Aug 8 Trade and Travel Update

I am on my very last 2 day leg with my family in Milan. On Aug 10, I’ll drive up to Munich to meet some friends and do a beer tour around Germany and probably Pilsen (Czech) and maybe Krakow, Poland. On the 19th, I’ll be in Barcelona to play a big poker tournament and then I’ll be heading home to resume normal life. I think this will be the last EU tour for a little while. We’re building a house in Canada next year and I think we’ll use that as our summer base and slow down the EU tours as I think I’ve seen most of it now. It’s not as exciting as it first was and it’s been more of a drain than a rejuvenation. As my account grows, I need to fully concentrate on trading and take only brief breaks on weekends etc.

As for the trades, well, the market is in a historic area right now. The DOW has made 9 all time highs in a row and the VIX (and thus option premium) is at all time lows. It’s a bad time (the worst) to be an option premium seller. It’s the worst time for strategies I used and the plan I had 🙂

I saw this graph of VIX futures and it really sings a song.

Anyways, I know a lot of people are being challenged right now. It’s been a rough 20 months for trading these types of strategies. Slow. I started trading the Rhino (which really likes any market other than a 5% up market in a 45 day period) and as soon as I initiated that trade at full volume, the market had like 15 months where 9 of them (RUT) went up 5% or more 🙂 I have terrible timing. I think the RUT moved up 50%+ in the last 15-20 months. The SPX went from 1828 to 2475 in what 16 months? Incredible move. So I had low’ish returns for that trade over the course of 2016 (I was positive just meh, I think 20%-25% overall). Then 2017 came along, and I had started the STT full on but still had Rhinos on from previous. The rhinos got decimated in the environment and is still affecting my overall return for 2017. This environment for the STT can still be done well I just wasn’t able to kill it this summer. As to do well, you really had to be perfect in timing for paying off the BSHs and for initiating the STT. It took a certain plan and without knowing how the market would have gone, it would be hard to do well in that environment sans Combo trades (the combos would have crushed). The vol has been so so so low that I’ve been dragging heels on initiating new STTs. I mean, you’re a net seller of vol and vol is at historic lows, you haven’t gotten a worse price on this ever. So I wasn’t excited about initiating new trades. I know it can be done if you arrange a + UEL and if you are very prudent at paying off those BSHs but that’s not easy. On big up moves, I’d initiate BSH and RC (RC pays off about half of the BSH) and I’d wait for some vol to enter in STTs. That vol never came (ever!, it’s so damn crazy how low the vol is..we haven’t had 0.3% daily moves in record times) and I was stuck putting on STTs in low vol(Crappy prices) and when my BSH/RC combo was down. Still it profited but just nothing much at all. Typically, the plan was this: Put on RC/BSH as the market has a big up day, wait for down day and enter an STT. In ANY normal market, or any market that’s not this market, you’d have that opportunity. Down days are fairly common…just not this year. That all said, poor (slightly profitable) results because of the management/plan I chose for the year. That’s got me a bit bummed out but at the same time I haven’t been more excited for what is coming in my trading career.

The combos that we are working in the group and the testing that we’ve done suggest very very consistent results. I’m showing a result of 8.75% on margin in 45 DIT. Thats 5.833% per month on margin used. We use only about 65% of balance, so total balance return would be 3.8%. Not that exciting when looked at as a single component. However, If we combine this with a T5 (TTT555) trade the margin reduces significantly. My goal is to get it to 5% a month on whole account for the STT combo alone. The T5 trade has gone from 1200 to 20k in 2.5 years in backtesting. That thing returns 100% 70% of the time within 10 days and loses equivalent 30% of time. You obviously can’t do too much of these as you’d wipe yourself out psychologically (and 30% of your balance) if you had 3 losing months in a row but the boost and the margin reduction makes it very attractive. My goal is to have the combo, the BSH factory and the T5 trade working together to provide a total account return of 100%. That’s exciting but it’ll be a lot of work, a lot of organisation and diligence in process. Further to that, we’ve got a T5 timer that helps immensely with entries and exits. Unfortunately, I went about 40 units in for the T5 before the timer exists and I entered at a shitty time, it’s down at them moment but the risk profile looks great. Like I said, I have the worst timing for everything and I have to create a life and trading plan that negates my awful cursed timing 🙂

I was asked to do a presentation on the PC2 trade but I am on my last two days with the family and I just can’t sacrifice the time w/ them without having a very angry wife so I am hoping I can just do it early September instead.

House Progress (4 years in the making)

Our house is nearly nearly there. We started building about 20 months ago and it’s just about finished. I was lucky to have gone to school with one of the best Canadian architects (in my opinion) and he agreed to design this one for me.

The design is amazing. We just told him we wanted three pods (separate living spaces) that integrated with the outdoors but also were connected by a top floor. This is what he came up with

Thanks Joe (fellow Trading Dominion user) for taking the pics in my absence!

Hopefully will be in by October/November.

Jul 13 – Where have I been?

I started traveling May 30 and have been on the road since.

