Category: Trades

Sep 6 – Rhino Trades

I just joined Bruno’s new service for Rhino trades. He has a fresh interesting outlook on the Rhino trade that interests me. I highly suggest it for anyone that trades Rhinos. I think it’s $900 for the yearly membership today. The Baby rhino looks like a nice addition which I haven’t traded yet. I need to diversify a bit and I’d love some more short term trades as I am not traveling and basically at the computer all day. I’ve started to look at some simple rules based trades to add to my repertoire as well. Just something that’s low stress and management that has a very consistent track record. Specifically the super simple spreads which I just saw a 15 year back test that was fairly impressive. I want to add some tweaks of my own (specifically a STT like addition to it).

Coming towards the end of Aug, I felt like my trading and the methodology was “a solved thing” but as I started getting more time late August and I started watching fellow trader videos/presentations and reading group conversations, I found ideas and data that proved that wrong. I’ve been inspired recently I guess. I mean, the Rhino is a very low maintenance type trade that’s both resilient and very powerful. I didn’t really want to put any serious capital outside of it in other trades and I felt like I hadn’t really needed to explore much more on the Rhino trade in specific. Find something that works and is resilient and leave it alone type thinking. But I think there may be interesting things that we can take away from the new Road Trip Trades (RTT) while adding Space trip Trades (STT) in for downside crash protection. The Rhino has a serious problem with runaway markets to the upside and addressing that weakness would be nice while not over exposing the down side. I don’t know if the STT would help in that as it’s meant for Crash protection, but I want to explore it. I also am not loving the calendar adjustments on the upside and have been mostly using call BWBs.

I’ve had a mostly unemotional hands off approach to trading it since the summer. I follow the trade plan and mitigate risk as needed. I haven’t profited much since the meteoric rise from the February lows since it was a 33 % or so move. The way I trade the rhino doesn’t allow for profit in a runaway market like that. I mean, how could I expect to profit much when each cycle had a 5-7% up move. It’s just not possible for me to make money in my trade plan for the rhino if the market has 7% up moves in each cycle of the trade or if it rises 33% in 5 months 🙂 All that said, I am looking to add some strategies for my upside and I’ve started to add some mechanical strategies I used to do.

Here’s my September trade that’s basically closed down pending any significant down move before expiry, it’ll be closed at a loss. If I get a 5% down move ANY time before Sep 20, it’d be a profitable month 🙂 If I get lucky and have a 10% move, I’ll be up massive amounts.

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Here’s my October trade

It’s up a tiny bit and I think it’s in a good position for the cycle. My upside risk is quite low and any decent down move will get it right in the tent (hopefully later in the cycle so the T+0 builds in the tent).

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Finally my SPX October trade

This one is my biggest trade with the most potential. If we get any 4-5% move in the next 30 days, It stands to make several hundred k. The upside risk is low but I’ll have issues if it sits between 2170 and 2200 and will have to address that sag.

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I’m back

I don’t know how I let the blog go this long without a post. I blame the traveling. The downside to long ass traveling is that I’m always behind in everything and am always catching up with any free time I get.

The summer was super slow and not much interesting happened from a trade perspective nor a p/l perspective. Basically broke even over the summer due to the huge rise from the Brexit bottom which the rhino trade couldn’t really profit from. The August trade was expired at a negative and the September trade is now basically a lotto play for a 5 percent down move and has no more upside risk or really any risk at all.

The October and November trades are all sitting nicely and hedged to the upside by some calls (almost m3 like) which I had on through the jobs report on Friday. I’ll remove them at rut 1260 which I consider major resistance.

I’ll be posting all my trades and trade graphs starting now. I have no more travels and I am utterly traveled out :). It was a great trip but 2 months was a bit long. We started in Vienna and went to Kraków, Lower Selesia, Dresden, Hannover, Frankfurt, Freiburg, Arona, Turin, Lyon, Milan, Strasbourg, Nuremburg, Salzbourg, Munich, London and back home to Cayman.

I’ll probably post every day and will post more interesting things

Aug 6 – Rhino Trade Update

Terrible re the lack of posting. My apologies. These past 3 weeks have been very uneventful in trading, it’s been a constant grind in a very very short BB range which is a terrible environment for butterfly trades after a large up move. Our trades have suffered and we patiently await a pull back. Time is ticking for August (big time!) but it was setup just recently to be able to go past the 21 DTE area I usually close things at. I’m afraid it’ll be a larger loss if we don’t see some sort of decent volatility this week.

Another reason for the lack of posting, I’ve been traveling extensively the last 3 weeks and just forgot to post. We did a road trip from Vienna–>Krakow–>Hannover–>Frankfurt–>Freiburg–>Arona/Como–>Lyon–>Turin. Not quite as large as the summer before but good enough that I think I’ve now see most of Europe in the last 5 years.

