The Trade Buster
@TheTradeBuster
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Retail trader turned Hedge Fund Manager, Expectancy Hacker, Host of the Trade Busters podcast
Joined December 2020
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Actionable ideas to take your trading to the next level.
As featured on:
🎙 Flirting with Models w/
@choffstein
🎙 Stock Market Options Trading w/
@OptionAssassin
📺
@tastytrade
Rising Star
See tweets below 👇 for select appearances, Trade Busters podcast, and top 🧵’s
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Some top notch 🥐 in this latest episode.
@jam_croissant
seems particularly laid back, I can actually understand most of what he’s saying. Really good explainations of why vol did or didn’t act as expected during prominent selloffs in recent history.
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Happy new year! This has been the third year in a row of improved trading results. Lessons learned from 2020 were implemented and executed to perfection. Hoping we can all continue to learn and get better together in 2022!
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First gift of the year 😃 This is a spreadsheet that will calculate and graph your YTD, MTD and QTD time weighted returns of your portfolio.
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1/ How to Start a Hedge Fund:
I originally wrote this essay because there seems to be a lack of readily available, concise information online on how to start and operate a hedge fund. (Either that or I am just really bad at searching for it). I decided to repurpose the original
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For the up-and-coming and aspiring fund managers, this one’s for you! Had a blast today speaking with
@SelzGary
and Co of Zero Delta Funds about their manager selection and due diligence process.
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As next Monday draws nearer, I’d like to take a moment to highlight one of the best episodes of one of the best podcasts. Extremely influentially to my own trading, this chat between
@choffstein
and
@GestaltU
is the gift that keeps on giving.
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Do you know what’s better than buying T-bills at 5% yield. Buying T-bills and stacking a strategy like ERN on top to make 10% a year spending 1 minute a day trading at only 1x notional.
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This may be my most important episode ever. The title should say it all.
In the ep, I reference
@breakingthemark
’s article “The Arithmetic Return Doesn’t Exist”, linked below 👇
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1/ Expectancy Hacking - Using Stops to Create Positive Expectancy:
In light of "recent events" involving much misunderstanding and a Twitter thread that went way off the rails, I realized that my oversimplification of certain concepts sometimes leads to the message totally
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And so ends the immaculate quarter for TE. 100% winrate.
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1
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Merry Christmas all! 🎅 came by and dropped off the 2024 portfolio tracker. As a reminder, the only input required each day is your portfolo net liq and cash deposits/withdrawals (if any). All stats and metrics and graphs update automatically.
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Updating all of my model portfolio data through Q3 and ERN 3.0 is absolute 🔥this year.
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Great insights from
@andrewdbeer1
. Been really interested in trend following lately as an addition uncorrelated return stream. $DBMF seems like a good way to get exposure to the space and make use of spare capital.
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Was an absolute blast having
@choffstein
on today. Lots of great topics discussed including:
- Return stacking 🥞
- Portable alpha 💡
- Portfolio construction 🏗️
- Trend following ETFs
#RSBT
- Golden age of retail 👑
Have a listen! 👇
@thinknewfound
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Thanks for all the continued support!
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Just made an observation for those on the fence still about 5 delta vs 15 delta. So the market has dropped about 250 points from the peak. I just pulled up the SPX chain for 85 DTE and looked at the 5 delta strike and 15 delta strike.
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1/ How Stops can Improve Expectancy - A 🧵
After my excellent conversation with
@breakingthemark
, linked 👇, I feel like I finally have the right words (and visuals) to explain how stops can improve expectancy. Let's look at my 2-3 DTE SPX Put study:
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I had an extremely engaging conversation with
@breakingthemark
. We talked about the importance of geometric returns for asset allocation and if/how using stops can truly increase expectancy. Be sure to check out Matt’s work at his blog!
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1
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Here's my take on a return stacked portfolio that can be replicated at the retail level now with the tools now available from
@thinknewfound
and
@InvestReSolve
and piggybacking off the work of
@choffstein
,
@RodGordilloP
and
@GestaltU
. Check the🧵below 👇
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Wow,
@TaylorPearsonMe
, just came across this post of yours.. absolute gold. No wonder
@jasoncbuck
talks about ergoddicity so much.
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As a long time fan of the show, it was an absolute privilege to be on as a guest. It was great fun and I hope a value-add to the audience as well. Thanks for the opportunity
@choffstein
!
Expectancy Hacking (S5E5) with
@TheTradeBuster
It’s "Θ-gang meets designer β"...
