Oct 4 – Nice! A 1.35% down day!

Finally got some volatility.

I put on the following today:

125 ES Units of HS3 (Futures)
10 units of CC (BWBSTT) in SPX
20 ES units of CC (BWBSTT) in ES
105 ES short puts for the BSH factory
10 units of Rhino Dec
100 ES PCS ATM for Dec/Jan HS3s
Some KH in my SPX account

Yesterday and late last week

5 units of X4V14
Rolled up my CC longs for January by 100 points (nice timing!)
Throughout last few days I got on 20 units of BWBSTT in SPX

All of my Jan and Dec STT campaigns are fairly neutralized as I’ve harvested the lower part of the risk profile. Kinda love that. They still have loads of theta but downside risk is much more contained. I basically only have March STTs that have BS risk but I’ve got hedges for that.

In my ES account, I still have about 200 old HS3 units from Dec/Jan that are about 70% of profit target. I just sold some ATM PCS at today’s bottom to raise the UEl and get them less negative delta. Will be closing Dec very soon.

I added 125 ES units in March expoiration(67.5 SPX equiv) and I consider it an opportunistic trade as well as added some ES CC (STTBWB) and started the short selling for the factory. I have a factory started both in the ES and SPX.

Busy day today, the type of day where you work for your money.

Had some minor vol related draw downs but no big deal, temporary and extremely small. The X4 I put on yesterday was poor timing πŸ™‚ That thing is down about 3k. It’s funny, I can predict what my balance would be during a 1.35% down-day almost exactly as well as the rise in balance when we have a end of day relief rally (like now).

I do have about 105 shorts exposed on my BSH factory that was borderline ready to form yesterday (wish I had) but those Dec puts will be a magnet down in value if we get any bounce and as a week or so goes by. Once they are formed, I’ll have about 100 units of BSH formed for profit.

Oct 1 – BSH Factory, CC (BWB-STT) campaign and poker

On Wednesday I just finished up a mastermind presentation in the PMTT group that talked about how to deal with your trade portfolio in a crash, the BSH factory campaign and how to harvest the STT-BWB. It went well, lasted about 1.5 hours and had 155 slides. It’s hard to talk about all this stuff on the blog as the info is protected in the group. It’s kinda what probably makes this blog stagnate at times. I have to get creative while not divulging our IP. If it was up to me, I’d share a lot more but it’s unfair to the group.

I did have some back of mind reservations presenting this campaign as I thought it was the “nuts” and I worried about having tons of people selling the same strikes on the same opportunistic days, but I dunno, I don’t ever want to be that guy, I don’t need to resort to that in life and my integrity is worth more than whatever perceived value there is. My belief is the group works because we all generally share our good ideas and in return we get tons of smart “eyes” looking at it and making it better. It works and this is what makes it tick and I’m going to continue on this path. Besides, the value back has been incredible and I am glad that we’re all exploring furthering the campaign in both its theory and its practical implementation. Returns in spades.

On Friday, I had 12 units of Rhino waiting to fill and it did right at the end of day at a good price @ 2.75 for the Dec 1710/1670/1620 BWB. Nice. I just closed off my other 10 units that I put on in July for 21k in profit. I still dabble in the ATM trades for diversification. Though, I hate taking this shit off sometimes. I had a host of Call calendars, Call BWBs and put BWBs and taking one part off leaves the other side exposed and sometimes fills just suck. It took me 2 hours to close it and I was cursing the entire time.

On the opposite spectrum, the STT CC campaign is much easier to manage and I usually just convert the structure to a hedge structure late in the trade. Saves commissions and adds some insurance. The STT CC is my bulk trade right now coupled with the BSH factory which will be for both income and hedging. Pretty much all I do now is some Rhinos (super low % of account), CC campaign, BSH factory and opportunistic HS3. I also dabble in some mechanical equity investing but its just for utilizing some of my balance (for further info check out the motley fool mechanical investing forum (search TMF mechanical investing) or check out imarketsignals.com. It’s cool stuff. The community in mechanical investing have been doing it for 20+ years.