Anyways, after the Brexit bottom, the market has been straight up making ATHs and been challenging the Aug/Sept trades we’re in. They were all at about 4% profit during the Brexit event to now be about -4%+ I am still in August surprisingly since I don’t have all that much upside risk and my theta is still positive. Any pullback of 3% or more would get us into break-even territory but I am running out of time (we have about 4-5 days max left) before I have to close. The September trade is quite negative now but can easily pull off a win in any normal PB before first week of Sept. I feel our October entry was great and should make up for the losses in Aug/Sept trades (if any). September upside risks are minimal.

The RUT has been up 34% since the Feb bottom and in that environment, it’s impossible to make any real money with the Rhino structure. It’s been a frustrating year but if we get any pull back of 4% or more in the next 30 days, the Sept and Oct trades will likely put our account profits at 50% for the year and that would be a great result.

I think a pull back is around the corner, but what do I know. Especially in this central banker environment. There’s been a total of 666 rate cuts since 2009 and 4 of the major central banks are easing. There’s loads of money keeping things propped up. What reason are there for a pullback? Well, at least short term, via Cobra

1. VXV to VIX ratio is way to high. All previous occurrences at this level resulted in a PB

2. Smart money/Dumb Money confidence spread is way to large

3. Many of the Sentimenttraders indicators are all way overbought

4. The nasdaq 100 commercial hedgers (smart money) made a

    record

short just now.

5. The VIX is down 6 weeks in a row (only happened once in a decade) and the other times it was down 4 weeks in a row–> the results were not good.

6. The BB bands are similar to right before the Sep 2014 correction and the 2015 Aug correction. Very tight! Explosive moves are more likely.

Jul 13 – Rhino M3 Trade Update

Not going to lie, yesterday was uber demotivating even with the experience I have in managing these trades. Both my Aug and Sep Rhino trades entered fairly negative territory with RUT @ 1210 which represents a 120 (11%) point move from just days before at the Brexit bottom. It’s just frustrating since both of those trades were up 4-5% and our balance was finally

    soaring

after a very difficult year only to have the yearly profits dwindle down to mediocre levels in just days due to a fairly effed up move. Why was I demotivated? Well, it feels like every trade cycle (45 days) this year has had a challenging 9%+ up move. Those 9%+ up moves are the most difficult type of move to manage in this trade. Since when does the RUT have an up move of 9% or more every cycle? I think RUT is up what 28% from its Feb lows? No matter how you slice it, it’s difficult to profit in a 28% up move in just 5 months and I am getting sick and tired of mediocre results and the “of course its up 11% in a week and half” frustrations. I’d like to have normal cycles with either a down move, a neutral move or an up move of 7% or less 🙂

Anyways, today has given us some respite and on close yesterday I hedged more with 1230 call calendars and some 1180/1230/1260 call bwbs. Today I added more and I grabbed some long IWM @ 119.5 to help on any up move. I believe that we’ll have a small pull back but we’ll be off to the moon eventually. Things look pretty damn bullish but we’re in need of a healthy pull back.

On two of my accounts I got off my 1960/2040/2100 SPX Rhinos but I never got filled on my main account. I lost most of the profits on that one.

Most of my Rhinos are 1060/1110/1150 and 1050/1100/1140s with call calendars and call BWBs at 1230.

One other annoying thing, I had some short 1190 and 1210 calls for July that I left on to expire when RUT was at 1100. Lol, I realized 5 days ago that I still had them on and now they’re worth a lot more lol. Expiry was Jul 14 and there was no reason @ Jul 7 to think we’d get that high. My bad. I always close these but felt like there was little risk. I guess RUT is up like 10% in a few days…

Jul 12 – Rhino M3 Trade Update

Struggling here with the massive up move in a short period of time. We’re at ATH on the SPX and RUT is tagging 1190 (From 1088 just a week or two ago). This is the one type of move that stresses me out the most with the Rhino trade.

The Aug trades are now all negative by about 1-2% when they were profitable by about 4% just a week ago. I added call calendars last week and hedged off some of the BBs I put on as downside hedges with calls (converting to M3) and some futures but it’s not been enough and we’re now negative and in a zone of the trade I hate. These things can handle, you know, normal 6-8% up moves in a cycle but when they get up to this range (10%), things start going negative and they start getting annoying to manage as we’ve got to deal with decreasing theta and zones where even pull-backs don’t produce much recovery because of upside hedges put in place. As I’ve switched from old school modified iron condors where I dreaded volatility and down moves, now I dread never-ending 9%+ up moves and wish for corrections, neutrality or a 45 day trade cycle that doesn’t have a 9% up move 🙂

The move is stressing me out because there are a lot of imponderability about it. I don’t know if this is the start of a huge break out because of helicopter CB money (BOE and BOJ are easing) or a typical normal over-reaction short covering from the Brexit event. All breakouts of ATH have an 80% failure rate and thus I am trying to be patient on any aggressive upside adjustments. We’ve got a Bradley turn date, some big negative divergence, volume was down -17% yesterday on index, we’re vastly oversold, the T2108 % of stocks above the 40DMA (69%?), and we’ve tagged upper BBs. The 80% failure rate can take days or even weeks so we’ll have to be patient but with any luck it starts now.

