Jul 13 – Trading the STT and BSH

I am solely in STT and BSh trades at the moment. They are not as exciting as the older Rhino trades because they kinda just make money there isn’t much variance per say. The one cool thing I guess is that I am doing it in quite the volume. I think I’ve got about 600 units on right now total. That’s something interesting I guess.

I had a contact at IB for putting on orders via the floor but to be honest, I just haven’t used it much lately, I found I was getting fills easily enough myself at various times. I tend to scale in to each trade over a few days. One time I got quotes from them and I was getting better fills w/ units below 50 then they could get me so I just haven’t used as much as I would. That said, when I get bigger in size, I think I either need employees or I’ll need to use the floor 🙂

I got into a bunch of longer term Dec STTs most recently and I have a lower profit target on those (they take up a lot less margin) and are even more benign. I’ll probably start doing this, 150-180 DTE w/ 2x less margin requirement but I’ll aim for a 350 profit target per unit.

I’ve finally started the BSH factory but I’ve only managed to get on 50 units of that so far. It’s profitable as I sold the 50 units worth of puts at the very bottom of the last months range. Eventually, I’ll have to put on 500 units worth. That’ll be tedious and we kinda need more than one down day.

As for how the year has gone so far, it’s been slow re P/L OVERALL but exciting for P/L of the STTs alone—>Very exciting. The STTs did fantastic but the P/L from those were countered by losses in the first sets of BSHs which weren’t fully financed and bigly (no trump pun intended) affected by the losses on the old 2016 Rhino’s I had on until April of this year. I don’t trade them anymore. I just trade STTs and BSH.

Let me get into more details, I started the year off by trading some units of STT and BSh from January 5th when the course was released but not in size until April. All the STT trades did great and were profitable and still are into this month. Almost makes me giddy how good they do. However, the profits from Jan-April/May were offset by the losses of the remaining Rhino’s I had on that were started in Late 2016. They did terribly, by April, we were finally finished w/ those damn Rhinos and they had a larger loss due to the insane Trump up-move. Difficult market to manage the Rhinos. In one account, they lost about 88k while the STTs did about 130k (for the first ew months of 2017). Included in this were the poor performance of my BSH hedges and the financing. I quickly learned from waiting too long to get financing on and the community developed better ways of paying for them (RCs put on the same time) or BSH factories. I use RCs now but am working on the BSH factory. Ideally I just have BSH factories and the STTs. All that said, the last 6 months we’ve got very profitable STTs that were hit by older Rhino legacy trades and by poor financing of BSHs in early part of the year. The future is bright as we perfect the management of the BSH and STTs. I love how the STTs have done so far and I wish I hadn’t had the Rhino losses from last year nor the poor financing early on. Ah well, things are building up quickly re P/L now.

8 thoughts on “Jul 13 – Trading the STT and BSH”

  1. Thanks for the update! It sounds like you’re having a good vacation as well.

    Based on your write up, I’m assuming you recommend the course covering the BSH and STAT. Is that a safe assumption?

    Also, does RC stand for reverse collar?

    Thanks!
    Justin

    1. Hi Justin,

      I would def. recommend the course and the community. We’re pushing boundaries in trade development. In the last two weeks there’s been 10 or so new trade types being investigated.

      RC = Reverse calendar (to finance the BSH)

  2. Great post.
    At 600 stt units, that’s definitely bigly. At that volume I’m surprised the broker doesn’t auto assign a trader to assist you, or at least to keep an eye on your trades.

    I’ve started trading the stt/bsh combo as well, but still maintain my M3 positions, it’s hard to give up on the ATM theta addiction.
    A couple questions re your stt trades:
    -what ratio are you combining your stt/bsh structures, 1:1, 1:2?
    -do you envision the bsh factory to just be a strat all its own regardless of stt volume? Perhaps even with a bit of income component to it?

    1. Hi ST,

      I know what you mean re M3 ATM trades 🙂 I am tempted at times re the Rhino.

      I combine at 1:1

      I do envision the BSH factory to be both income producing and the overall hedge to the STT portion of my portfolio.

    2. Hi ST,

      I do a 1:1 ratio of BSH to STT. Though, I am aiming for the BSH factory to expand on its own past the number of STTs i do.

      I just got assigned to the Prime group in IB by my contact which was a nice touch. It’s meant for hedge funds etc. Happy about that. I do envision the BSh factory to be a strategy all on its own with income component.

  3. I’ve the same experience, STT doing fine, but the BSH eating lots of the profits.
    But I’m very bad trading directionally, so ron’s method 1,2 and 3 for the financing are not working for me.
    Have not tried the calendar yet.

    1. Yep, the beginning of the year we had that trump bump and I just couldn’t get on the requisite financing for the BSHs at the time. Hurt a bit. Right now, I am aiming to eventually be 100% BSH factory but I just use the RCs for now. Though the RC only pays for half or so of the cost. The other half you usually offset with a slightly bullish STT configuration. Sometimes I put on 1.5x worth of RCs. I was waiting for a bigger down-day at the beginning of the year to get on good PCS to pay for the BSH i put on but that didn’t work out well 🙂

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