Poker

I’ve been studying every day ramping up for the Oct WPT in Montreal. This is going to be practice run at the PSPC in January. I have about 40 hours of study left I suppose just to get me on par level in knowledge with the average competition. Not an easy game as I’ve been at this since 1999 ;). When I was in my twenties, I mean, I felt like my generation was easy competition, I’d put in reasonable efforts and excel in whatever it may have been..ie. Poker at the time was jokes, first person shooters on PC was jokes or whatever. Now, I put in probably 800 hours into PubG and still suck, back in the day my wife and I played Rainbow 6 lockdown/vegas and were top 100. Now, I doubt I break top 100k πŸ™‚ I don’t know, it feels like everything is taken next level (or ten) by this new generation. The kids in poker now have just perfected everything. They literally eat, breathe, shit poker. It’s all they do and they do it right. They’ve broken down the game to levels that are so far beyond. If they put that effort into anything else (trading, business start ups etc) they’d probably have easier success though. I’d gather that to be earning reasonable money in tournament poker would take the same effort it takes to be be a professional trader but with less variance.

All that said, After Oct, I might hire the best tournament coach in the world to get me prepped. The prob is he’s like 375 EUR an hour πŸ™‚ Steep, but thats what you get for the best. I might start with a more reasonable one and get ramped up towards him. BencB is the coachs name. Epic track record.

Sep 25 – Presentation, BSH and Trade plans

Tomorrow I am going to be presenting at the mastermind group about how to deal with your trades during a correction event. It entails having a trade plan that deals with potential broker rules, neutralizing income trades to allow for removal of hedges and doing practice runs w/ your similar structures through the Aug and Feb events of which we have data for. It talks about adding in how the system will react to your portfolio of trades and knowing how to deal with that. It’s so important to have this area attached to your trade plan. We need to address systemic issues (how the system (broker, margin rules etc) will react to your portfolio of trades.

The Feb vol event was a big hit on the system and represented the single largest increase in VIX (VVIX) in all of history. Volatility and VIX by the nature of how it is calculated represents the premium or insurance rise in the value of options at specific strikes. Each option contract is basically an insurance contract for that specific point in the market. Simplistically put (no pun intended), someone buys a 2825 put because they want to be protected for any falls below 2825 while someone else might buy a 2500 put because they don’t want the risk below 2500. The pricing of the option contract at 2825 is quite a lot higher than the 2500 put because you’re asking for a lot more protection. . The pricing of each contract has stable portions but the unstable portion, the portion that changes when all else remains the same is what represents the premium or insurance cost or fear price that we are selling or buying. This premium value can change across different strikes at different ratios and that is what we define as skew. That thing that changes across strikes, visualize each strike price as a like a bar graph with part of it shaded black. That black part can move up or down depending on the market pressures of each strike, some events put pressure on way out of the money puts while others might not. These changing “black portions” of the bar graph is how you can visualize skew. You might see a 2825 contract really get jacked up in premium but no change in the 2500 premium. If you’re a net buyer of 2500 but sold the 2825, you just got screwed by skew. Anyways, back to the point, the VIX It’s supposed to represent the fear in the market related by noting the increase in the insurance premium. We’re net sellers of that insurance, and when you are a net seller of insurance that just had the largest rise, you’re going to have problems. We’re glorified market insurance sales people πŸ™‚ These problems can be not just in P/L, but also in how the broker reacts to the increased value of those contracts despite the risks of said contracts as well as the general margin rules related to portfolio margin while we are removing hedges (which must be taken off right around the event).

Our trades were theoretically supposed to be immune to such events as we had separate hedges but we had a failure in how the system reacted to the value of our trades which was not expected nor where the rules they implemented at certain brokers known. We need to address potential systemic reactions in our black swan trading plan.

The Feb event was a problem not because of the trades per say but rather how the system/brokers responded to the increased value of those trades after the event. It was how the system responded to the trades that threw most of us for a loop. We’re dealing with incredibly complex trade systems that were meant to solve for all the known variables. They did for the crash day but the system they were in didn’t allow for the unwind that we needed. The hedges we have only last a few days as they are fear based hedges. If we can’t unwind those, we’re fucked. That was unforeseen but now solved for.

Poker

I’ve been studying quite intensively for the upcoming WPT in October (Montreal) and the end goal big daddy PSPC in Bahamas in January. The PSPC is a 25k buy-in mega event where Poker stars gave away 300 25k seats for free plus added 1MM to first–Total of 9MM juiced into the tournament by poker stars for free. I’d usually max out at 10k just because I think its kinds nuts to go higher for a tournament but a few friends wanted to get in on the action and are going to stake a bit. So I’ll sell off 10k in action. It’ll be an epic tournament.

A lot of people ask me how can I possibly study for poker. It’s not what you’d think. It’s incredibly complex and requires a lot of upfront hours to be at par.