👨🌾 Harvesting the VRP
🏏 Max “at bats” with 0dte
🏗 Engineering a payoff
📉 Sequence risk
Apple -
Spotify -
YouTube -
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The Trade Busters page now has an FAQ/Quick Start guide. Feel free to suggest any other questions you might have.
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The Theta Engine matrix is now public and linked at the main trading page. Huge amount of new research to give you ideas and build conviction. Look out for a pod ep going through everything in the near future.
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1/x
1)The best feeling in the world: The market comes just short of your stop and reverses.
2) The worst feeling in the world: The market barely hits your stop and reverses.
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Pay attention to your feelings the next two weeks. We are about half way to the max pain point (where all the stops kick in). If you’re already thinking about pausing TE entries or otherwise deviating from your plan, you were trading too large.
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My second most important episode ever (ha!) Also, major 🎩 tip to
@mikeharrisNY
for sharing an absolute legend Bloomberg interview with
@nntaleb
which I reference in the ep and is linked below 👇
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The best strategy is not the one that makes the most money. It’s the one that you can actually follow.
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*Warning* - Massive alpha leak incoming. Join
@justmarkhorse
and I as we dive into 0 DTE trading…in the last hour of the day! Mark breaks down, the edge, why it exists, pitfalls and nuances. 0 DTE traders, this one’s for you! 👇
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We did it! Theta Engine has made a new ATH, 14.5 months in DD and 127 PTs off the bottom, we are back in business! (And ready for the next book wipe 😂)
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Had a blast today with
@jasoncbuck
of
@MutinyFunds
talking about the importance of 🛡️ combined with 🗡️ , why 🪳 are the least 💩-ty, and nerding out over Shannon’s 😈. I may just well join the booty crew this week on
@FinancePirates
🏴☠️🫡
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1/ How to Design a Trading Plan -
The most important part of designing a trade plan is to have a well-defined goal. Without one, it’s difficult to gauge your success. At the end of the day, we all trade to make money. But how much do we want to make? As MUCH AS POSSIBLE right?
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While I appreciate the sarcasm in this post, the ironic thing is that basically everything in it is TRUE as long as:
1) You apply risk management to keep the risk/reward ratio in check.
2) Allocate minimally to black swan protection
3) SIZE APPROPRIATELY
4) Set realistic goals
Our income-generating strategy is a sure way to consistently earn you up to 5% per month with virtually no risk!
All it takes is 5 minutes per week.
How? (I hear you ask)
Easy.
Keep reading and you'll never have to worry about your finances again! 🧵👇
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1/ Return Stacking with Options -
The idea of return stacking seems to be very much in vogue lately. Although the concept has been around for a while, this particular term was coined in a paper by
@choffstein
,
@RodGordilloP
and
@GestaltU
. It can be utilized to "capture alpha
1
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This is it… 5 months and 94 winning trades later.. we are 19 trades from all time high with 27 open positions. Can we do it?
@jp_JellyRoll
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ERN got another upgrade! Credit goes to all the members in the discord that contributed ideas and research. The ERN strangle is now being traded as a a ratio with new simpler mechanics. Have a look! 👇
@ErnRetireNow
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Major update to the 45 DTE strategy now the 45+ DTE strategy. This is how we use data to improve results!
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For new followers, the fastest way to get caught up is to listen to episode 48 and read the show notes (copied below).
1) Read the FAQ at .
2) Listen to episode 37
3) Listen to episodes 8, 13, 19, 20, 29
4) Read essays 1, 5, 7
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One of the best episodes to date, showcasing a different side of the 🥐 than usual. Definitely worth a listen even if you aren’t heavy into options or a usual follower of
@jam_croissant
.
Went on a recording spree in May and the result is a BONUS episode with
@jam_croissant
. Cem expanded my mind and I hope he will do the same for the listeners.
-Bill
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Thanks for the opportunity to share my story,
@matt_kohrs
. I had a blast, and hope your listeners get some value from the conversation!
Massive shoutout to
@TheTradeBuster
!
David, like many of us, started off as a retail trader. After many years of honing his skillset, he started to see considerable success. He now runs two hedge funds that focus on systematically trading options.
Here's his top bits of advice
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One of the most consistent ways I know to generate profit:
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My take on strategic diversification
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Was super cool to chat today with
@KrisAbdelmessih
and riff on:
-🌙 tower AI and Kris’s blog
- when you can make profit but still have a “bad” trade
- should retail trade options?
