Divination & derivatives: the Iron Condor and the Celtic Cross (how options strategies are just like tarot, pt. 1)

A Christmas catastrophe, a derivatives explainer, and why your Bloomberg terminal is basically a tarot deck. Or - on the structural kinship between trading systems and fortune telling.

“All happy families are alike; each unhappy family is unhappy in its own way.” - Leo Tolstoy

“All fintwit communities are alike; each fintwit community is unhappy in its own way.” - Me (Ani Bruna)

Is there any time of year more fraught and tense for families than the holiday season? Thankfully I’m Armenian and I’ve never celebrated a proper version of the holidays because my people do the whole January 6th/7th eastern orthodox thing, and while I found it devastating growing up, I totally get it now, have you seen all the discounted items at TJ Maxx in the days immediately following December 25th? Cha-ching, score! But score-keeping of another kind is happening within the finance community via fintwit (finance twitter for the uninitiated) due to derivatives drama going on right now since this year’s Christmas involved a man who calls himself Captain Condor tweeting through the liquidation of his entire trading community’s accounts in real-time. When I read about it, I realized two things:

1) I absolutely need to write about this and explain what is going on and

2) Derivatives were my least favorite course in my international finance master’s program, so of course my first pure finance concept essay should be an homage to this dark period of my life where I also lost my favorite scarf when bicycling to make that lecture on time…it’s been two years since then and i have been unable to find it. Damn you, Dam Square)

While I’m aware we live in challenging and interesting and uncertain times and timeline this, timeline that, the decidedly existential bent to Captain Condor’s Christmas Crashing Out Event also involved messages to his followers (who had just watched their money disappear) such as the existential lament of Captain Condor, oh captain, my captain, declaring “There’s a 100% probability we will eventually die.” Incidentally, this is why you want to take a Heidegger course before your brain ossifies too much, folks. But yeah, George Michael was a little too on the nose when he sang Last Christmas, I gave you my heart / But the very next day, you gave it away. Captain Condor is no George Michael, but it’s basically the same as Last Christmas, your account is gone/But at least we are all mortal.

While Wham! wrote that holiday song about a breakup, they could have written it about a brokerage account too. When I initially read about this quadruple C rated event (the Captain Condor Christmas Catastrophe ™), I was curious as to why I kept seeing tweets about iron condors, as I’d never heard of it before. Could it perhaps be a Game of Thrones sequel or something? (I’ve never seen the series so I wouldn’t know, fun fact). Given that the vox populi in Patagonia also don’t tend to be into heavy metal as they tend to be into showing off heavy metals on their wrist, I was wondering why so many men in finance were posting about iron condors last night.

At first I suspected it may be because I have a theory (finance guys absolutely have a thing for alt women/goth girls, that’s another discussion for another time) but when I found out that iron condors involve derivatives in this disaster, it hit me immediately: it may be 4am, but options strategies are actually divination systems.

The actual entire structure of what these traders were doing (all the fancy math, all the probability talk, all the “systems”) is architecturally identical to reading tarot cards. That’s right - I’m going to prove it to you, and I don’t need a crystal ball.

I do however need your patience as I first explain one of the most boring concepts in finance. Sorry, not sorry. I told you, I hated that class. Here is the plan: first, I will explain what an iron condor actually is and why it does not involve Norwegian black metal. Then I will tell you what Captain Condor did with them. Then I will prove to you that this derivatives strategy is structurally identical to a tarot spread.

In Part 2 of this series, I will show you why this keeps happening, why trading education functions as religion, and why the guy who invented probability theory was also a professional astrologer.

What Is an Iron Condor and why does it not hail from Norway nor involve burning down churches?

I am going to explain this because I had to learn it at 4am and now so do you. Also because the shape of this thing is the whole point of what I am arguing.

When most people think about the stock market, they think about buying stocks. You buy a piece of a company, hope it goes up, sell it later for more than you paid. Simple. The advice is to buy low and sell high, but I have had the good luck of buying high and selling low enough times to be aware that there may be greener pastures to play the market. Ever heard of a derivative? No, I am not referring to a work of art that is tepid and bland while obviously trying to be something it is not. In finance, a derivative is a contract whose value is based on something else. You are not buying the thing itself; you are buying a contract about the thing.

One type of derivative is an option, named as such because an option gives you the right to buy or sell a stock at a specific price by a specific date.

Think of it like this: imagine you want to buy a house, but you are not sure yet. You could pay the owner $1,000 for the right to buy the house at $500,000 anytime in the next three months. If the house price shoots up to $600,000, great, you can still buy it at $500,000 because you locked in that price. If the price drops, you simply do not use your contract and you are only out the $1,000.

Basically, an option is a deposit that gives you the right to do something later, just like a roster of people you can flirt with when you’re bored or need ego validation or if you get too into a person who isn’t feeling the same way. When it comes to understanding options, just remember the expression about keeping your options open both fiscally and in fornication.

