long VIX. You get a little gamma on the VIX. You get a little gamma on some options, you can

scalp that. This year the gamma scalping has been working fantastically for that strategy, so we've been riding that pretty aggressively, but when the ball got super high, it was a good time to sell some puts, so we were able to do that too, because we can sell the puts and have the

ball hedged on the future. And so tell us, can you define gamma as you guys, or I guess, officially and then how you guys view it? Yeah, so gamma is, so there's, first you got to start with delta in options. Okay, so every option is, it's a derivative of, you know, of the underlying. Of course, we've got to say that on the derivative podcast. So that means that a delta means for $1 change in the underlying, so the future in this case went up $1,

whatever your delta is will be your P&L to the position, right? So if you own a call, that means you're long a call, that means you're long deltas. If it's a 50 delta call, the market goes up one point, you'll make $50, right? So gamma is, so delta of course is the Greek symbol for change. Gamma is the Greek of change of the change. So every $1 increase, what's the change in the delta? So a 50 delta call, $1 higher might turn into a 55 delta call, right? So then the next dollar up, you'll make $55. So instead of just making $100 on a $2 move, you'll be at $105, right? So that's really where the

gamma comes in and your delta is changing as that stock is moving. And so you can be delta hedging and hedge out the deltas and you're still long or short gamma. Correct. So hedging out the deltas, that means that we're returning to flat. So a lot of market makers like to have a flat position with an option trade on, right? And you'll make money on the ball. But you can also make money on the move.

Of course, the move is the volatility that is the essence of options trading. And so if the market moves enough when you are long gamma, you'll be making money. And when you're short gamma, which is another way of saying short vol, you want the market to not move as much as the vol you sold. And if it doesn't, you'll be making money on that short vol circuitry. Got it. And so when you're saying you're gamma scalping, what do you mean by that?

So that means we, in this case, we're long gamma. So we have S&P 500 Delta, which we started at zero. But when we see these swings that the market's swinging, up 5%, down 5%, up 10%, down 7%, we rebalance and we get back to zero. So we're talking about 120-point swings in the S&P 500, where just a little bit of Delta, of course, goes a long way. So, you know, a 50 delta is 120. So you can see how that adds up really quickly.

Got it. And so do you also do any, like, calendar spreads in the vol-arb? In the VIX itself? We do calendar spreads in the future trading. We can do calendar spreads in the options trading in the vol-arb. So, again, it just boils down to watching the curves, understanding where it was yesterday, where it is today. So, yes.

And long story short, yes, of course we do some calendar trading. Right. So you're basically saying, hey, we're using every tool in the toolbox as it concerns VIX and volatility in our ball arm strat and trying to capture what we can. And then is it purely on a discretionary basis or is there systematic signals involved there? Well, we kind of start with a systematic signal where, you know, we have a back-tested history and we know it will work in general versus the EA of all. And then you kind of move from there and you kind of see, oh, this did really well today. We should just take it off because it's doing better than we even think.

So we can kind of capture that in. And then we'll wait for it to come back and say, oh, this is fair value again. We can put this on again. Or this is even better than fair value. We'll put a little extra on. Got it. But there's guardrails. So you're not, not right if the market's down 45 you're not saying oh this is the low we're gonna of course of course we're hedged with our vics for starters but we're always

hedged with uh an extra put on the downside just in case nice and there's no discretionary like we're doing the o'hare spread and putting it all on the line tomorrow because the market's so low and you have risk limits. The O'Hare spread. Is that getting on a plane, getting out of town? Yeah, that's the old board of trade. Like, I just totally margined out my account, put on all the trades, get in the cab in O'Hare. We have our own money on the line here. We don't want to lose it. I think that flash crash story is a perfect example where that could have been the last

day of my career if I didn't step up and just say, you know, cut my losses. And that's just a perfect example because i knew back then uh i could either take three months of losses and um you know cut it and cut it there or i could be done i think the moral of that story is if you stay in the game you're going to have your opportunities so that's the way we trade it and that's we don't we can't afford to be out of the game so we're going to stay in the game and we want to make sure that we're going to be able to trade tomorrow i took it from your earlier story that you did swing for the fences and you were almost out of the game are you saying you cut the losses when you were in that position yeah i i took three months of losses i cut my losses if i if i did not do that uh i would have

got a cap on my shoulder saying hey uh, Mr. Teague, come with us. Your position has been liquidated. Got it. So instead of saying, hey, I'm going to do one more trade and try and get it all back, you said cut my losses, live for another day. Yeah. Perfect. Cut my losses, live for another day. You know, it meant locking in a loser.

