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.

My plan going forward.. (HS3, BSH Factory, TTTBSH)

Finally finished up a deep backtest run of the newest trade setups and am finalizing my plan for 2018 which I am confident will be a break out year re profits. The trade plans setup are so robust.

Since Jun I’ve just been testing and testing and testing all the various concepts trying to cohesively setup a plan for end of 2017 and 2018. Majority of my free time has gone into this testing and I think I am finally in the homestretch. I have a plan and I have extensive testing completed for the majority of that plan. Testing was completed for the HS3 from Jan 2014 to present and here are the compounded results:

I’ve been waiting for a high vol red day since Sep 5th, and one has just not really come. I need vol to enter this trade. I’ve tested that there are about 20-24 entries per year but some years can be as low as 12-15. Good enough as the trade will return 10-15% on margin. So not only has the trading from Jan to Aug sucked, but I can’t get a damn entry for these new trades 🙂 Frustrating. I guess a year end is just a date, so patience is what I’ll exercise.

As for live trading, basically up to August, trading has been not going my way. I was live trading the STT and BSH w/ financing and just had a terrible time paying off the BSH structures (as I mentioned several times). I underperformed relative to my goals. Couple that with the legacy Rhinos from the beginning of the year that did AWFUL, it’s just been such a “meh” crappy year. I mean, this year has broke records in all metrics for volatility and down day magnitudes and frequency, it went as badly as it could for these types of trades. Coupled that with the fact that I am waiting to enter large trades, and time is ticking, I doubt I’ll have much chance for even a modest year.

When we do get that down day, I am using the trade desk to put on a 100 unit trade and I am not messing about with filling it myself. If we get another few down days after that, I’ll put on another couple of 100 unit sets on. Fun.

Yeah, so when I look back at the year, it sucked for trading live and results therein but it was the biggest learning and trading maturity step I’ve taken. It feels good. The entire year was probably 500+ hours of testing and analysis. Lots of dead ends, but lots of discoveries Jeez, the latter half of the year was so much back testing that I was dreaming about it. When I was on my trip, I’d use the 3 hour nap (my newborn baby) period during the day to backtest and test concepts and lately, it’s been testing in day and at night when the wife and kids go to bed. Since June, I think there have been 15 or so concepts introduced and I think we’re nearing the end of the runway of what’s possible re overall conceptual structures in the equities options market. Anything from here on in will likely be plays off what we’ve already tested. You can see this manifest as the group naturally is moving towards the next level of complexity—>VIX trading.

I’ve been liking the idea of a TTTBSH protecting the initial setup of a BSH factory and have done some extensive testing on that. Even if you do it in low vol, it seems to work out just fine as the TTT will protect until its adequately setup (the factory).

155 Unit STT

Been a while again…regretfully

I was traveling over the holidays. Ended up buying a piece of land for a cottage and a new Model X Tesla P100D. Then to top it off, I then flew to Bahamas to compete in a few poker tournaments including the Stars main event championship.

Poker went pretty awesome. I got a 1st place finish and a 62nd in the main event only to be busted out when I had AA vs Ryan Riess’s AK. I was a 93% favorite after I 4bet shoved but he caught 2 kings on the flop and I was eliminated. Bad beat. But I walked away with about 15k for my efforts.

I can tell you despite the good results, it didn’t feel that great. My chip stack was healthy as was the villain (Ryan Riess). I was a huge favorite and I am confident that with my style of play, I’d have made the final table with that win. As well, when he called my 4bet shove with AK, we had to wait several minutes as the photographers, tv crews and some writers came over to analyse the hand. So I was sitting there, super excited, knowing I was a 93% favorite ..basically already counting my chips and smelling the final table only to have KK flop. Brutal.

I might have to add in a section on this blog for poker as I am now back at it and will be playing the circuit. Next stop WPT on Feb 9th in Montreal.

Here were some of the highlights:

In the trading world, I have moved over to doing a good % of my trading portfolio in the STT(Space Trip Trade) and BSH (Black Swan Hedge) trade combo. I got a big one on for May right now—>155 Units!

I am excited about the trade and it should be fun and interesting. I was satisfied with the back-testing and I think the trade will be my main staple trade along with a 30% combination of the ATM trades (Rhinos). I closed off most of the Feb Rhinos and have only some March and April. I’ll enter the Rhino trades opportunistically when pricing is good and use them as a hedge to to the mid 5-10% downside moves.

I’ll get a post up analyzing my current STT trade shortly. I have a few more debit spreads to add and it’ll be complete.