- market making conspiracy theories
Have a listen! 👇
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I had the privilege to chat with
@BrianLeeTrades
today. I first heard about Brian on
@chatwithtraders
and ever since then, have been inspired by his impeccable work ethic and drive to perfect his craft.
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This is it guys. 14 months later, TE is basically back at ATH on a mark-to-market basis. 10 PTs away from ATH in a REALIZED basis. Can we do it?! 👀
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The final piece of the Trinity System
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Had the privilege of chatting with the legendary 🐢
@rjparkerjr09
himself today. We discuss the new $TFPN ETF and the idea of using less 🔔 and 🪈 to make trend following the best it can be. Have a listen! 👇
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Holy sht, this episode with
@bennpeifert
and
@HariPKrishnan2
is 🔥🔥. Listen from 26:20-29:40 to hear a perfect explanation of why I hate strategies like CSPs and the Wheel (which I plan to make an episode on eventually).
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The Trinity is complete.
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In a departure from our regularly scheduled programming, I am joined by
@andrewdbeer1
to talk about trend following,
#DBMF
, and hedge fund replication. Not an option in sight. Thanks again, Andrew!
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Thanks, for the opportunity to share,
@NomadicSamuel
! Everyone please give Sam a follow! He’s done great work generating ideas for alternative/expanded canvas portfolios. These work nicely with options strategies as a capital efficient solution for retail. Have a look👇
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Huge amount of updated research now available. Once I finish this I’ll move the data over to the main TE page.
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As long as you have a fundamental knowledge of what your edge is and a robust backtesting framework, rigorous iteration helps not only to sift out the bad idea but provide context to the strengths/weaknesses of a strat. The 🔑 is having a test that properly reflects live trading.
@quant_xbt
The best traders I know would never start trading a strategy based on a backtest
In the best firms presenting a backtest as evidence would be laughable
It’s something you do last not first, just a sanity check
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Grateful for the opportunity to appear and share ideas on a podcast I have followed for so long. Thanks for having me on
@tessa_dao
and
@chatwithtraders
!
NEW EPISODE 248 📢
Dad, brother, nephew are engineers, hence got a little soft spot for engineers. Was thrilled to interview the talented, David Sun
@TheTradeBuster
! Love learning different approaches to options trading. Enjoy! - Tessa
@chatwithtraders
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What does the 🦊 say? Had fun today catching up with
@Foxtweet85
! Topics discussed include:
-Regime based strategy selection
- Is VRP real?
- Honing your craft while filtering out noise
s/o to
@Vexxly
@darjohn25
@jasoncbuck
@OptionOmega
Have a listen! 👇
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The Trade Busters discord is open to all listeners of the podcast. If you know, you know.
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In light of recent news about the SEC's plans regarding order routing and payment for order flow, here's a 🧵 with podcast episodes featuring current and former market makers to get the other side of the story.
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Even if a trade log shows a strategy is profitable, the actual experience of trading it may not be what you think. Have a listen to learn why👇
@OptionOmega
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Can you really have success trading 1 minute a day?
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Fun fact: April had 19 trading days and TE hit 19 PTs.
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1/ Is selling options naked really more risky?
Before we address this question we need to define and understand theoretical risk and practical risk. Theoretical risk is the amount of risk a position can incur in the absolute worst case scenario. For example, if you buy a stock
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Really enjoyed this interview with
@BrianLeeTrades
by
@InvestorsLive
. The section at 1:41:33 was particularly poignant when Brian touches on the hard work and sacrifices needed to trade at an elite level.
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How does a put selling strategy work in a correction?
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I thought this would be a timely subject with the markets at ATH and Theta Engine running way above expectancy.
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Come on Tuesday with any questions you have. The recording will also be posted as a podcast episode.
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Something I’ve been working on…
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0 DTE is one of our specialties but it’s nice to hear
@jam_croissant
’s take on it. I think the market has fundamentally changed after the introduction of daily expirations. I really hope my followers know better than to sell nickels and dimes though 😱
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Some more comparisons of equity curves at various stop levels. The constants across are tests are:
-15 delta shot put
-closest to 90 DTE
-60% profit target
-daily entry at 9:45 Eastern
-1.5% BP per entry
-tested from 2013-present
The below graphs ARE MARKED TO MARKET
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Before you start trading too heavily with /ES and /MES, listen to this:
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1
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Looking to add another 🏹 to your return stacking quiver? Today I was joined by
@GestaltU
of
@InvestReSolve
to discuss their managed futures carry strategy and the new
#RSSY
ETF. Have a listen! 👇
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2
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Had a great time chatting with and getting to know better Ron Bertino of
@TradingDominion
. Without PMTT, there may not have been the Trinity System as we know it today.