It meant that instead of losing everything I had, I lost everything I had for the year. Right. Moving on. Well, number three is basically S&P overlaid with the vol index, right? Yes, this is the perfect example of how the vol can hedge a portfolio. You know, you could say it's an equity arm or in this case it's a future trade,

but it's S&P 500, we're overlaid with the vol strategy and you know, we're just looking to, I mean, it's another way of scalping is that we're looking to buy and sell the ball as the market goes higher and lower. So when the ball goes lower, the market goes higher. What ends up happening in that trade is we end up selling out our future position. We end up buying more volatility future position and we kind of load up on the fix when it's low and we kind of sell out of the market when it's high. Is that a systematic process or certain levels

or that's discretionary? That's a systematic process. Although, again, we're not rules-based on this strategy. And again, we kind of noticed the volatility is very high. We're not getting the same bang for our buck to own the VIX when it's 50 as you do when it's 15. So we kind of adjusted

that slightly, but obviously under normal circumstances that's rules-based, so we're just going to trade the VIX versus the future. Rules based on time or based on VIX level? It's just based on allocations. We want to maintain the same weighting

of S&P 500 futures to the market. Got it. But not day by day. Sometimes day by day. So if the market's up 2% and the wall's down a little bit, we're going to sell the market out and we're going to buy more VIX.

Okay. So do you need a pretty big uh investment there to make the granularity work it's a minimal 500 so yes okay um which yeah i love that idea because it also allows you to be long when you don't want to be long right like i think that's the most powerful part of having a something like a long ball overlay because yeah I need to pick the bottom I don't need to know when I should get back in I don't need to know that that six six six was below I'm just in that might be a good segue to talk about the mutual fund because what I have been telling our clients uh the advisors who work with us uh

back then when we started was you know know, in December, I think a lot of clients have two risks at that time. The risk is, do I get in the market and the market has a correction? Or do I stay out of the market and the market continues to melt up? Now, I don't think anybody was predicting what we saw over the last month was going to happen back then. But I think it's pretty clear that, you know, the market was overvalued and was in a little bit of a bubble. That said, we got into a bigger bubble in 07, and we got into an even bigger bubble than that in 2000.

So certainly the market could have bled higher significantly. So obviously there are two risks to being that. And our view has always been that given a long enough period of time, the market's going to be higher. Even if you bought the market January 27th on the high, you wait long enough, wait 10 years, you're almost certain you're going to be up. It's just a matter of time. So over a long enough period of time, the market will be higher.

That said, you also take a long enough period of time, we're going to see significant corrections like we saw. So there's always that risk. And I think limiting the drawdown and being able to opportunistically trade it when that happens is just the game. So I don't want to be out of the market. I always want to be in the market, but I can sleep easily at night because I have this hedge on. I'll counter with Japan and their 20 plus years before new equity highs in their stock market. That could always happen but I don't see it. I think the United States is where everyone wants to put their money and I will bank on

that. All right. I'll bet you a dollar that we won't see new highs for 20 years. I should just send it to you now, the dollar. So you mentioned the mutual fund there, but tell us, so what's the name, the symbol? Of course, yeah. So the mutual fund is called the Rational Equity Armor Fund.

