Discussion in 'Journals' started by guru, Aug 26, 2020.
Sucks to here. Wish you all the best.
dest said the same on a few occasions.
so hopefully it's just a rage quit
I've seen many posts where @guru's replies were most helpful and deeply insightful for those who can understand.
Though, people often struggle to understand, replies are just outside of their adjacent possible.
Although I did not find the arbitrage setups that Guru mentioned, his posts inspired me to find a lot of low risk high reward option setups. You have to assimilate what he says and then work hard to utilise it.
Thanks. Not really a rage quit, just a bit too distracted with ET and need to focus on more useful stuff. I can’t get much value out of ET while I also can’t be helpful to others when I can’t discuss my own specific trades, so it often ends in vague points and arguments.
I don't have a blog so may still post something here (in my journal) when staring at my own "secret strategies" in amazement, though mainly to show what's possible.
Here is a secret "energizer bunny" strategy with P&L that simply always goes up, no matter what the underlying does, on UVXY:
Though people are focusing too much on trying to game VIX & UVXY, which often require high margin and don't offer as much alpha as related SPX options:
(I have to split my positions because they have too many options/legs to get filled as a single combo)
Though this year the market is so good that everyone makes money and it's difficult to get a feel for actual alpha in more shaky market.
This week I've also tested some semi-arb trades that require high margin, though couple of them were pure arbs and the MMs instantly let me out out of those trade(s) with profit. Not even sure how I got those in the first place, unless through multiple MMs or an amateur MM trying to cover illiquid instruments. I'm setting up a new portfolio margin account at TDA to see what I can do there, as IB is really too limiting with their internal and also secret or at least opaque margin rules.
Lol, trying to arb NDX index:
(and no margin issues, actually margin credit if I could place that order, only 30x 7-option combos at -0.30 credit each)
It's quite possible that you have developed a fantastic system/approach to extract some edge from the options market. I have seen wonderful holy-grail trades in action before, and it's quite amazing to see. You might need to reset your expectations about what this might be worth to someone else though. Options markets tend not to be as deep pocketed as you might otherwise think, and if you start extracting millions of dollars out of the market without taking directional risk, this will almost certainly be identified as a leak by the main liquidity providers in the market, and quickly plugged.
Good points, and that's what I'd tell someone else as well.
In my case, I'm not even focused as much as on strategies as on technology. It's tech companies that can be worth more than an average fund. Strategies themselves don't excite me as much, though some decent ones can trade $billions and extract quite a lot of $s out of the market in a way similar to holding stocks. Say if you bought a bunch of ITM calls on every stock then it wouldn't be much different than holding those stocks. A basic strategy can simply sell some calls against those that you hold (covered calls or poor man's covered calls) and $billions are probably traded in similar way, but that whole process can be improved a little to beat the standard performance, or at least trade in somewhat optimal and educated fashion.
Other strategies without much directional risk may indeed have more limited in capacity, but if you trade big names (SPX, AMZN, GOOG, etc) then the potential for large gains is there as well.
If you've heard of Tony Saliba who made $millions trading options in the 1980s, in theory he should be able to make 10x more now. He can no longer profit from market making and claims that his method no longer works, but I have several variants of his method and could show that it may still work though it may be less profitable ("may" because it doesn't easily show up in backtests and may require some discretionary decisions). I'm using that approach among a few others, so not even a single strategy but a system that proposes different trades to choose from.
So I just funded an old empty account at TDA with $200K a few weeks ago, but was waiting to get approved for portfolio margin. Got approved 2 weeks ago, started trading, and I'm up 2.5% without much drawdowns, and after spending $1K+ on commissions. The goal is to make minimum 10%/year with max 2% drawdown, which can be scaled to, say, 50% with 10% drawdown, so with the right opportunities much better performance than 10%/year is possible. Maybe it will be 10%, maybe 100% in a year, we'll see.
Most drawdowns/volatility may actually happen due to TDA unable to price some options properly, such as on illiquid stocks, LEAPs, OTM options, and anything with wide spreads. Sometimes MMs pull their quotes after hours and suddenly my account value drops by a large %, though coming back to being more stable when the market opens.
I may setup a new journal just for the purpose of tracking/demoing performance in this account (it's a live account, not a demo).
This isn't my main trading account, but setup only for trading a few strategies, part-time, when I have the time.
The Pursuit of the Holy Grail in trading delivers 10% a year?
Something as Holy...as The hOLy Grail...should deliver 10% per week.
Magical...returns, not Standard/dull/boring returns.
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