It's standard for a reason
Vol #267: April 2, 2026
It’s nice to go to a place where everybody knows your name.
While it precludes me from ever having a working lunch again, there’s always an interesting conversation to be had. I’ll have to catch up on the Practitioner’s Guide to Volatility another time.
The other day we had a spirited conversation over appropriate wine tasting etiquette. There are several cues that a server gives to indicate they respect both the wine and the guest. Once you know these, the ritual is either pleasantly rote, or abominably sacrilegious.
Small details like reciting the year, region, and producer, or keeping the label constantly facing the guest demonstrate an awareness of the process. Dumping 5 oz straight into a glass to taste shows cluelessness.
The traditional rules of tasting suggest that one person owns the transaction from start to finish. Whoever makes the ordering decision is the one responsible for verifying receipt of the appropriate bottle.
It’s important to highlight that the objective of sampling the bottle of wine you ordered is not to provide notes and analysis. This is not a tasting for scoring or even deciding how much you like it. It’s simply a pass/fail of whether the bottle has any faults.
Because the exercise is more like signing for a package, it’s logical that only one Hancock is needed. However as customs evolve, tasting etiquette has changed too. Whether it’s for equal opportunity or to be inclusive, it’s become increasingly common to include both members of a two top in the process. That’s misunderstanding the point, and it’s wrong.
The folks down at my local are traditionalists, and agree with me. Obviously. But in the world of hospitality, even if the guest doesn’t know the reasons behind the practice, it’s a risky move to be exclusionary.
The erosion of small details like this really makes me dig in my heels. It makes me want to “stand athwart history yelling Stop.” There is a well orchestrated symphony taking place here, pipe down you animals.
Whether or not you agree with this old man yelling on his porch, there’s no denying that customs and procedures exist for good reason. Every industry has its subtle protocols that at their most benign flag a rookie, and at worst cause unnecessary confusion and mistakes.
Buy for. Sell at. Buy for. Sell at. Over and over again we repeated that until it stuck in our heads. You learned these words before kindergarten, but as fresh faced college graduates we were told just how important it was to line up the prepositions.
So important that you could drop the buy and sell, and if you said “for”, someone knew you were bidding. “50 at 1.20” contractually puts you on the sell side in open outcry.
To this day it grinds me when I hear a real estate agent talking about putting in an offer. Or even with the correct verb, someone will place a bid at $1M. Shivers.
The underlying reason here is very practical. In a messy crowded pit with potentially several orders happening simultaneously, the economy of language is valuable. You want to be heard clearly and concisely - every additional word is another variable to get muddled. Verbal transactions are binding, and you don’t want to end up sorting this out in the breaks room later on.
In other cases imprecise language can just be confusing. Options have enough variables already, using non standard language pours sand into the mental machinery. Kris Abdelmessih pointed this out a few weeks back on Twitter - “Deep” is for ITM and “far” is for OTM.
If you tell me you want to sell the deep out of the money calls I’m going to scratch my head and we’re going to spend the next minute or two clarifying the strategy. I don’t totally know why, but it just seems logical that an option is deep because it’s up to its shoulders in intrinsic value, and it’s far because there’s only a small chance it gets hit. Something like that.
It’s not just the specific terminology that differentiates the insiders from the tourists - how you talk about trading or a position says a lot about your experience.
While it’s important to have a logic and expectation behind any trade you make, the more focused a risk taker gets on specific scenarios and theses the more suspect I become. Savvy investors recognize that the future is a tapestry of outcomes, and a good portfolio is robust against the predictable and the unknowable. Trading is an exercise in resilience, not fortune telling.
Framing market makers as anything other than liquidity providers shows you know as much about market plumbing as I know about the pipes inside my walls. Dealers don’t care about direction, and aren’t pushing the stock against you. They’re rarely forced to do anything, and the only thing that sets price is orderflow.
These linguistics ticks are the equivalent of not properly reciting the appellation or bringing the bottle to a separate corner to pop the cork. What really botches the tasting is when the wine gets overserved. When amateurs think the point of the ritual is glug glug.
It’s far too common for traders to come to the options market expecting alchemy. Consider yourself warned - options trading doesn’t make money.
Derivatives are built for risk transfer. They’re contracts to mitigate or enhance a natural exposure. The farmer that sells future contracts, or the multinational that buys currency forwards.
The framing of a strategy as an income generator is a red flag. Even when you drop in ten dollar phrases like variance risk premium harvesting, it doesn’t turn a basic strategy into a revenue generator. Expecting anything more than a few marginal percentage points of return says you’re drinking just for the buzz.
There are edges and opportunities in options - markets aren’t efficient for risk transfer participants without the hard work of pricing sleuths. But there’s a very specific time and a place for that, and it comes from a lot of hard work. There are no tea leaves or dealer positions to read, just prices and outcomes.
When tasting that newly presented bottle of wine, the objective is binary - pass or fail. Anything more from either the server or the guest shows they fail to understand the basic point. It’s tempting to bow to the naive demands of guests expecting that everyone gets a taste, or to retail traders that just want stock picks and dividend checks.
But whether you’re in wine service or options markets, the standard practice has developed for a good reason. Using the right language, and understanding the framing of the situation is what separates the amateurs from the experienced.
And with that basic test out of the way, it opens a whole world of potential conversations about bottles and markets alike.