How 0 DTE and 45-day Strategies Took This Trader To 24 Mil

Summary

The transcript follows a conversation with a trader who has transitioned from a medical career to focus on trading, using strategies like covered calls and volatility management. The trader shares insights into managing liquid equities, including major stocks like Nvidia and Tesla, and discusses their journey of establishing a small hedge fund. This entrepreneurial shift is framed as a personal challenge and a potential future career, where the trader seeks to prove the viability of full-time trading. The story emphasizes the individual's independence, ambition, and success in the trading world.

Takeaways

• 😀 The speaker has refined their trading approach using volume indicators and open interest to identify resistance levels and manage risk.
• 😀 The speaker emphasizes the importance of following dealer flow and understanding the role of market makers in determining price movements.
• 😀 Open interest at key levels, like 6,000, can create resistance in the market when positions become profitable and are sold off.
• 😀 The speaker uses a strategy of selling into volatility at the start of the trading day, aiming to exit quickly to minimize risk.
• 😀 As the speaker's trading account grows, they acknowledge that managing larger amounts becomes more challenging but exciting.
• 😀 The speaker trades major liquid equities like Nvidia, Tesla, Google, and Amazon, using the same approach as they do for options and futures.
• 😀 In a charitable LLC trust account, the speaker focuses on covered calls and stock transactions, generating income while adhering to regulatory restrictions.
• 😀 The speaker has started a small hedge fund with their family members' money, seeking to prove their ability to deliver returns in a formal hedge fund structure.
• 😀 The ultimate goal for the speaker is to transition from a medical career to full-time hedge fund management once they have proven their capabilities.
• 😀 The speaker advocates for the 'tasty trade' way of trading, which focuses on structured and disciplined strategies that can augment income for anyone who follows them.

Q & A

What is the main approach the speaker uses in their trading strategy?

The speaker focuses on understanding open interest, dealer behavior, and large positions in the market. They track volume indicators, real-time dealer flows, and major open interest levels to predict resistance levels and adjust their trading accordingly. They also engage in selling into volatility at the start of the day and aim to exit for quick profits.

How does the speaker use open interest in their trading strategy?

The speaker uses open interest to identify significant market levels, particularly where there are large positions or heavy activity, such as at a level with a high number of calls. When the market reaches these levels, the participants may sell their positions, forcing dealers to neutralize their risk by selling the underlying asset, which can create resistance.

What does the speaker mean by 'pin risk'?

Pin risk refers to the situation where a stock or option price ends up at a key strike price near expiration. This can lead to significant volatility, as participants may rush to adjust their positions to avoid losses, which in turn creates resistance at these levels.

Does the speaker trade only options, or do they also trade equities and other assets?

While the speaker primarily focuses on options, they also trade equities, such as Nvidia, Tesla, Google, and Amazon, using a similar strategy. Additionally, they trade other assets like crude oil, natural gas, and bonds, applying the same approach across different markets.

What role does the charitable LLC play in the speaker's trading?

The charitable LLC is a trust account in which the speaker can only conduct certain types of trades, like selling covered calls and buying/selling stocks. This account is structured to generate income by selling premium, even though it limits upside potential due to the nature of covered calls.

Why did the speaker decide to open a hedge fund?

The speaker opened a small hedge fund as a challenge to prove they could manage a fund formally and demonstrate their ability to achieve returns. They also see it as a potential next step in their career, as they are considering transitioning away from their medical practice to focus on trading full-time.

What is the speaker's long-term goal with their hedge fund?

The speaker's long-term goal is to prove to themselves that they can successfully run a hedge fund and eventually close their medical practice to manage the hedge fund full-time.

How does the speaker generate income in their charitable LLC account?

The speaker generates income in their charitable LLC account by selling covered calls on highly liquid stocks. This strategy helps produce consistent income, even though it can limit the upside potential of their investments.

What is the speaker's view on trading for smaller amounts versus larger amounts?

The speaker believes that even when trading smaller amounts, if traders follow the right strategies—such as those taught by Tastytrade—they can augment their income. While trading larger amounts may have more significant returns, the principles can still apply to smaller trades.

What qualities does the speaker display as a trader and entrepreneur?

The speaker exhibits a strong entrepreneurial mindset, independence, and a willingness to take risks. They walk the walk by applying their trading strategies to real-life situations and aim to show others that success in trading is possible with the right approach.