Rational is the name of the mutual fund company. Equity Armor is, of course, our firm, and Equity Armor is what we're, again, the strategy is in the description there. So it's an equity strategy of S&P 500 names. There's between 30 and 40 S&P 500 names equal weighted. We have a dividend strategy tilt. At least 90% of the names will have a dividend paid out in them. So we are trying to capture a little bit of yield in that fashion. But we're also just looking for a lower volatility strategy. So again, these are our professors at Cal State Northridge. They have 300 patents on their modeling, and they have a model of 18 key macroeconomic factors,

and they look at the macroeconomy, and they try to pick stocks that are most suited to the current economic situation, things like spot gold price and unemployment rate and used car sales, car sales. It looks at the FTSE, the money supply. And it looks for stocks that are going to tailwind based on the current economic situation. It also looks at stocks that will do a little bit better if the economy

turns south. We're looking at a lower volatility to the downside. Basically, everything they do just got thrown out the window in the last two months because nothing fundamental seemed to matter. They're doing the equity, the beta portion, then you guys overlay it with the VIX index.

Of course, yeah. Our outperformance has been with the vol overlay this year. That hedge has really, really proved to be a big winner, obviously. All right. Past performance is not necessarily indicative of future results. So some of those stocks are paying out dividends, too. So that's a nice little tailwind that you don't have in some of the other models, right? Correct.

And also the low volatility aspect of it. So that's really helped us to the downside. Although, you know, when things got topsy-turvy, like correlations just went out the window and everything in the S&P 500 was moving at the same beta. All right. Welcome back, listeners. We're now going to switch gears a little bit and talk about VIX and volatility in general and what we've seen so far in 2020 here. So, Joe, just give me your overall thoughts on what this environment's been like and if we overshot on the volatility of this move or whether it was as expected. What are your overall thoughts? Well, the market itself has been way more volatile than I had expected.

You go back to 2008, just the speed that we got down 20%, this was unlike anything. It really is actually closer to 87, not something really in my trading career. But if you look at the charts, the speed that the market went down 20% is a lot closer to that. So that's really fascinating. Also really fascinating to see the volatility happening to the upside of the market, seeing all these 7% and 10% moves up, which is really bizarre. So really just confusion on what the right price should be, I guess, is the only way to say it.

And do you think that would panic selling or do you there's a lot of things blaming it on quants and high frequency and passive indexing what what do you think? There was there was volatility all over the marketplace so if you look at the bond index bond indices the 10-year yield last year last week excuse me started the week at 60 basis points, and three days later, by Wednesday, was at 120 basis points. So that was a really dramatic move in bond yields, which absolutely caused a lot of volatility throughout the rest of the ecosystem. I think the bond market, for me, has really been'm the shakiest ground. It seems like this week, after

three Fed dramatic actions, it seems like it's slightly better, but that's still anybody's guess. CBOE needs to get an active bond VIX futures.

They have the index. The futures are not traded, though. Like 10 years ago, they tried out like the Russell VIX and the NASDAQ VIX and the oil VIX. And they didn't get any volume on it. I wonder if they're going to reconsider trading those. Right, you'd think with this move, that just everything we're talking about of overlay and you could have a bond ball overlay that uh would have really helped some

portfolios oh yeah for sure um and then so we did a blog post recently quoted one of your tweets of i think it was four days in a row or three out of four, we saw the VIX and the S&P move in the same direction. So at first it was two down days and the VIX actually sold off. And then we've had since we had two up days where the VIX actually increased on the update. So what do you think? Yeah, correlations reversed there on the ball side. Yeah, really interesting action with the VIX. And what I first would say, and I actually predicted this Wednesday before this happened, there in the ball side. Yeah. Really interesting action with the VIX.

And what I first would say, and I actually predicted this Wednesday before this happened, so we saw Thursday and Friday with the market down and the VIX down of last week, which we also saw was people kind of turning to tech a little bit in those days, and those were outperforming. Even on Friday, no, it wasn't Monday. Monday, the tech, the SMH, the Semiconductor Index was up. While the market was down, it was kind of a signal to me that the correlations were falling. And I went back to the correlations.