There are two types of options known as calls and puts. It is going to take everything I have in me to not run a parallel to how puts and calls also apply to the hotline bling of optionality in dating, but maybe another time.

A call gives you the right to buy at a set price. A put gives you the right to sell at a set price. If you think a stock is going up, you buy a call. If you think it is going down, you buy a put.

But here is where it gets interesting, as you can also be on the other side of these contracts. Instead of buying options, you can sell them and collect money upfront.

When you sell a call, you are betting the stock will not rise above a certain price. When you sell a put, you are betting it will not fall below a certain price.

When you buy options, you pay a small amount and can win big if you are right. When you sell options, you collect a small amount but can lose big if you are wrong.

Buying options is like buying a lottery ticket, and selling options is like being the casino.

An iron condor is when you set up four of these contracts together in a specific arrangement - you sell a put, buy a put at a lower price, sell a call, and buy a call at a higher price. The two you sell generate income. The two you buy cap your losses if things go wrong.

Pay attention to that word: arrangement. It is going to matter.

You are essentially making a bet that says: “I bet this stock stays between Price A and Price B for the next day or week or month.” If you are right and the stock stays in your range, you keep the money you collected. If the stock moves outside your range, you start losing, but the way you have arranged the four contracts caps how much you can lose.

Four pieces in specific positions, and each piece is only meaningful in relation to the others. The position of each piece determines whether it protects you or exposes you.

If this is starting to sound like something other than finance, hold that thought.

Also, wondering why it’s called an iron condor? It’s because when you graph out what you would make or lose at different stock prices, the shape looks vaguely like a bird with wings spread out. Someone figured this out on Excel once and it was a moment of their life that they will never forget. I am so happy for them. Since finance people usually don’t have a chance to be artistic or creative unless it involves a corporate or accounting scandal, we have to give them every little indulgence we can because god, yeah, the lack of creativity is absolutely reflected in the naming of the damn derivative stratagem to begin with.

What Captain Condor actually did just like Nic Cage

David Chau is a 31-year-old college dropout from Nevada who built a trading community called InsideOptions with over 1,000 members paying upwards of $5,000 a year for his daily trading recommendations. The Wall Street Journal profiled him. Forbes covered him. They call him Captain Condor because I suspect finance people love giving themselves nicknames that sound vaguely military due to some internal inadequacy fear.

Now that you know what an iron condor is, here is what captain Chau was doing with them and how he earned that nickname. Chau placed these bets every single day on the S&P 500, which is the stock market index and a number that tracks the 500 biggest companies in America. Chau was doing them with very short-dated SPX options, often effectively 0DTE by the trading session. (0DTE means zero days to expiration, meaning options that expire that same day.) These bets were essentially the most volatile, fast-moving version possible of them - in my mind, I imagine they embody Nicholas Cage and the title of the classic Gone in 60 Seconds.

When you are betting on something that expires in hours, everything happens fast. A small move in the market that would barely register for a normal investor can wipe you out before lunch. There is no time to wait it out, no let’s see what happens tomorrow - every day is all or nothing.

His system had one other aspect to it, which is that when Chau lost, he doubled the size of his bet the next day. Then doubled again if he lost again. The idea is that you will eventually win, and when you do, you recover all your losses plus profit.

If this sounds like what your mysterious but fun uncle from Florida does at the blackjack table in Vegas, that is because it is. It is called martingale betting, and casinos love people who do this.

The problem with this, however, is not subtle. It’s when you hit a losing streak that is longer than your wallet is deep, and then you lose everything. Not some of it. Everything. Everything, everything, everything. Unlike the eponymous Dramarama song about figuring out a relationship’s difficulties, this aspect about martingale betting is not hidden knowledge. This is literally the first thing anyone learns about martingale systems. It is in the Wikipedia article. It takes thirty seconds to Google. I mean c’mon, as Gob Bluth would say.

For two and a half years, Chau’s system worked beautifully anyway. His system reportedly won the vast majority of its trades. His trades got so big (sometimes involving contracts worth tens of millions) that analysts noticed he was actually moving the market when he placed them.

Yet there was wariness with this already, as one expert warned back in April: ‘If he knows what he is doing, great. But the size is kind of crazy. Doubling down on each trade is literally gambling’

Chau himself also shared another existential sentiment earlier this year, saying “I have always been worried about the impending doom. Nothing good lasts forever.”

Chau isn’t wrong - nothing lasts forever indeed, not even cold November rain. And reader, yes, the doom doomed two days ago.

What happened is that the market moved against him day after day and as described, under his system, you have to double down after each loss. So he did, and the bets got bigger. By late December, his positions had grown to risk millions on single-day trades.

Yet the market kept moving against him, and accounts started liquidating. That is the polite finance framing for “bro, your money is gone and there is nothing you can do about it.”

Reviews from his community, dated December 24-26, tell the story in real-time:

“Algos reacted weird, streaks turned endless... and boom, whole account vanished by evening.”