We started off in Lisbon Portugal and spent 9 days there. It’s a top 3 place for me for sure. It was very hilly which was a bit tough with a newborn in a stroller but we made due. We stayed right near an awesome little park that had a small confectionary like restaurant that served coffees in the AM and beers in the PM. Loved it. Spent a lot of time there. Everything was so cheap, like 1.30 EUR for a beer 🙂

After that we rented a car and drove down to Faro for 5 days. It was OK, too touristy for me, felt like one of those british tourist destinations that you see (Malta Paceville, Ibiza, etc) but we had to go there to catch a bus from Faro to make it to Seville. I just couldn’t get a rental car that would allow us to drop it off in Spain, so we had to bus it. After Seville we made our way down to Marbella by rental car. Marbella was pretty cool, like the Monaco of Spain Lots of expensive cars and wealth. I ended up playing the Marbella Pokerstars tournament. That didn’t go well, I busted K8 on a 6788 board to a 9T. Normally I could get away from the hand but it went down like this:

Everyone folded to me on the button, I raised first in, small blind and big blind both called. IT was checked to me on the flop 678 and I bet 1/3rd pot. Call call. The turn brought the 8 which gave me set with K kicker. It was check/check and I bet 1/4 pot. The BB check raised me and I pushed. The ranges here are pretty big for all of us. So I got attached to the hand and busted. Ah well.

After Marbella, we made our way to Madrid, spent 8 days there. I wasn’t expecting much from Madrid but ended up liking it a lot. The airbnb was decent but the lady was super OCD and really annoying, writing us every few hours with instructions for the most mundane things. 2MM LBGT folks came in for world pride day and I think Madrid is considered the capital for the community. Was interesting and neat to see. After Madrid, we trained down to Barcelona and spent 8 days there, not much of interest happened there.

I am currently in Stockholm now. We rented a house in the outskirts (country) for two weeks to chill out a bit. It’s only 20 min by train to Gamla stan. As always, I am constantly in catch-up mode. Either w/ trading or my business.

Next on the list is Gdansk, Poland and we’ll probably drive down towards Arona, Italy. I am going to play in the Barcelona pokerstars championship event end of Aug and that will conclude my European trip this year!

More posts about trading incoming today

Preparing for the summer road trip…

Starting to do some small time planning of our yearly European road trip. We depart May 28th and will return late Aug to our hopefully completed new house. We will start the trip from Portugal which is exciting since we’ve never been to mainland portugal, just the island, Madiera. We’ll probably spend 2 weeks total there and make our way into Bilbao, Spain. Either by Train or rental car. We’ve got two kids, a new born and an Au-Pair so it’ll be a bit of a caravan 🙂 We always make it work and we always make it fun. Spain and Portugal will probably take up 3-4 weeks of the trip. The rest will be spent in Poland, Germany and Italy. I was thinking of checking out Estonia for a week too which would at least add a country to my list.

In Portugal, we’ll stay in Lisbon, Porto and maybe see Faro? If anyone has any suggestions, they’d be awesomely appreciated.

After Bilbao, Spain, we’ll probably do Wroclaw, Poland and some more Southern Germany and of course our constant staple–> our fav B&B in Arona, Italy. (Cascina Incocco)

My favourite country is Germany but I’ve literally seen every city in that country and it’s hard to justify spending too much more time there but perhaps we may add Constance to the list this trip on top of Munich. I might go solo in Germany around Aug 10 until my poker tournament in Barcelona on the 20th.

I am digging the new trades for this trip. I can plan and initiate instead of stress and react 🙂 Looking forward to that. Though, I find I need big screen real estate these days for analyzing things. I will only have a laptop :<

Stop #2 – Krakow, Poland

We flew into Vienna, spent 7 days and rented a car and made our way to Krakow, Poland. The rental car place told us we couldn’t go through Czech and possibly Poland (but they had to confirm). I told them don’t worry about it, we weren’t going there anyways lol. We did. Those types of small things give me pleasure.

The drive took I think about 4-5 hours. Krakow was one of my favourite stops this trip. Not what I expected. Everything was super cheap, people were friendly and it felt less touristy then other stops. I’ll be going back. We checked out the salt mines but not Auschwitz (next time). The vodka was like $1euro a shot for premium stuff. Delicious. of course we got Perogies several times. I am half Polish so on Christmas Eve, we eat Perogies and Cabbage rolls as a tradition.


The Salt Mines


Enjoying a big beer on a patio. Good times


The kids hanging out next to some sites


Kingstons face as I tell him about Ron Bertino’s Space Trip Trade


Looking Cool as Fuck

This summers Road Trip – Intro and Stop 1: Vienna

This past summer we did a 7 week road trip that started in Vienna and ended in Salzburg. Might be wondering how we pulled off 7 weeks of road trip and only ended up 3 hrs away, well we did one huge ass loop.