Correlations were high when the market was just in free fall, right? So the market was down 5%. Most stocks in the portfolio would be down 5%. Most stocks in the S&P 500 was down 5%. Most stocks in the portfolio would be down 5%. Most stocks in the S&P 500 are down 5%. When correlations are low, if you get the market 5% down, you'll have some stocks up 2%, some stocks down 10%. Just a lot of different moving parts, depending on which sector you're in. So finally, on Monday, we actually saw the semis up while the market was down, telling you that correlations kind of are parting. That actually brings me back

to 2008, when in 2008 the market free fall panic was happening in October, and you saw the VIX peak in October and stayed really high for a while. But then as the market kind of settled in there, it still kept on going lower. And of course, it didn't bottom until March of 2009, but the VIX was much lower. So again, the market peaked, the VIX peaked around 85 or 90 in October and then drifted lower, lower, lower, lower. and then it was in its 40s by the time the market actually bottomed. So the vol was lower and the mix was lower, and really that's kind of what we need to see for the market to actually bottom.

You need, first of all, the selling to be exhausted and also people to start picking some winners. You need people to turn to some tech, people to figure out who's going to do well in this really unusual situation and who's going to be not faring as well. So stock picking needs to return, the winners need to be picked, the losers need yeah in terms of your models and other people trading the vix do you feel does it get does the vix on these spikes get so high that some of those models become aren't don't work as well like especially vol arb and some things like that does it start to get out of whack

it there are times when it works right there are times when it doesn't um there are times when you just got to turn the puts and say that's a better hedge right now uh so uh when it comes to the vixen trading these times it really takes an understanding of it an expert of it um if you want to do it yourself you really got to watch it and know the levels and remember where it was last week and have that feel for it, because otherwise I don't think it works well. I think it is correctly predicting price movement, right? And when the VIX is 15, when it increases,

the prediction of price movement increases, that usually corresponds with the market going lower. When the VIX is 45 and we're in a bear market, like we are, of course, the volatility recently has been to the upside. We had two 10% increases. Today we're, you know, Thursday the 26th, we're up, you know, market's up 6% right now, as I speak. So that's really volatile to the upside. So it makes sense for it to be moving that way

if the volatility is going to be to the upside. And the index itself has calls included in the calculation? The EA vault, sorry? No, just the VIX itself the vix calculation oh yeah it has uh it has calls inputs of course yeah right so in theory right we all think it's just based on the or it seems in practice that it's based on the put prices but it yeah i think again the most the most uh impact that has is the at-the-money options. People buying the straddle, what's the price they're paying for that?

That's really the largest impact on the VIX. What are your thoughts? I asked this on our pod last week. You think there's a practical upper bound to the VIX? Theoretically, it could go infinite, right? But practically, I feel like there's a level where it would imply such large moves that the S&P could go to zero if there were two or three of those moves. Correct. That's a good point. Market makers and I were kind of joking last week when the Dow was down 2,000 for like three straight days, and it was at like 2,400.

And you can just look at each other and say, well, 24,000, sorry. Well, there's just 12 more days left to trade, I guess, right? Right. But historically, it doesn't want to go above 90. It doesn't want to be above 100. I think only this time in 87 is the only time I think it was above 90. So it doesn't want to be that high. high. At 90, what does that mean? What's the implied? There's a rule of 16. Every $16 is a 1% move. 64 is 4%.

80 is 5%. Every day for the next 30, that was 6% move. It's just impractical. And what you really actually need for that to work out is you need somebody to buy that. You need a buyer in the S&P 500 put. And probably you're not going to find somebody that's going to pay that price for it. But I guess you could say, right, like Bitcoin and stuff has had fall that high, like probably a sustained 150 or something.

Oh, sure. And you just look at the VIX futures, the VIX right now is 170, or this was yesterday. So that's sustaining. And explain the VIX a little bit for people who don't know. Oh yeah, this is fun. The VIX is the VIX of the VIX. So it's, you take the VIX a little bit for people who don't know? Oh yeah, this is fun. The VIX is the VIX of the VIX.

So it's, you take the VIX options and you do a VIX calculation on them and you have the VIX. And it's tradable or no? No, no, not directly. No, it's just the options of the VIX features. And then talk a little bit about the back months in the VIX. So those all record highs, I'm assuming they were. I don't have the stats on that, but what have you been seeing in the VIX? I don't have either, but it seems comparable to 08 to me. I can remember 12 months out seeing those creatures above 30, which is about where we are now.

