So You Want To Run A Hedge Fund

Yo Pit Crazies,

Trading the way hedge funds do is easy, said no one ever.

And there are several reasons for that, which we covered in last night’s Hedge Fund Secrets Revealed event.

In fact, there is one key problem in particular that I have found most retail traders face.

It may be one you’re struggling with, too.

Click below to find out what it is AND get a replay link to last night’s event — where we offer a solution to the issue.

Here’s the Problem

The constant issue most of my students have is … closing trades and how to exit trades.

There is no Magic 8-ball to tell anyone when to leave a trade. 

The secret is to plan the exit prior to entry.  

And it’s one of several valuable insights we covered during our live event last night.

Here’s an example …

I wanted to ride the Coinbase (Ticker: COIN) wave higher and bought some call butterflies.  

COIN proceeded to drop after I bought them, but the butterflies held their value pretty well and got to profitability again.

I had some house money — gains from a previous trade — so I rode COIN for a bit as it bounced back. Once the flies were green again, I closed them as the rally stalled a second time.

After being in the flies for two weeks, the time frame of Aug. 20 was looming, and options don’t have infinite time horizons.

I closed for a small gain and the house money got bigger. 

The Lesson: If you want to learn how to manage positions, join our new Capitol Gains group. It’s hedge funds — made easier and more accessible. See how we do it here.

Power Moves Portfolio w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

The live Power Moves Portfolio trade log is here.

      • I closed the last of my Coinbase (Ticker: COIN) call butterflies at $3. If COIN was a bit closer to $250 I would hold the last fly, but it is not getting up there.

Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 

The Pro Room using the rally today to take profits:

      •  Ken A looking at BTO ExxonMobil Corp ( XOM) Aug 20 60/64/68 call flys for $0.64…bought a couple Aug 20 55 puts to hedge
      • Kiran closed an Alibaba Group Inc (BABA) call fly +40% That trade idea came from Dejan.
      • Jason F maddog closing- BTC Cleveland Cliffs Inc (CLF) Aug 17.5/13 p for 0.08, up 90%, closes position from a Power Moves Idea

          • BTC XLE Aug 43/40 p for .08, up 60%, closes position from a SharpB.E.T.S variation

Sharp Bets:

Each week, Option Pit CEO Mark Sebastian looks for low-volatility, mid-term duration call buying and put buying opportunities.

      • Closed all of the SPDR Select Sectors Energy (Ticker: XLE) Aug. 20 48.5-strike calls for a 60%-plus return

Robinhood Trader:
Option Pit CEO Mark Sebastian uses the Robinhood Gamma Radar to find order flow in active names.

      • Mark has his RH mojo back, this time with a 33% close in AMC Entertainment (AMC)

Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle trading vehicle. The goal is to teach students the best times to buy options.

      • My Workhorse Group (WKHS) 1×2 ratio call spread is just even. WKHS could benefit bigtime from the stimulus package, and I am looking for a spike up here over the next two weeks.

Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside VIX, VXX and UVXY options.

The Option Pit VIX Light Is Red. VVIX is still above 100, but gave a little more back this week as J-Pow chose growth over inflation.

Earnings continue to be very strong, so I expect VXX to see the 28 handle today — but it seems like 28.99 at this point.

For the Volatility Trading Club …

      • I closed my VXX July 30 29-strike puts at $.15, which still gave the trade a small profit of 20%. I’m still holding the Aug. 20 26-strike puts and I expect VXX to make new lows next week.

Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!

To Your Trading Success,

AG

 

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