Here’s a example of the thought process of a hand to give an example that I’ve told my friends who’ve asked:

Let’s say you’re dealt QJs in the small blind. Everyone is 100BB deep.

Everyone folds to Button who raises. His range of hands is very wide being on the button. Probably 45-50% of all possible hands. Being in small blind we’re generally 3-betting or folding as we really don’t want to act first every hand nor do we want the BB to mandatory complete which puts us against 3 opponents on the flop. SO the three bet can show immediate profit but if he calls, we’re still good.

So we 3-bet.

The Button smooth calls. His range becomes quite defined here as he can’t call a three-bet with most of his range.

What do we know so far? Well it’s unlikely he has AA or KK and with QJ we block combos of QQ and JJ. So we block a lot of his value range and its unlikely though not impossible he has AA and KK

Flop comes T73 rainbow

His value range is pretty much only sets and two pairs as we’re blocking QQ and JJ and AA and KK is unlikely.

We have decent equity here with two overs, we can turn a K or 9 for open-ended and an 8 for a gut-shot and thus we can barrel every turn with semi-bluffs because of villains range. Further, a bet here is showing immediate profit as many Ace high, king high (beating us currently) are folding though some are calling. On the turn, if he called flop bet, he still has some Ace highs and small pairs, mid pairs that will fold to a second barrel. Further we aren’t blocking ace high as we have QJ so that’s a further edge. Let’s move on to the next card.

We bet and he calls

Turn is a 2

Given his call on the flop, it’s likely he has ace high type hands or over card broadways. These will have a hard time calling a second barel. We do NOT block his ace high hands so that’s a positive. We don’t want to block his folding hands that re better than ours. This is a good second barrel bluff. He’s forced to fold a lot of better hands here.

Concepts like blockers, knowing the opponents range and our own gives us ability to gain small edges and to make the right plays which are necessary in this game. I’ve got probably at least 50 hours of study before MTL and double that before Bahamas. But once I get past that, I should have increased to a level where I can really make a run in this world. It’s the only thing at my age that I can compete at on a world stage so I’ll stick with it.

Sep 4 (Back in action)

Been a while since my last post.

I just finished up a whirlwind summer of travel and I don’t think I’ll be traveling the same type of lengths for quite some time. Three months is too long and too hard with 3 kids. Since I’ve just built an epic house, I just wanted to come back and enjoy it. I’ve seen all of Europe and I think I’m good for now. So probably less travels and more trades for this blog and maybe some poker πŸ™‚

I finished 135th out of 1931 in the European championships which was a good result. Another deep run but no final table in a championship event, which is what I am going for and what my ultimate goal is. I don’t care about winning it. I just want a final table. The experience is so grueling and exhausting. The game is at another level and to compete on this forum requires a lot of work. I literally have to sit there and prevent genius pro’s from taking advantage of me while somehow obtaining my own advantages. Not an easy feat. Each day is around 12-14 hours long with very small breaks. When I am at the table I have to be fully concentrated and that eventually wears its toll. When the day is over, its super hard to get to sleep, all jacked up on adrenaline (which is so bizarre given its a game of cards!) but it is what it is. I love it and I hate it πŸ™‚ The next 3 months I’ll be in the “lab” workng on my game for a really big championship in January. The PSPC. Poker stars has given away 300 25k seats and added 1MM to first place, 9MM added to the prize pool. The word on the street is it’ll be a legendary showing. This means that there will be up to 300 relatively weak players/potentially fish. I usually stick to the 5-10ks but I’ve got some stakers willing to pony up some to remove the spiciness of it. It’ll be a very long skill based tournament. I hear 2 hour levels are in order. Usually I play 40-60 min levels. Time to get cracking. I might hit up the Nov Party Millions in Bahamas as well. There’s also the World series of Europe near Munich Oct 27 but that’s a far ass trip..

As for trading, I’ve been working on a few different systems and I’ll be presenting a version of the BSH factory on the 26th of September to the mastermind group. It’s an income producing totally BSH protected factory. It’s simple, doesn’t involve all the complexities the other trades require (skew issues, complex analysis, unknown market type reactions etc). It’s so pure and back to basics. I can see that becoming the main thing I do. Besides that, I am running the CC campaign and working to get a BSh factory live. I tried to sell some puts today at 2885 but they didn’t go through yet, the markets bounced back up to 2893 so we’ll see if I can get ‘er on before end of day.

Whirlwind month of Jul (Travels, HS3, STT, Rhino etc)

Finally settling down and getting back to normal work lifestyle rather than scurried catch-up.