My plan is to add upside hedges on any normal sized pullback (thus getting the trades more balanced) and hold off on adding upside adjustments if we just continue up or pause unless we break 1199 with conviction.Then I will reconsider my plan and probably start taking losses. My guess is RUT stalls around 1190 area and pulls-back, I think John Locke is also recommending being not so aggressive on upside hedges right now and also believes the same thing re 1190 as a reversal zone at least short term. My nagging “back of mind” thought is that these markets aren’t following the usual, we’ve got central banks injecting like mad (BOJ and BOE) and this money has to go somewhere. I fear that these Aug and Sep trades might be in some trouble.

Jul 8 – Rhino M3 Trade Update

Rough week in the markets. The RUT was in the 1130s yesterday and the trades were doing fine though fairly delta negative (just not enough to warrant ANY adjustments). I did have a few TF futures, some long IWM and some calls on as additional hedges, but I removed those at a decent profit throughout the day just not at today’s high by any means. I wish I waited longer. I sold off 1 call per account at 131 (1050s Aug) and TFs at 1157 during the jobs report (damn!) and IWM at about 116.57.

Yesterday, the trades were down about 3% from our all time highs and healthy positive, this was understandable since the market was up about about 4% in a few days and our trades will always suffer in larger up moves. Today they’re down a lot more from the high but still slightly positive over-all. Our upside risk is not so high as today’s move was fairly big and sudden and took away most of that upside risk. Today’s up move was next level and puts the move from the Brexit lows at 8.3% up. This removes most of our profits for Aug but we’ve got limited upside risk and a huge profit tent built underneath. IF we get Any move into the below 1145 in the next 3 weeks, we’ll be singing. IF we continue up..well we’ll enter negative P/L but with not so much upside risk per say. The entire Aug trade now banks on a pullback where we’ll take some off and/or adjust on the upside.

The September trades I entered are now negative which is understandable since they’re a mix of 1150/1110/1060 and 1140/1100/1050s. I’ll have to add some call BWBs sooner or later if we continue to be at 1170 or above. I would like to wait for some cool down first. I want to see how this next week proceeds. I would have thought the EU bank risks were bad news but maybe EU money is now flowing into the US market. The internals today were insanity. That worries me a bit re continued up moves.

Jul 2- Rhino M3 Weekend Update

I managed to get some calls and call BWBs in on Friday during the dip and luckily, pretty much right at the bottom of said dip.

Trades:

2 x 1050 calls at $106 to hedge my Bearish Butterflies I put on as a hedge pre-brexit (converting them to an M3). I have 1160/1110/1060 and 1150/1100/1050 Butterflies x 15 and 2 x 1050 calls. Note: Earlier on the week I had bought the same calls for 90 and sold at 99 when I thought the RUT was exhausting itself. I had to rebuy at 106 when that was proven wrong though the same calls touched $114 on the height of the RUT move. So I was pretty much in M3 configuration the entire up move except from 99 to 106 re cost of the call.

15 x 1210/1180/1130 Call BWBs to hedge the Rhinos @ 18.33

The trades are mostly hedged to the upside now and though I expect some weakness into next week, I also expect the markets to quickly resume its uptrend. On dips, I’ll start taking off some Aug trades and hedge a bit more with call BWBs or Calendars. I’ll be quick to take profits on Aug. I had built up a lot of profit in Aug expiry and though some of it was taken away in this most aggressive up move, I still have a lot. My overall balance is about 6% from its earlier and max highs on Monday. I am very happy I took off all of July on Monday as those wouldn’t have fared well in the maniacal three day bounce. I was quick to take profits on those 🙂

As for September, I am only somewhat entered. I have 1150/1110/1060s and 1140/1100/1050s. I am looking to add some call calendars or call BWBs to protect on the upside. Waiting to see what happens post Jul 4 weekend. I got a bunch more on thursday @ 2.90 which isn’t a great price. I won’t pay much more than that so if the volatility continues to fall and the BWB prices go above 3.15, I’ll sit out and manage what I have on and wait for a high volatility day to enter more @ better prices. If we don’t get a high volatility day in the next 20 or so days, then so be it. I struggled with July due to bad prices and won’t repeat the same thing again. Trading well means getting good prices and being willing to sit it out until you do.

He giveth and take half awayith

Markets are on a tear.  Rut is up something like 8 percent since Tuesday.  I closed all my Julys for a nice profit but my Aug and Sep are now half of what the profits where.  I’m close to adjusting the upside but I’m waiting till Tuesday. Markets tend to run up on July 4 and also it was quarterly rebalancing and it might be a massive short squeeze.  I could use some down move to adjust 🙂

Jun 29 Update

I’ve just arrived in Vienna and hadn’t had time to update the blog with all the catchup and management of business and trading.

I have a long post coming but the synopsis was that these past 3 trading days have been the best I’ve had in my trading career (>250k profit). Putting me very healthy positive for the year.  It was a struggle until May.  Having pretty much broke even for the year. So given the risks I take, I am happy as can be with the result given the worst market conditions you can have for this trade