 Good morning, good morning, good morning It's time to rise and shine Good morning, good morning, good morning I hope you're feeling fine Good morning, get up, get out of bed It's time to wake up, you sleepyhead Pick up is a brand new day And we can't miss out on that day to decay Get your day planned out to be at your best And you gotta make sure you got the right back test Like this sleep away makes sure you're awake Cause we don't have time for fat finger mistakes And ratio condos will pay the bills But you gotta be quick to get those bills Follow your plan to keep your pockets thick If that market gap's up, look for Uncle Rick Small gap down means it's time for a duck But while we came here today, now let's get to it Good morning everyone, happy Thursday Today is November 2nd Welcome to today's Zero DTE live stream It's gonna be a quick one Only thing setting up this morning is Our buddy Uncle Rick So And that's assuming it does set up Looks like it should We've only got a 23-ish expected move for the day So typically it's going to set up well S&P is up 37 NASDAQ up 178 Brussels up 23 Dow up 200 Gold and silver both higher Notes and bonds Big move higher Notes and bonds Ten-year yield down almost 3% Back down to 4.644 Oil up half percent Natty gas down a couple percent Grains a little bit mixed Euro and the pound higher So the US dollar weaker And the in Bitcoin Staying above that $35,000 level VIX down over 3.5% Back in the low 16 handle Two and a half minutes until the market opens We've got our remaining VXX verticals That I'll most likely be taking off today Getting another big contraction And volatility So took half off at 50% of max We'll take the other half off Most likely today I'm also going to be taking off my oil strangle Either today or tomorrow Where the trade is profitable after adjustments We're not quite to profit target But we're getting kind of in that down into that Once we get down to around 40 DTE I like to start finding a place to Take those off to kind of Reduce risk Those are really designed as longer duration With very, you know, a lot lower gamma If you start getting down in that range I like to just peel them off So finally getting some contraction in oil volatility We are very light on positions right now Just been kind of scaling out The last week or so We've had implied volatility spikes We've had implied volatility contractions Two-sided price action Can't ask for much more I don't think there's a limit, Krish On the ratio I've got some portfolio margin positions That I do eight by fives That works just fine For toss And then tomorrow's head issues on Interactive brokers with that With different ratios Yep, LaSosa just doing a RIC this morning S&P pushing at the open So the 10 wide RICs trading at about 14, 25 I'm going to move up a strike here 42, 80 43, 100 42, 70 42, 35 And I'm just trading up to 15 Price going up But a little initial IV pump going in So I'm going to be patient Getting in here Just trading closer to 14, 15, 14, 25 Right at the open You'd have been pretty quick to enter Or while we're waiting on that We've got our time fly that we did a double adjustment to And prices continue to push higher Still got a very flat T zero line So I'm not looking to do anything at this point Probably most likely end up holding this one Until at least Monday Unless it keeps pushing higher I mean, if it gets up to kind of 43, 15 area I will probably just kill it Just bail S&P up 47 Interesting how Markets rallying but not getting Rick is not coming down in price Got an ES hedgehog It's up a little bit What's up more when the market was down Got a gold reverse hedgehog that's doing good Old benefit from a continued move higher Got a It was a good exit on the TGIF yesterday Still have this single calendar with my Downside vertical hedge That one's now with this push It's kind of moved Up to the upper end of the range I'll be closing this one today We do get a little pullback Might be able to scratch out a profit Yeah, the other thing I may do today Is add another time fly In a different expiration cycle Obviously we've got volatility contracting Which is not the most ideal time to be buying butterflies But I'd be doing it with a little bit of a I mean like I always do It's got a little bit of a bearish tint So if we do get a pullback after this big rally A lot of times you'll see After a big one directional move after the Fed It'll move there for a day or two And then you get some little bit of reversion It's just kind of that overreaction that you see a lot of times Yeah, and then I'll be looking at Either a single calendar or a TGIF as well All right, now Rick's trading back down to about 1450 That's more in line where I wanted it If it strikes up as well See what that's looked like All right, I'm going to put my order in for Rick at 1440 Here's the Rick I'm trying to get filled in And just got filled So what's your question on that back test, Krish? Well, I mean when I look at a back test The numbers kind of speak for themselves 67% win rate 12% drawdown 18% more So this is opening a trade at 255 p.m So this is power hour So this is a 