How It Works
- 1
Wait for 'capitulation' event (VIX spike, margin calls)
- 2
Identify forced sellers (funds blowing up, indiscriminate selling)
- 3
Bid well below intrinsic value
- 4
Hold through the volatility squall
- 5
Profit as rationality returns
Key Mechanics
Liquidity premium
Mean reversion
Margin call mechanics
Bid-ask spread widening
Regulatory Context
Legal and encouraged (provides market stability). 'Circuit breakers' may pause trading.