Good riddance to August! Truly one of the most difficult option cycles I can remember. Back in ’08 you knew we were headed lower and it seemed easier to manage risk. In this current market environment the overnight risk is enough to make one age years overnight. I’m staying small in September and doing more directional trading until I get a better handle on what to expect.

Going into the weekend we saw the VXX outperform the VIX, albeit on weak volume, suggesting market participants were worried more about Theta decay than an event. Considering that the VIX is already suggesting 3% moves in SPX it’s a good thing we didn’t see the VIX rip on Friday. Volatility pro Adam Warner sees the VXX/VIX action as being more about Vega and the thinking that volatility stays at these levels. Although Adam caveats the weak volume in VXX Friday. Interesting times we trade in now, no question. Enjoy the links and your weekend!

  • A crowd psychology analysis of the riots [Left Foot Forward]
  • Evil as a common goal [The Guardian]
  • Downtown’s Rules for Surviving a Crash [TRB]
  • How Does Financial News Impact Your Brain? [NPR]
  • Memory contaminates perception [The Guardian]
  • The story of a speculator [Scribd]
  • What Can A Highway Engineer Learn From A Neuroscientist? [Scientific American]
  • Do You Suffer From Decision Fatigue? [NY Times]
  • Online Financial Personality [PDF]
  • Want to keep your exercise resolutions? [U of Illinois]
  • For The History Books: Unprecedented Market Action [My Simple Quant]
  • How to unleash your creativity [Psych Central]
  • Our Leaders Have No Idea What To Do Here [Dr. Phil]
  • Systems Collapse When The Irrational Is Considered Rational [The Epoch Times]
  • How a Long-Only Investment Manager Approaches Turbulent Markets [Minyanville]
  • 5 Investment Strategies For Better Sleep [Smartmoney]