So it seems similar to me. I think they're very steep, but it is shocking to see the far-out months still at 30 just because I kind of expect volatility to be down a year from now, well below 30. Maybe not a month from now, but certainly 12 months from now. And then my last big structural trade of what are your thoughts? I have this debate with a friend all the time of the tick size is $50. And he basically says it's not tradable short term because that size is too big. Basically, the contract size, the tick size to the notional value of the contract is too large.

Do you have any thoughts on that? Why? Because it's a five-set increment. Yeah, that it should be a penny or less. Well, it used to just be a penny back when there was a lot less trading, and I think the market makers got frustrated with it. They didn't know where the price was going to be. Right now that it's a nickel, at least they kind of have a feel for it. I can appreciate that tick size being kind of high.

There are talks to have a micro VIX feature. I've asked them a couple times for that. I think they're looking at doing that. So that would help certainly in that regard. But, again, I mean, it's the notional size of the VIX feature is a lot higher now. It's, you know, $46, but it's a lot less than the E-mini. Yeah, it's like by a factor of 10, like when it's down at 12, and it's his point of when it's at 12 and you're trying to get in and out, it's just eating up most of your potential profitability each day. If you cross the spread each time, which I argue which i argue like well then don't cross the spread great well we're wrapping up here uh but we like to end every time with uh asking you

some of your favorites, rapid fire. So if you're ready, I'll go. Ready. You're ready. Favorite investing book. Favorite investing book. Does Moneyball count? Sure, I'll take it.

It's how I got into trading. It's one of the reasons why I got into trading. I was always big into fantasy baseball and uh always loved baseball still do obviously uh shedding a tear right now that today would be opening day um it uh talked about the probabilities of players and statistics and how um and just how they how they kind of value players a little differently. And it really parallels really well with options market making, just kind of the understanding of value in the market and if they see an inefficiency or they see a spot where they can take advantage of it.

And then I love there's a futures market tie in there because John Henry loved what he saw out of – what was the guy's name, the A's guy? I can't remember right now but john henry called him in from the red sox so john henry made all his money as a trend follower had billions under management oh billy bean yeah billy bean so john henry had billy bean come in offered him the job he said no but then he basically ended up with theo who was doing all that stuff so then the cubs got and won our World Series. So we'll take it. There we go.

Yeah. For all our fellow Chicagoans, favorite Chicago pizza place? Pequod's. There you go. That's my favorite. Yeah. The caramelized cheese crust is the best. Yeah, absolutely.

How about, are you a, what's the Michigan pizza chain? Pat's Pizza? No. No. I don's Pizza? No, no. I don't like Detroit pizza, sorry. Little Caesars? No, no, no, no, no. How about, are you a podcast listener? Favorite podcast to listen to?

Reply All. I like those guys. Reply All? Yeah. I don't know. What do they talk about uh just random internet stuff weird memes they see like a funny tweet or what's it mean and they'll uh you know see like a sports tweet and it'll be kind of obscure and you you know what you know and you don't you don't kind

of explain it pretty good time all right I'll go check that one out. Favorite Michigan vacation spot or Western Michigan town? Saugatuck. Saugatuck. All right. Big time, yeah. Favorite Michigan sports team? Detroit Tigers and Michigan State.

Favorite video game? You used to be a bit of a gamer. Yeah, I actually really like Grandmaster Strategy games. I'm such a dork. I like Paradox games. There's games called CK2 and Europa Yermis Alice, and I can't play them anymore because I have children, and they take too much time. I know.

There used to be a great Star Wars one, like, way back. This was, like, 95 or something that I don't even know the name of, but it was fantastic. It was strategy. It wasn't just a shooter game. You had to figure out how to, like, open these doors and move the elevator to get into the new level, which leads me into my favorite Star Wars character. A guy who Captainirk old school captain kirk is star trek star wars

hot solo sorry all right kirk was oh man that is that is embarrassing yeah that's that hurts my inner nerd because I am a nerd. Are you a Trekkie and a Star Wars fan? No, I like Star Wars more. I don't know why I was thinking Trek. I'm a rare breed that I like both. But most of the time, those two factions fight each other.

All right, Joe. Thanks so much for your time. This was fun. And good luck with everything going on in Equity Armor. Thank you. Thank you. Thank you. All right. Thanks.

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