Just finished a 24 day cruise, then traveled to Arona, Italy for some R&R with family friends then onwards to meet my biggest client (a well known Ferrari racer/entrepreneur socialite type guy who’s got the fastest lifestyle I’ve ever seen) in Budapest which consisted of me trying to balance 2 kids, a baby, an “at the end of her rope” wife while staying out to 3:30am for business (and some pleasure). I barely could keep up with anything. After that I made my way by rental van to Zadar, Croatia where I caught up. We just left and made it to Istria, Croatia and now I am in a villa in the countryside relaxing and catching up on everything.

During these little whirlwind periods, I have to balance everything which can be difficult but I think I have it down to a science. My communication usually suffers, emails that aren’t super important sometimes get forgotten but everything else is generally aces. One of the reasons I travel to Europe during the summer instead of elsewhere is because of the timezone, i.e. the market opens at 330pm here so I get the evenings to attend to trading.

My mind is always focused on the trades during every single day regardless of where I am, or what tours I might be on or if we’re on the road. I generally don’t miss a beat on the management of these trades and finding opportunities for entry and adjustment.

I usually wake up every day, model my trades, look at the market technicals, figure out what I need to do later, enter trades in IB/EDF and pause them for market open. I then get out for the day with the family and do whatever we may have planned. We have a small baby now so we have to usually be back for 12-1pm for nap time. I use that to further catch up and usually do some backtesting or whatever else I have to do for market open. Then at about 2:30-3pm my wife and I will typically head out for some alone time for about 3 hrs, usually touring cities and getting dinner and a drink. During this time, I got everything on my phone and sometimes I may have to interrupt the conversation to get things on but its never a prob. We are usually back by 7pm where I finish out the rest of the market hours and I’m done by 9:30pm to finish the night. Through all that, I am usually tapped out and non important things get left to the way side until I get to an area where I can relax more and catch-up. So yah, If I am out, and I usually am, I’ll be looking at phone and entering those BWBs (for new trades), PCS (for raising UELs in HS3s etc), and entering them in-between talking to my kids at dinner or wherever else I am. I am using downtime during the day (naps or AM) to model and get a plan in place.

The HS3 futures in EDF are crushing right now, I started them I think in May and it’s up almost 35% or so. I reached profit target on 111 units in Oct 31 expiration and 20 units in Sep expiration. I have another 83 (SPX equiv) units on in Dec monthly which are more than half way to target and 61 (SPX equiv) in Dec 31 expiration that I just started on those two down days we had last 8 days or so πŸ™‚

My HS3s in SPX/IB are also near profit target. Wonderful. I think I have on about 100 units there. Solid gains. My CC campaign is also doing great.

I added in some Rhino and X14V14s in for ATM trades. I changed how I manage upside in the Rhino but the main reason I added is I call it a middler which loves moderate down moves and helps hedge that little area where the market falls 2-5% and affects (short term) the HS3s and CC trades negatively re vol and skew effects. I love how it reacts together. I really liked the rhino in the old days as I remember being super upset about making 20% when the market moved up 50% over 2016 πŸ™‚ I will use it small as a booster and middler πŸ˜‰

I am not sure where we will go next (we’re here in Croatia until the 11th but for sure I will be in Barcelona for the Pokerstars tournament on the 22nd where hopefully I can have some decent luck..

More to come as I have lots of time…

Jun 27 – Trade Plan (STT, HS3 and X4V14)

Today was a typical bounce day and I used the opportunity to get in some bearish STT and PDS hedges.

I’d like to backtest the krishnan hedge as a vol spike hedge and probably will do so on the cruise during the vast amounts of free time I’ll have πŸ™‚ Generally, I get a lot of sitting around time and I’ll typically choose something to research or test.

I’ve got on a slew of protected STT, HS3 and X4V14 trades (ATM BWBs). All reacted fine during the little fall and all are pretty well hedged. Not a whole lot to report really. I added some delta and vega hedges on the bounce just to balance out everything.

This trade war rhetoric should keep skews pretty disadvantageous to already on trades. Reasonable to put on new trades etc.

Jun 26 – Yesterdays Vol Shock and the trades

Yesterday was interesting day, VIX spiked up 40-45% and we had some relative fear in the market.

My fresh HS3 trades all drew down as expected on any initial vol spike of that magnitude. Nothing at all to be concerned about and not all that big. My older HS3s were just fine. After an initial spike (VIX spiked to 19) there’s not all that much relative exposure to Vega left before the BS portions of the trade kick in. I mean there is a bit but relatively small and any more down move would trigger the OTM longs and the trade goes profitable. The trade is almost as perfect as it can get but what it needs is some initial vol spike hedging to keep Drawdowns and psychology clean. We have initial ideas.