“We are essentially picking up pennies in front of a steamroller.”

People lost real money, the tune of which I don’t know, but it may be possibly if not probably perhaps millions of dollars across the community. Some members had sold businesses to fund their trading accounts based on years of winning.

Meanwhile, Chau had reportedly been earning upwards of $200,000 per month in subscription fees. And on Christmas Day, as it was all falling apart, he tweeted about the certainty of death.

I’m not sure how I’d feel reading that tweet if I lost everything on that bet, but my Substack is free and none of you have yet to even buy me a coffee for my wonderful writing (granted, it’s only been a few weeks, but you know, it is the holidays. Don’t be greedy with the wit, it needs to be fed).

How Iron Condor as an options strategy is actually literally like seriously a card game metaphorically allegorically example-y

Remember how I said to pay attention to the word “arrangement”? Here is where it pays off.

An iron condor has four parts arranged in a specific configuration. Each part only makes sense in relation to the others. The position of each piece changes what it means and what it does.

One of the most famous divination systems in the world, Tarot, also happens to have a famous spread called the Celtic Cross, where ten cards are arranged in a specific configuration. Each card only makes sense in relation to the others. The position of each card changes what it means.

Ring any bells with a certain derivative strategy?

For those unfamiliar with the dark arts, Jungian archetypes, or originally from Los Angeles: regardless of whatever preconceptions you have, the tarot has a rich history and is used for symbolism to prediction to dramatic scenes in movies, TV, etc. In the tarot, The Tower card (the one with the lightning bolt destroying everything) means completely different things depending on where it lands in the spread. In the “hopes and fears” position, it means you are terrified of sudden change. In the “outcome” position, it means that change is coming whether you like it or not.

Same card. Different position. Different meaning.

In an iron condor, the same contract (let us say, the right to buy stock at $105) means completely different things depending on how it relates to the other three pieces. In one configuration, that contract is protecting you from disaster. In another configuration, that same contract is exposing you to massive loss.

Same contract. Different position. Different meaning.

Both systems derive meaning from arrangement, not from any individual piece.

The parallels between options strategies and tarot continue. For example, in the Celtic Cross, one card literally lies across another. It is called the “crossing” card, and it represents whatever is blocking you or working against you. In an iron condor, you have protective contracts that “cross” your risky contracts, limiting how badly things can go wrong.

Same structural logic. Different costume. Different material outcomes.

Anthropologists who study divination practices describe them as “moving from a boundless to a bounded realm.” You take infinite possibility (the chaos of the future, which could go literally anywhere) and force it into a structure that you can read. The spread creates a methodology in the form of a container for interpreting randomness, and that is exactly what an iron condor does. You take the chaos of the market, which could go anywhere, and create a bounded methodology in the form of a container where you can profit if it stays in a range and where your losses are capped if it does not.

Both systems are technologies for making randomness feel legible.

Beyond structure, both systems also share rhetorical techniques. Tarot readers use cold reading, which are statements that feel specific but are vague enough to fit anything. “I sense a transition coming in your life.” “Someone from your past may reappear.”

Trading gurus do the same thing. “The market is at an inflection point.” “We could see movement in either direction.” “Watch this level closely.”

All these statements sound like predictions but are unfalsifiable, and regardless of whatever happens next, the guru can claim they called it.

Both practices also impose narrative structure onto randomness. Tarot readers do not just read individual cards, but they construct a story. “Your past was this, which led to your present situation, and this obstacle is blocking your desired outcome.”

Traders do the exact same thing with charts. “The market found support here, broke out here, faced resistance here, so it is heading toward this target.”

Both practices have a beginning, middle, and end. Both derive cause and effect. The human brain cannot tolerate randomness. It must find patterns, and tarot and trading exploit this compulsion.

Tarot deals in archetypes: The Fool, The Magician, The Tower, Death. These are universal patterns that recur across human experience. Trading also deals in archetypes of The Fool, The Magician, The Tower, and Death in the form of ‘pls fix’ emails sent about decks.

Even trading technical analysis has its own archetypes through Head and Shoulders, Cup and Handle, Double Top, Rising Wedge. Traders see these shapes in charts and believe they predict future behavior.

Both systems say that this shape, this symbol, is salient with meaning something. When you see this pattern, this outcome follows. Both are imposing archetypal meanings onto noise and the sheer chaos of existence.

Both create the illusion that chaos can be understood and subverted through knowledge.

Captain Condor’s community learned this the hard way on Christmas Day. But here is the thing - as the Dutch love to say, he is not special. This exact pattern has played out before, with Nobel Prize winners, with beloved ETFs, with legendary traders, and even with suburban Karens. When it comes to divination and derivatives, the links between fortune telling and fortune making run much deeper than we’d think.

In Part 2, I will show you the history of traders who thought they had conquered chaos, explain how trading education became a religion, and tell you about the 16th-century astrologer who invented the math these finance bros still use today. The cards were already laid a long time ago.