5-4 power hour trade Yeah, not bad I mean, I don't like it as well I mean if you compare it apples to You know, try to compare it as close as you can apples to apples To the other tranche one it's not Not as good, but not too shabby Vicks down 4 over 4% Well, do the side-by-side comparison, Krish You know, I mean some, you know You may like the win percentage better But the drawdown not as much You might, you know, you just got to compare those different things and decide what you like better I mean, I can tell just by looking at the P&L graph that it's not as not as smooth Looks like it might have a little bit higher win rate It's got a higher drawdown I mean depends on the starting capital Comparison so you'd have to do that too, but Yeah, you just need to You just need to look at them side-by-side and decide what you like better Some people are more comfortable with a higher win rate Some people are more comfortable with a lower drawdown Some people focus mostly on mar You know, so that's something that you've got to decide It's not this it's not going to be the same for everybody So vxx let's see it's up about 18 730 So we're at about over 65% of max profit I'm going to go ahead and take that off Build at 515 All right, so just posted that in the premium selling Option selling channel That's a nice winner Bumblebee what does drawdown mean? So that means the or if you're looking at your P&L So for example looking at this This back test here, can you see my screen? So a on the option omega back test it shows max drawdown So that's the peak to valley The biggest peak to valley of your of your P&L So for example, I would assume that relates to right here So you can see you're checking along you're checking along You hit a you know new high P&L, you know in this case it says 207,000 and then you go through a drawdown Your P&L is drawing down You know now it's down to 1883,000 so from 207,183 I would assume that's where that 12.3% comes from Because that looks just eyeballing it that looks like the biggest drawdown Of this back test right there So that that's what that's what you're they refer to when you hear the word drawdown Yeah, or yeah, technically it'd be from here to this point here got a little bit lower So from here to here That would be the drawdown And then once you retake the new highs of P&L Then you're then you're out of your drawdown So the Mars your compound annual growth divided by your max drawdown So let's see if that's so 226 divided by 12 equals 18 Yeah, so it's your it's your compound annual growth divided by your max drawdown Gives you a mar so it's kind of a quick quick reference to to determine Compound annual growth rate divided by your max drawdown Gives you a figure that helps it just kind of it's kind of a just a quick metric So you don't have to do that calculation yourself Data list I think yeah, that's that's correct. That's why you'll see You'll see a back test that has a hundred percent win rate But it still has it there's still a max drawdown because Yeah, because there's there's an interday drawdown Even though you closed every single trade for a winner based on the back test parameters Which is which is a good thing. I'm glad they did that because it it helps give you a little bit more reasonable expectations that Okay. Yeah, they were all winners, but there's still a drawdown Yeah, and very important Kelvin mentioned I I did a podcast episode on this too and that has to do with the the drawdown of It it kind of relates to the sequence of returns is another way to think about it You know, this is a specific test starting January 1 through November 1 So that drawdown is based on that time frame Well, what if you what if you got in and started trading it right here? in The beginning of july right when you see the p&l start to peak right before that drawdown Well, your your drawdown is going to be more than 12.3 percent Right because this is based on this all these profits that you've already accumulated Then you have that drawdown so, uh, so it's of a higher, you know your Your dollar amount came down on a higher value So the percentage of drawdown is less, but if you started right here Then you had that drawdown right away. It's going to be quite about higher than 12 12 percent Yeah, I talked I talked a lot about that in, um When I was doing some of my earlier power hour videos as well Um You know where I was I was trying to get people to make sure you're going through the trade log Find find those areas where you have strings of losers You know, uh, this one was what was that? July Starting around July 5th So if we go to July 5th So We had a couple winners. So then starting Yeah, starting say july 11th. Okay, so If you if you you see this back test looks fantastic Then you start trading it And then all of a sudden and you start trading it on july 11th One two three losers in a row and then july 14th That's four or five losers in a row Then you have a couple winners, then you have four more losers in a row. So you've you've had, um You've had five Six seven eight nine ten eleven so nine out of 11 trades have lost Most people most people