Options leave you breathless
Vol #280: July 16th, 2026
The first vodka distillery in America was in a quaint Connecticut town.
Today the only reminder is an empty brick warehouse sitting across the tracks from the train station. No plaque or rusted sign, simply a bit of folklore from the brief time when a soon to be powerhouse was a curious foreign upstart.
The Smirnov family had been wildly successful in Russia, and along with a thirsty client base of nobles, their spirit was regularly served in the Tsar’s court. Things turned upside down with the Bolshevik revolution, and only one son managed to flee for Paris. Vladimir carried on the family business, but struggled in the land of wine and cognac. After several years he finally sold the exclusive rights to American distribution to a vacationing cosmetics executive named Rudolph Kunett.
Kunett wasn’t long for the spirits business, and neither was his founding warehouse in Bethel CT. After only five short years, he sold the company to a larger Hartford operation and the facility moved to the capitol. Today the brewpub across the street is booming, but the clear spirit has left almost no trace on the town.
And that’s just how Smirnoff would have liked it. Just as they worked for decades to find a place behind the bar, their most lasting mark would be a notable absence.
Prohibition threw a wrench in American drinking habits. After almost 150 years of innovation in both the quality and service of spirits, the bartender’s Library of Alexandria was torched. Tipplers began to drown their wretched substitutes with sugars, juices, and anything else they could find to mask the flavor of bathtub gin. Depression leading into another war didn’t help.
The men and women of the new post World War II economy took drinking culture in a different direction. The new era was about clean, modern, and most importantly not stinking of booze. Plenty of spirits got drunk, but the lovely feeling that whiskey, rum, and beer delivered, also left unwanted side effects.
Smirnoff was able to slide in with a deft marketing campaign that tackled its (fully American owned and produced) Russian heritage with irreverence and savvy. The Moscow Mule was popularized despite its Red associations through a Hollywood connection, and the great white whiskey leaned into its odorless aftertaste.
“It leaves you breathless,” their marketing copy sang. Said otherwise, the best part about this product is that no one else has to know you’ve been using it.
If you’re hiding your drinking, you’ve got some other problems to reckon with. And whether you drown it in ginger beer, orange juice, or take a chilled shot neat - it isn’t going to fool many people for long.
But in the spirit of David Ogilvy - the key to success (in advertising) is to provide the customer with a benefit. A product that both inebriates and obfuscates seems to have two.
Alcoholic beverages are nearly as regulated as financial products, and both share a hangover of consequences if you over indulge. It used to be that stocks were stocks and bonds were bonds- caveat emptor, but there was no hiding from yourself or others what you were doing.
Now we’ve reached a Smirnoff moment, where the most attractive thing about new financial products is that they obscure what’s actually happening. Breathless.
The most obvious example here is prediction markets. It’s not exactly new or novel to point out that these are gambling instruments masquerading as financial products. Sure the line is grey, and in whatever iteration of the meme you prefer - it always has been. Abstractally the difference is philosophical intent, but practically the CFTC has to draw a line somewhere.
With a definition for gambling as something like the obscenity test - “I know it when I see it”, plenty of slick marketing will have you believe that hedging event risk is a perfectly appropriate role for your brokerage account. So long as there’s a soccer team that needs to mitigate the financial impact of a potential relegation, the contract can pass the “economic purpose test.”
But one valid use case doesn’t justify taking the same instrument to roll the dice for a dopamine hit.
The same logic holds for 0DTEs. The valid use cases for hedging and strategy design are a distraction from when that same theta hit is used for disingenuous copy to promote short term income or feeding yolo bets.
Various options based ETFs pitch themselves as alleviating the pain of trading derivatives. The holy trinity of easy, consistent, returns are neatly wrapped up in a breathless package. Pick your specific flavor and let the fund do the rest.
Managing overlays, buy writes, or put spread collars gets to be a pain. Take away all the side effects of that exposure and you have all the gain without the pain. That is a reasonable solution to a real problem. So are the sizing benefits - with only 1 share of an ETF you can get the exposure of something that would take hundreds of shares to do on your own.
But you can’t hide from the downstream impacts of ethanol forever. Selling calls will always be about the short upside convexity and downside exposure in exchange for a fixed payment based on the best estimate of volatility. That’s what you get. For all it’s pain or gain - that’s the point.
Smooth over every detail about strike or expiration or ticker selection or size, it’s still a covered call. Or a 2x leverage play. Or an inverse CPI trade with a yen kicker. Structured note parlays in an ETF are going to be epic.
Easy is nice. Easy takes the pain away. But easy access demands strong opinions.
Vodka is a middling spirit, and sports gambling doesn’t belong next to my low fee diversified retirement vehicles. Options ETFs lean too far into their marketing, and know the package isn’t ever as neat as presented. I could go on. But as my friend Andrew reminds me when I start expounding about wine - “nobody gives a f&ck.”
Advertising is there to sell you on a solution. Customers don’t want features or products, they want an end to the little nuisances. And more money. It doesn’t matter whether they’re worried about boredom or economic risk.
Returning breathless from your three martini lunch doesn’t change anything about the effects you’re feeling. Now there are as many good reasons to raise a glass as there are good calls to sell. There’s nothing wrong with the product, the trade, or regulation of vices.
Only to know that the packaging and marketing exist for a completely different purpose than yours. Without an opinion about what makes sense in the first place, you’ll be caught breathless. Bourbon tastes better anyway, just own it.