The draw down is due to Vega and Vanna as the initial vol spike doesn’t quite affect the far away longs as much as the more upfront part of the trade. The far away longs would trigger in a bigger move down or a continued move down. Works well. The draw downs from an initial shock are moderate but I don’t lose sleep on it, standard (pre-market now, we’re already recovered most of the draw down). Basically, just stating that a 40% initial vol spike will generally cause your HS3s to draw down $500 or more.

Another 3% drop would activate those longs and BS protection kicks in and the trades would crush. This is the nature of the trade and the trade-off of the structure and well, it’s expected with ANY positive theta trade, at least initially. Rui mentions that he noticed in his backtest that the lower long put Vomma, Vanna, and Gamma power kicks in when the SPX gets close to the upper longs and the lower get into the 10 delta range.

Essentially, an initial shock and the time before panic is the temporary dead zone of these trades. Once those lowers have the greeks activated, then the trade profits.

Let’s call it VolFEAR and VolPANIC to distinguish the two types. An STT combo and an HS3 combo will initially draw down when we are in-between VOlFEAR stage and the VolPANIC stage and this is usually a relatively temporary period before either the market moves towards VolPanic or VolNORMAL stages.

Adding in a Krishnan PBR might be the answer to this and I am going to explore adding it in for low vol times for that initial shock (that you’d typically get in a 1.5-2.5% down day). This would cover the initial DD and maybe even profit and taken off while the initial structure would activate on a move further and is safe anyways.

The market is bouncing now and my pre-market balance is relative recovered. In backtesting, this was always the case and often after a larger fall and a few days of rest, the trades hit the profit tent and reach targets. Let’s see if this is the case for my older trades.

I managed to get on about 40 more units yesterday and I got 25 PDS @ 45 DTE to help with hedging on the bounce to 2721 at EOD.

I Like where we are right now.

Big accounts and prepping for travels (HS3 and STT trades)

I am about to board a 24 day cruise and am preparing all of my trades.

I have this on right now:

250 units of HS3 (spread between ES @ EDF and SPX @ IB) (2.5MM planned capital)
20 units of Campaign style STT (1.5MM planned capital)
34 units of X4V14 (Locke style ATM BWB) – (765k Planned capital)
50 units of KH hedge (Black swan lottos)

So that’s quite a bit!

To prepare I have 2 sim cards (local EU with roaming and a CAD world wide roaming) as a reserve. I have unlimited internet on the cruise and I brought a portable monitor and laptop. I’ve entered GTC orders for every HS3 and STT so that they’re there for me. I’ve got all my models ready and none of these are particularly exposed to a BSH as they’ve all got BSH built in. Most of the work is entering, and I am fully entered. I’ve got the GTCs so I can close in crisis (hopefully at profit). The market opens here at 3:30pm-4:30pm depending where you are, so I am usually done my tours etc by then so I can attend to trades in the evening or early afternoon.

I’ve done this before and guess what, it was during Aug 24 2015 crash πŸ™‚ Suffice to say I was tied to the computer for the last 4 days of that cruise. The internet handles IB with ease. Haven’t had an issue. It was different them, I was trading rhinos and Modified Condors. I needed to adjust.

Lately, skew and vol has increased due to trade war rhetoric and i’ve noticed my Decembers take a vol hit. Not a big deal but could have had better entries.

Back at it – April

After what was a very rough period from Feb 2 to about last week, I am starting to recover and regain my ambition and motivation.

I had a rough go with IB margin rules during Volmageddon (Feb). They had implemented a 30x rule which basically summed up the total value of the options and if it exceeded 30x the value of your account, you had severe restrictions with adding new positions/contracts EVEN if they were risk reducing. During what was one of the biggest vol spikes and thee biggest change in volatility (VVIX) the option pricing sky rocketed across the board, and when summed up vastly exceeded 30x. It’s a ridiculous rule and it was an unknown rule. IF I had opposing positions where I sold a put at $5 and bought another put at 4.75 they would sum the position as 9.75 even though there was no substantial risk in that position. In the vol spike, options 10x or more so they’d be $50 and 97.50. This summation technique would put the account in violation of the rule. This gave me problems for when I had to roll or remove hedges. They also used some bizarre calculations that would restrict even further. This left me in a very precarious position where the complexity of removing hedges and positions was very difficult. I couldn’t get off my variety of hedges unless I literally liquidated the entire account which would have been impossible during those few days. I tried as best as I could to remove hedges and small parts of income positions but I just couldn’t get it done in time and the hedges collapsed in value and the STT remained compromised.