hang up hang it up after that I said, yeah, this is this is a this is not a good strategy The back test failed me The back test didn't fail you you you're your mental understanding Of how back tests work Failed you You know, you can also look at that and say well, that was that's the biggest drawdown that this back test has has had. Yep But we all we also experienced that right if you all remember in july and august Trunch one was I think it was more august trunch one was struggling There's a lot of talk about is Trunch one's just not working anymore. It just doesn't work. No It's just going through a drawdown Every every strategy has a drawdown Yeah, that's right. We had five. You know five straight red days So the yeah, so bumblebee that's the magic question, right? So the question is When do you decide to move on from a strategy? And when do you decide to Keep plugging away through the drawdown And the the biggest factor comes down to your position size Are you position sized appropriately to withstand? A Call it normal drawdown Or you or or you could even think, you know, are you position sized to withstand a Bigger drawdown than the back test has ever had You know, so that's that's something that you have to decide, you know, for example If you saw my november plan I ended up cutting ducks Out of my Out of my trade plan a zero DTE ducks Now this was for a couple of reasons Not just related to the duck performance itself But Let me just update this So, you know, I mean, but look at this. Look at this drawdown We're seeing on these zero-day ducks, right? It's just getting hammered and this as, you know, pretty strict criteria That's basically we're looking for a small gap down And traditionally when that happened We would, you know, kind of there's a high probability we'd kind of stay steady to hire Well, what's happened in the last A couple months is we've seen small gap downs and those And the markets continue to run lower, right? Stopping you out Now even with this drawdown this Trade still has an 81 wind rate still I still think it's a really good strategy part of the reason That I ended up cutting it is because This exact same criteria is used for the JSP's And so Part of my issue Wasn't necessarily that this is a terrible strategy and that, you know, I couldn't hold through that drawdown But it was because my position size based on two Extremely correlated positions Was just was just too much So I ended up just deciding to cut one of them and I just decided to cut the duck and I'm going to still trade the JSP's but there's, you know, my my uh My assumption would be that this is this is a drawdown and then this will continue to Go back up eventually. I think I still think it's a good strategy, but that was just my My decision that I made based on my Allocation between positions and that kind of thing Yeah, I mean ken, you know Let's get, you know, we're we're we're human. We like to celebrate the winds, right? We don't necessarily celebrate the losses. Although, you know, I mean, obviously I show all mine I mean, you'll I just posted my monthly performance In the trader chat channel for the month of october, you know, this was brutal I had I lost over 25 000 on ducks and over 26 000 on jsp So I lost over 50k on those two strategies And they were, you know, just I mean, they're like I said, they're very highly correlated, which is part of why I Had to cut one of them So, yeah, that sucked. I mean, I had I had a monster month, but it could have been even Even that much better if I didn't take a 50k loss on those two strategies in october But yeah, I don't I don't necessarily I mean, I and I'm talking about you all in this community the Trading industry and all the bullshit that you see online. I mean, that's a different story. I there that's garbage, but When I see you all, you know Pumped and posting your profit for the day. I don't I don't have anything against that whatsoever. I think yeah I think you got to celebrate the winds The x had that little push that's been kind of chopping the last 15 20 minutes Bumblebee what causes drawdowns iv changes. I mean, yeah Depends on the test Just let's just go back to this example What causes what caused the drawdown on these decks? Well Price gap down just a little bit between 0.1 and 0.5 percent that day You entered because that's the criteria And then price continued to run down so that in that case it wasn't necessarily implied volatility That was the issue for this drawdown. It was big outsized moves and and You you know, you've probably noticed over this period of time that we've seen this drawdown You know for me every day I draw the expected move on my chart, which I haven't moved the lines yet today But I look at what the expected move is to start the day and I always plot these lines Well, we've had we've seen more moves outside of the expected move in the last month then Usually you see in a year Sometimes I could be exaggerating a little bit on that But we've seen a lot of moves outside the expected range outside the expected daily range And in this case we had a lot of moves Outside the expected range to the