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It’s finally that time again! This first guest of the season seems very familiar 👀
@choffstein
@jasoncbuck
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I just noticed that my live/public Theta Engine just hit 900 closed trades! Below are the strategy metrics. This is all based on actual trade data.
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1
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Very informative ep of The Business Brew with
@BillBrewsterTBB
and
@MebFaber
. I’m curious to see the results of blending Cambria’s ETFs with my usual ensemble of options strategies. Will upload their data into the model portfolio and report back!
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This is still as relevant as it was over a year ago.
Do you know what’s better than buying T-bills at 5% yield. Buying T-bills and stacking a strategy like ERN on top to make 10% a year spending 1 minute a day trading at only 1x notional.
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9
The updated ERN 2.0 aka ERN Strangle is going very well so far. Have a listen to deep dive into the mechanics and results.
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9
For those that love to fit the curve, this episode is for you. LOL, jokes aside, there’s a lot of context to be gleaned from these studies even if you don’t actually change how you trade.
0
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9
This is a must listen for all ERNers but still has plenty of takeaways for trading other strategies. Topic include overnight stops, black swan risk, and wing width selection.
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Now you can put the concept of “credit received as a proxy for risk” into practice.
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Hope you guys have fun with this one, it took just about every trick in the book to put together. We use it all the time internally to analyze strategy ensembles.
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1/ 1% per week compounded is 68%~ per year. While I wouldn’t go for such a high return, it’s not totally out of the question. The issue is I see when people say you can do this using strategies like the wheel. There’s a LOT of these wheel accounts lately… and they started
$100,000 sitting in a brokerage account can make you 1% per week selling options.
Why do people hate on it so much?
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1/ Trading Options on Margin is NOT the Same as Buying Stocks on Margin -
I did a podcast ep on this a while back (linked below) but it's such an important topic I wanted to get it into a thread. There still seems to be a ton of misinformation about it among retail traders,
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Thank you
@GaryAntonacci
for coming on the show today! I’ve been looking into non options based strategies to stack with our existing book so it was great to learn more about Dual Momentum and the rest of your work.
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This was my favorite episode so far!
@choffstein
, at 56:30 you said “you shouldn’t be able to get rid of some risk and end up in the same place”. How does this square with rebalancing and Shannon’s demon? What’s your take
@jasoncbuck
?
The Pirates of Finance- a weekly show by
@JasonCBuck
and
@choffstein
covering everything from generational wealth to the Kentucky Derby
This week, the duo talk Main St vs Wall St Recessions, family offices, hurdle rates, portfolio math plus much moar🏴☠️
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1/ Introducing the Trade Busters Model Portfolio
There will be an episode on this soon but fee free to poke around in the meantime. It allows you to simulate blending options strategies including TE with various buy-and-hold underlyings.
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0
8
TE continues to perform strongly this year. Just hit a PT on the large green candle 20 min ago. The last PT was over 2 weeks ago and SPX is down 1% since then. The book is a bit heavy but every position is 🟢 for the moment.
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Alright, spreadsheet nerds. We’re finally kicking off the Spreadsheeting for Trader series. I have a lot of content planned and hopefully by the end, you’ll have the tools to build some fancy studies of your own.
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Final episode for 2022. As promised, this ep will go over the portfolio tracker which has just been updated for 2023. Hopefully in time to familiarize yourself with it, granted it requires minimal input to work. Happy New Year!
The Trade Busters
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21/ If you have always dreamed of starting your own fund, feel free to DM me for help or a referral for service providers!
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New ERN Strategy is live! This is an update to the original 2-3 DTE Put strategy inspired by
@ErnRetireNow
. If you haven’t already, go listen to episode 10 first.
The Trade Busters
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@bennpeifert
@WealthOrDie
For a smaller fund that just has basic administration/tax/audit, expenses can be as low as 15k/yr which can be absorbed completely by the GP so performance isn’t impacted.
1
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8
Some discussion on sizing the Theta Engine to finance the hedge.
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It’s hard to beat the market at it’s own game… so play a differnt one. In this episode, I refer back to an excellent thread by
@therobotjames
so be sure to check that out first in the comments below 👇
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Along with the fact that further OTM options are more sensitive to Vega, this may explain why 15 delta TE can be less prone to stop outs than 5 delta.
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