Anyways, I’ve been nursing these remaining positions since February and have recovered much of it but not all. I hope that maybe I can get to full recovery by May or June. That’s my year so far.

Suffice to say, I am working with new brokers and won’t be using IB for PM type trading (STTs, HS3s etc). I will also be moving my base trade towards HS3 type trades, STTs in higher vol down moves and John Locke style trades (M3, X4v17 and some BB) as a booster and to bring back some diversification in my trade plan. I still like ATM type trades. I remember when I had the Aug 24 crash with my MICs (this happened right when I was learning the Locke trades and was just initiating). Soon after I had recovered the entire loss from Aug within 4-5 months using M3s and BBs. Anyone that traded MICs, would know just how bad those did during Aug 24 2015. I liked trading those things (M3). I eventually switched to Rhinos and did modestly with them but I hate the upside exposure on runaway markets. Though, I mean, I did Rhinos during one of the biggest up moves in history in the RUT. No wonder I was frustrated with those.

Anyways, that’s my current situation and plan re trading.

I am in Canada now visiting the office and some family and friends. I will be back again for the Montreal Party Poker tournament and probably touring Europe again this summer. I’ll post more about those travels and the trading complications there-in.

STT initial draw downs

Thought I’d share some of the nuance of STT draw-downs during the past several days which I found interesting but expected after back-testing it to death. Always different live though isn’t it? In the last 18 months we haven’t really had large VIX spikes or bearish moves so it’s a nice refresher on how things actually work in real life re trading.

I had entered several June 29 STTs last week when VOL spiked quite high despite the move upward. VIX was telling us that demand for protection was increasing as the market moved up. Traders were protecting themselves. The STTs were a decent price given the pricing of OTM options so I used that to compliment the entries I had the weeks prior in the June 29 expiration. On Monday, the market fell and we had a spike to 15.3 VIX area. So we went from a 9 VIX environment a week prior to a 15 VIX environment. The move was relatively small in the SPX but the VIX move was quite large. That day, the market was hovering around SPY 281.5 with a touch of 281.22. About the same place it was the week before. However, the STTs I entered drew down about $550-$600 a unit which closed in on a 100k total draw down. Of course, these types of VOL based draw downs are temporary and they follow the VIX spikes you see in the charts. If you see a large spike, expect a temporary draw down, likewise, even if the market continues down, if the spike subsides, expect your STTs to regain in value. This type of thing is most pronounced with a move from a low vol environment to a higher vol environment and it will affect newer STTs more than developed STTs. Likewise, If we start entering STTs in this higher vol environment, they’ll be less prone to vol shifts. Anyways, it’s Thursday, and pre-market is down to about 280.6 area and my STTs are only drawn down about $250 a unit yet the market is lower than it was on Monday. Totally normal and give another 10 days, we’ll likely be green pending no disaster in the market. All the while, I’ll be entering more and more STT and setting the next several months up as a success. As time goes buy, the profit tent will build up and even with the market moving lower, the STTs will regain value and eventually, probably in the next 30 days, we’ll be reaching profit targets. If we have another shock event or a shock VIX spike, we’ll have draw down but it’ll likely be less than the initial one as time has gone buy and time builds resilience in the STT. Yesterday they were only down about 200 a unit. Totally normal following a large spike with brand new STTs. Again, time kinda cures all of this. Given another 10 days, it’ll be very hard for the STT to draw down this amount again unless we have an actual larger bear move that requires adjustments etc. The STT likes grind down markets and can handle a sudden move and it’ll often do really good if we can get a bit closer to that tent. Give it 30 days and we and very likely we’ll be green and in a sweet zone for further profit expansion.

This is a great environment to get into STTs and if we can keep this going, we’ll be laughing.

Those vix spikes are great times to enter more. I did. Now we let this move play out and adjust as we need (I usually add condors weight to the direction I need to hedge). I will at times add debit spreads as well.

I’ve converted old STTs (March) to hedge structures by selling some of the longs of the PDS and buying back twice as many of the shorts of the PCS as well I’ll buy back the PCS at cheap prices and sometimes sell a bit more of the front long to compensate etc etc. Credit to Rui @ the PMTT Group for the idea.