downside so these were getting stopped out So it depends on the test sometimes it's market, you know, like power hour same thing You know whenever we take losses in power hours because price moved too much Implied volatility obviously has something to do with that because the higher the implied volatility of those zero-day options The wider your range is going to be so that helps, you know, let's price move around more without getting stopped out So just it depends completely depends on the strategy you're you're trading Yes, sir So the total premium Is all of all of your trades added up during this back test So for example Let's see on october 26 We took in a premium of seven ninety seven dollars and ninety cents We're doing eight contracts So seven ninety times eight Whatever that is that that's the that's the total premium that we Took in on this date Well, the total premium just all those added up between You know may 2nd through november 1st the entire back test And then the capture rate is how much how much of that total premium that you Sold in this case, you know, we're collecting a credit Uh, so how much of that premium do we actually capture? And that's what ends up being our profit by the way, um Bumblebee and anyone else really so matt from option omega put out a backtesting boot camp It's a free boot camp or free class on their option omega academy platform that they just rolled out um, kind of If you want to go if you want to do a little bit of a deep dive on on the back tester Kind of understand not only some of the basics, but some of the other Criteria that you can use to to build your back tests It's not on youtube. Just go to uh See, I think it's academy. Yeah academy option omega.com Then you click on courses And then back testing boot camp there it is Sign up and you can get it get it for free. Uh, I haven't had I haven't done much with trade steward yet. I set up, uh I set up one it's not it's not functional yet, but It's just uh, it's just a matter of time figure out which strategies I want to I want to I want to try it with but I haven't done it yet Nice and Neil you know that end of october 26 and 27th was a painful one. I bet so those that's mostly JSP's so just so puts in short puts and short calls based on NT trend cool I got a question for you all something that's been kind of weighing on me something that's I've been trying to kind of think through especially after this last month of performance and we're talking about posting posting profits and losses I'm kind of I'm kind of concerned as these numbers continue to get bigger about posting publicly My trade performance You know like especially if we if we start going into a like a Real depression, you know a real recession You know people are losing their jobs and stuff like that and and you know and I'm I'm posting Hey, I made six figures this month. You know, I just I don't I'm starting to feel very I've always kind of felt weird about posting my profit and loss, but I I'm starting to feel even more uncomfortable You know trading Is such an interesting thing, right? It's all about making profits and so You know if I if I worked in the Whatever some other industry, you know, I'm not I'm not going around Telling people how much I made right nobody else does that except for us right and so A You know, I don't know I it It just it just doesn't it's it it's starting to feel uncomfortable and so I'm trying to figure out What I like I want to on one hand. I want to show people what the potential is But on the other hand, I don't want to be a douche If that makes sense So yeah, I mean percentage, you know, so That and that and then so percentages is an option. I mean I could show percentage of my total account I guess but like Some of the you know a bunch of the positions that I trade now are portfolio margins So some of those positions that I put on Literally take almost zero buying power So if I make a $10,000 profit on something that uses zero buying power, how do I calculate that as a percentage? You know, so I can't So I can't you know, I want to show all the different trades and all the different strategies And you know kind of how good they did I mean, I guess I could show only win rate and then only Profit as a percentage of my account value. It's kind of What I started thinking about but Anyway, I just wanted to kind of hear your you all's feedback Yeah, e-allison. I thought about that too. Maybe, you know, when I'm posting publicly, I'm just posting percentages and then to you all in the community who I know kind of understand and actually are learning the strategies and And that kind of thing. Maybe I maybe I post You know all the a little bit more detail As far as you know, the dollar amounts and stuff like that Well, like I said Kelvin, I mean, I I also want to be able to Show people I mean the whole reason I started posting my performance to begin with is because I didn't when I first Started trading I didn't do that. But I got so many requests from people Wanting to know the performance So it just I was just like, all right. Well, I guess I'll just post my performance Trader