1. Vienna, Austria
2. Krakow, Poland
3. Lower Silesia, Poland
4. Dresden, Germany
5. Hanover, Germany
6. Frankfurt, Germany
7. Heidelberg, Germany
8. Aschaffenburg, Germany
9. Freiburg, Germany
10. Tuttlingen, Germany
11. Como, Italy
12. Ranco, Italy
13. Arona, Italy
14. Turin, Italy
15. Lyon, France
16. Milan, Italy
17. Strasbourg, France
18. Nuremburg, Germany
19. Salzburg, Austria (dropped car off)
20. Munich, Germany (By train rom Salzburg)

We always airbnb it except in one area (Arona) where we stay at an amazing B&B (it’s our 5th time)–>Cascina Incocco–>Which I’d highly recommend to anyone. It’s one of my favourite spots.

Some pics from the first stop on the trip:


On the way there!

Vienna – First Stop! Augustiner Yep.

A painting in Emma’s memory match. We’re ticking them off while we travel. Egon Schiele


On to Krakow!

Jun 13 – Trade Plan

It’s been a while since I posted….I was traveling for work and had minor surgery which put me out of commission re posting. I ended up closing the June trades for a great profit about 1-2 weeks ago.

I am in the July and Aug trades all of which are about break-even at the moment. They were all pretty heavy delta negative a week ago and according to OV, we should have expected some significant paper profits because of the RUT falling from 1188 to 1153, but we haven’t. Completely different position than the models suggested. I understood this and sort of expected it with any decent IV rise but not quite as pronounced as it is right now. Usually, if things calm down just a little after an IV spike, the skew changes and time decay floods in and positions start to match the expected model. This time around, this won’t happen until we pass the two big events that are causing the IV spike — Brexit and the Fed meeting. The recent terror attack and the politics surrounding it also presents some issues. For now, market makers will keep pricing inflated. Not forever, since all premium must come out but at least until those events pass and there is some breathing room. Seen it before many times. For now, I am taking the opportunity to add more bearish leaning BWBs to the trades as they’re much more decently priced. I just paid 2.70 for a BWB whereas I was paying 3.40 just a week ago. So not only are they cheaper, but they’re helping hedge to the downside.

RUT has been a bitch since Aug of 2015. We’re having outsized moves and it’s made trading challenging. It’d be nice when the beast settles down a bit. This year alone, we had a 22% decline from Jan to Feb which was followed by a 22% rise up till Apr 28th. Making money in the Rhino trades during that environment is almost impossible. Following that, we had a 7% drop into May 19 followed by a 10% rise to Jun 8th (a 25% for the entire year @ Jun 8). Again, this trade can handle 7-8% fairly decently in any given trade period of 30 days, re not LOSING money but when you get a quick 7% drop followed by anther 10% rise, you start to have challenging trade management. Despite that, June did very well especially since we got out of most of it before the 10% rise. It’s really not normal to have 8-10% moves each month with whipsaw. I cannot wait for an environment that has normal moves 🙂

Our Jul and Aug trades should be able to handle any bearish fall so long as it’s not like 10-15% overnight. They’re all good till about RUT @ 1100. The position they’re in now, ANY stabilization or drop in IV will get them to probably max profit pretty quickly. We’ve got 35 days left and lots of room to the downside and lots of theta since we’re under the tent. Should be a good month unless we have a large correction.

I am traveling for 2 months again starting June 27. We’re doing:

Vienna (7 days)
Krakow (5 days)
Dresden (3 days)
Regensberg (3 days)
Salzburg (3 days)
Munich (5 days)
Freiburg (3 days)
Salzburg (4 days)
Arona (6 days)

10-15 days left unplanned

Undetermined whats after this..maybe south of France or north Italy. Any suggestions?

Mar 27 – Traveling Trade Update (Rhino)

Been traveling and haven’t had time to update the blog. When I travel, I am in constant catch-up mode with both my business and monitoring trades. It leaves little time for this. I’ve been in Barcelona for 6 days and we get ready to board an 11 day cruise tomorrow to hit Tangiers and the Canary Islands.

The April trades are making some headway despite more challenges in the market. It’s just not cooperating. Through out the week I adjusted the trades more and more conservatively without market opinion so that I had the best chance to recover while maintaining solid theta and lower risk deltas. We enter next week with a slight delta negative thus a downside bias. We’re not fully recovered YTD but I am happy with the result. The market moves have been historic and extremely difficult to trade with market neutral strategies. Nearly all the market neutral traders I know (even the “gurus”) have posted losses in the March and April expiries. I mean, what the hell, we started the year with a 22-24% decline in the RUT within a few weeks only to have an absolute epic up move that is a record in its ferocity again in a few weeks. It’s been unrelenting in each direction. It pretty much moved from 1200 to 940 in a matter of days and then moved 18% from 940 to 1105. This all somewhat happened during the April and March trades which were the only ones active this year. Our result? Somewhat negative for the year but if we have any normal decent range bound market, I am talking about like what we’d have 95% of the time, then I’ll start to crush. Handling an absolute nightmare and being down only a little bit is exciting and a testament to the rhino resiliency.

I’ve got great trades setup in May for both the SPX and RUT as well as June for the RUT. Any semblance of a normalized market should get us well profitable in the next month. The market is like a bull in a pen, after it moves a bunch, it tires. We should see less pronounced moves. I’ve got a lot of downside hedges active (very cheaply) and should be covered on most large down moves. I’ve also got some upside hedges using mechanical stock picking to help ease any more upside moves.