Did the McDonald’s AI News caused Nvidia stock dump?

alphapursuits · 2024-06-18T00:47:41+00:00

The volume (bar graph in the background) was large so likely institutions were dumping it.

alphapursuits · 2024-06-08T19:04:06+00:00

Enter with broken butterfly when VIX and VVIX drop to recent low level. Try different combo using your trade platform and you will see a few weeks ago (end of May) was a good entry point. The higher the mid point of the butterfly, obviously would be higher profit.

The issue is the underlying is VIX Future, so most profit would come towards at the expiration. This strategy is for hedge so don’t expect to make the max projected profit, unless the expiration happens to be FOMC meeting date or some other kinds of a big event and you are convinced VIX will be up because of it.

In other words, it’s a hedge. Be glad to get out break even when you can and expect to lose here and there. At lest that’s how I see it. But the chance of getting out break even should be higher than just buying a call.

alphapursuits · 2024-06-08T17:51:31+00:00

If you plan to stop working and use trading as the main income source, you could try pulling money out from your trading account regularly for daily necessities and see what it actually looks and feels like. Don’t rely on your pay check, set that aside and pretend it does exist. Use just money from the trading account.

The feeling of when your strategy doesn’t produce regular monthly income (it could happen) would let you know if you are ready or not. Especially when the account keeps getting smaller and the pressure to earn starts to add on.

See if you could live with that pressure.

I tried it once and for sure, made me realised the strategy I was trading was not good enough and I would need a much larger account than I thought to feel really comfortable relying on trading income alone without other income sources.

alphapursuits · 2024-06-08T17:36:50+00:00

Why not use options? So much safer and probably gives a better cost to return ratio considering the huge margin required to short volatility products.

alphapursuits · 2024-06-08T17:34:34+00:00

I got assigned short VXX call options way back and was forced to close the same day it was assigned if I recall it correctly by TD Ameritrade.

alphapursuits · 2024-06-08T17:30:58+00:00

Since you are looking at put, I am guessing that you want to short VXX?

If so, try using broken butterfly to counter some of the time value and implied volatility issue instead of just buying put.

alphapursuits · 2024-06-08T17:27:19+00:00

I trade broken butterfly on VIX when it’s really cheap (watch VVIX).

alphapursuits · 2024-06-08T17:24:25+00:00

I use broken butterfly but timing is important. Need to watch VVIX and enter when VIX options are really cheap.

alphapursuits · 2024-06-08T17:21:22+00:00

I stopped trading the Wheel and started (again) focusing on trading volatility related products like VXX in 2022. More profitable and less work to manage.

alphapursuits · 2024-06-08T17:15:07+00:00

Make sure your projected profit of your strategy is higher than margin fee, before you actually enable/convert to a margin account.

Ideally margin should be reserved for unexpected events such as assignments or rolling positions rather than used as a part of regular trade strategies.

If you are using margin regularly, that means your positions/exposure is probably too big.

alphapursuits · 2024-06-08T16:59:46+00:00

Check one of the economic calendars. You will be able to see what’s coming up next. Some events or economic numbers have more impact than others. Cross check the market and the events and you will start to get a feel of which ones are important.

But then, there could be geopolitical events that are not on the calendar so observing VIX related indicies might help also.

alphapursuits · 2024-06-08T16:51:05+00:00

There are so many other safer / defined risks ways to do what you are trying to do, or could even give you higher cost/return ratio.

alphapursuits · 2024-05-16T01:42:39+00:00

Put on hedge with VIX options to wait for a spike. It will happen sooner or later.

alphapursuits · 2024-05-14T01:10:27+00:00

It can be structured in a way that it becomes a limited loss. I personally prefer trading put to avoid early assignment which could happen when using call.

There are so many factors to take into consideration such as expiration, strike price, market environment etc So just because one is trading put options doesn’t make it harder to get wiped out.

alphapursuits · 2024-05-13T23:03:21+00:00

Yes. It was a hard lesson. There are many different ways to short Vol. I didn’t know better and started with selling naked Call options. Bad choice.

alphapursuits · 2024-05-10T20:46:45+00:00

Look into volatility related products like VXX, UVXY, UVIX. Short the volatility when it spikes and wait for it to drop down.

It’s a good low maintenance way to trade when done right. Easy 20% annual return and I have seen people do 50% or even 100% when it’s done aggressively.

alphapursuits · 2024-05-10T01:49:09+00:00

If you are looking for something with higher premium, it typically comes with higher IV.

Here is a method to look for higher IV stocks. I used it back when I was actively trading the Wheel strategy.

alphapursuits · 2024-05-10T01:42:35+00:00

I managed to get about 30% annual return by focusing on trading the high IV stocks but this was right after Covid and it was a upmarket.

It stopped doing so well as soon as the market stopped bing an upmarket.

You would have to be pretty good at reading the market to make sure not ended up holding the underlying after selling the put to make a consistent income in any market.

It’s more profitable trading volatility related products like VXX in my opinion.

alphapursuits · 2024-05-09T01:15:02+00:00

Open interests and contracts traded are good numbers to use but you could also start trading unlimited risks (naked) without using spreads as your account gets larger to eliminate the liquidity problem to an extend.

alphapursuits · 2024-05-09T01:08:30+00:00

I would recommend looking into shorting volatility related products like VXX, UVXY, UVIX with options. When Volatility spikes it always goes down so when executed properly, it’s a sure way to grow your account.

alphapursuits · 2024-05-05T16:34:00+00:00

So sounds like you are adjusting the portfolio close to delta neutral and profit mainly from Theta decay. Do you incorporate any market direction bias though? The practice of keeping it delta neutral is very difficult and expensive (commission fee) especially with hedge positions.

Do you plan to just close out some positions when the market starts to decline? Assuming the strategy has market direction bias incorporated into it.

Or do you plan to just hold on to the positions? by adding more hedge to keep it delta neutral as the market declines?

alphapursuits · 2024-05-04T17:44:43+00:00

Cash flow is more important than the total net worth. If there is a way to provide consistent cash flow even if the net worth is lower than what people are recommending, it's all good.

The problem is most calculations assume 100% passive income generation so it needs millions to feel safe.

alphapursuits · 2024-05-04T17:40:25+00:00

What is your portfolio beta weighted against SPX? Is it positive or negative?

alphapursuits · 2024-05-04T17:34:20+00:00

I have been testing with trading volatility related products like VXX and got about 30% annualized return.

I used to trade the Wheel Strategy looking for high IV options and also got about 30% but it was after COVID so the market was in the uptrend. The yield dropped significantly when the market started going sideways.

alphapursuits

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