Bianca. I felt for a while that posting dollar amounts is a bad idea I think it's awesome that some people do make a bow low but for new traders It can have a number of negative effects. It's just like Yeah, that's the other thing You know, I don't You know, there's still way too many people that Copy my position size not because it has anything to do with their account size, but because That's what I did, which is just crazy to me. But it still happens. No matter how many times I say, don't do it You know, and then we got the you know, I mean, we live in a society of a bunch of You know, it's living in a litigious society too. So, you know, that's the other thing It's like no matter what my intent is that, you know, I'm being 100% transparent way more transparent than any other Joker out there. I'm doing the right thing. I'm, you know I'm teaching people how to trade the right way and stuff like that But there's always the loser out there who can't make it on his own Who's going to try to find a way to get what somebody else has and they, you know Now they're seeing me post, you know, six figure wins in a month You know, that just that's the other part that kind of makes me uncomfortable Yeah, like that that idiot who tried to blackmail me a few weeks ago I mean, you know, the guy like that Meanwhile, spx fell asleep Yeah, I mean, I think I think what I've Kind of what I'm leaning towards is, you know, I still want to I still want to That's just, you know, on our performance page Uh on our website, I still want to I still want to continue posting every month But I think I'll just do that Based on a percent Total total profit based on a percent of account value I just won't be able to go through each position Or each strategy and kind of show How each one did because it's just not it's just not possible with portfolio margin Um And then internally to you all I'll just I'll still continue to Kind of show the more detailed I think that's kind of what I'm leaning towards Appreciate that lassoza opt for dollar any trader hawk news What kind of news are you looking for? I Been continuing to trade on it I got some t-shirts left Opt for dollar will go to it if cs kills toss Sorry, brother. You're gonna have to expand I'm I'm not sure what you're asking Appreciate that fast 57 31 Appreciate it trader Bianca well, the only the the main issue with charles schwaab is um The margin requirements for calendars at this point So I've I've enjoyed trading calendars on trade hawk So if that's your if that's your concern, I mean, I don't I don't I don't see charles schwaab killing toss It better not kill toss That'd be a That'd be devastating, but Yeah, the margin on calendars is kind of the big issue at least right now Yallison, you're not you're not getting any margin issues trading calendars on schwaab, huh? I've heard I've heard both sides. I think annette. I don't annette. I don't know if you're on here, but she She's trying to post calendars and she's trying to trade calendars on schwaab and she's you know They're treating it like naked options. So it's kind of odd. I've heard this now from multiple people multiple traders having Both sides of the equation Some haven't some say no issues some saying issues Up for dollar my accounts are still with td. So no, I have not I have not experienced the charles schwaab experience yet Appreciate it. Kelvin. Yeah execution on trade hawk's been great Yeah, tasty is another option I would just say they're you know the risk graphs for calendar. I any kind of calendarized strategy is pretty Pretty worthless, but you can always use option strat for that as well Yeah, I was told I was going to be moved in 2024 Somebody else was told they were going to be moved in I think it was annette She was going to be moved in 2024 and then all of a sudden they got and then all of a sudden she got moved So I've also been told I'm getting moved in 2024. So hopefully They do stick with that I've heard um I've heard some of it now has to do with Trading futures. I don't think schwaab is ready for futures I don't know if it's just I assume they trade futures, but maybe it's just futures on toss or something like that. So if you If you trade futures, then you'll You'll be one of the last to get pushed over They tried to they tried to push you to schwaab krisch and you and then they switched you back Yep, only power hour for me a rick and power hour today the Kind of the retail stated commissions on TDA Elliott are 65 cents a contract But they you know depending on your trading volume you can negotiate I'm not sure what uh, I'm not sure how schwaab will be Negotiating, but I think I'm I think I'm doing I think I'm getting 35 or 40 cents a contract I hope they grandfather us I would That would be the smart thing to do, but who knows Well, this was supposed to be a quick little uh Get in rick and be done session, but good conversation. I appreciate you guys Feedback and just uh Appreciate everything. Love hanging out with you guys But I think I will get off here Get some other stuff done Then we'll come back for power hour. All right, I'll have a good day chat with you soon