[00:00] be like well I just got laid off and I'm actually going to trade full-time have exactly how do you start figuring it out test trade track and be curious over the
[00:14] course of two years you're now up to 1.5 million that's when it really clicked for me you are the ultimate one trick pony right at 9:32 once the opening price Discovery occurs I will basically start trading credit sprs every 2
[00:27] minutes into Mark n FS [Music] all right everybody welcome back it's another Rising Star shoot I think you
[00:39] guys are going to like this one something a little different we are going to explore two things that we don't usually do on Rising Star shoots number one is we're going to talk to somebody that's gone from being a
[00:52] retail Trader to kind of somebody that's stepped it up to being a full-time gig that's one thing and the second thing is somebody that's also taken a lot of the tasty trade mechanics and adapted them to a zero DTE type of trading style and
[01:11] uh somebody that trades 100 to 200 times a day somebody that trades um very aggressively my uh kind of a style I like a lot um and so I'm excited to have this conversation and learn more about you as well get your helmet on as we say
[01:26] because here we go so you're 30 yeah when did you make your first trade uh I made my first trade in 2017 2018 it was basically I read some Warren Buffett introduced me the concept of a covered call so I started playing him on
[01:45] dad and learning about that as well so 2017 2018 kind of a pretty um strong Market low volatility strong Market um definitely at that point probably
[02:00] anything that you bought went up correct and um and you sold some calls against it so you're like oh this is easy easy pey um so let's talk progression so you're you're kind of just starting out what were you doing for how were you
[02:15] supporting yourself uh I was working in construction as a superintendent I was PR interviewing kind of like Seno manufacturing and Drug manufacturing construction that was your undergraduate degree too for got it so um so you're
[02:31] kind of doing what you had prepared to do and did you get did you get bit by the bug yeah or or was it like was it slow or you just get bit I realized very
[02:44] quickly that what I had signed up for in college and what I thought was safe was actually risky in turn by doing the same thing that everyone else was doing and kind of I was affected by the upward drift and financial markets whether I
[02:56] liked it or not so had a lot of time commuting from work and started just pick up on podcasts and such like that which is where I rolled into you guys you know it's it's funny sometimes people they rolled us because it's it's
[03:09] like it's something that you feel like you have a little bit of control over and I a lot of times there's some disenchantment out of school where you think oh man I just lost control of everything like I don't control my own
[03:22] destiny anymore and so they end up with us because you're thinking well this gives me some control back now definitely and the way you kind of speak to it is here are ways to extract Azure why we think it's present and here's
[03:37] data that best basically backs that and that really resonated with me where it's structurally sa and when we follow this we use to get our output are you kind of
[03:49] like a a little bit of a math geek or um an engineering geek a little bit Yeah I think everything really comes down to the details of it and I'm a big advocate of the simpler it is but the more dep you understand all the concepts around
[04:04] it that's what true Mastery is and kind of the way you guys explain those Concepts I think is a good emulation of that so Finance just quantitative Finance just made sense to you like it wasn't it wasn't
[04:16] something that seemed very foreign it seemed like oh I can figure this out yeah it made sense basically from day one and then what really made it click was when I realized the quality of your assumptions around that is really what
[04:29] outputs I kind of related it to test trade track and be curious yeah and that is really kind of the formula to seeing what fits you and then optimizing your
[04:43] strategy for conviction instead of return so you can follow through of that get what you bought so 2018 17 18 19 whatever when you're first starting out you're obviously working you know you're you goes into the pandemic
[05:00] little bit on the side working your butt off in what in in the construction you yeah so at that point I think it was like most people where you're trying to
[05:15] and your house success you get in a meeting you know try to have a life too that's not okay and then uh I'd made it through Co relatively okay because you
[05:31] know I'd taken some positions off sure uh but then i' had gotten laid off you longer needed and I basically decided that day that I was like I can do this I
[05:44] my Destinies have been sure and I started to again find another job but really go all in now and kind of put my job on this was a second priority and
[05:56] trading as the first priority not advice that necessarily lend every one but that's when it really clicked for me it's the kind of thing where if if you're not going to roll the dice at that point when would you like like
[06:10] give this a try because the downside is all right I start over anyway yeah and the upside is maybe maybe I figured this out maybe I or maybe maybe my timing is
[06:24] perfect and maybe I'm just entering the space at a time when you know they need 25 and 26 year olds that are strategic that can understand a different kind of a different Road through Finance yeah and I like that you bring that up too
[06:37] because one thing that I kind of related to when I got into there's obviously compound knowledge whereas if you start something at before it's 24 25 and it really gets rolling it's a hockey stick return on your ability to learn at that
[06:52] it is very hard to impress up on people how important longevity is just you have to play the game you know I mean like I mean Buffett's probably the greatest example because it may have taken him you know 50 years to get to the point
[07:06] where he could create some kind of um exponential return but but it's all about longevity and I think at 25 or 26 it's very hard to Envision you know it's very hard to consider longevity because you want instant
[07:21] gratification so you so now you're you know mid 20s and postco you've little you made some money you have a couple hundred thousand correct through
[07:37] everything you got right you roll the dice with everything you got exactly okay when you decide to go full-time as a Trader late 22 or something yeah
[07:50] okay and you were like you're like I'm all in I'm going I'm I'm I'm going to take this to zero I'm going to be zero or whatever right yeah okay cuz I love so okay now what do you do like like how do you how do you start figuring it out
[08:07] how how'd you you know I mean obviously had some idea but how' you how'd you make it work how'd you figure it out first thing is just like proximity Is information possible watched your guys' show and was originally exposed kind of
[08:24] look back at that point which is the first back test right thing I'd seen and as I got into this I was like this result does equal that I can make money when this happens and I saw that even when I took draw Downs it matched the
[08:36] back test so I really started getting into the quantitative part and the numbers part which is like you're talking about how do I enable that compounding with limiting the draw down what I like to say is I'm locally
[08:49] concave for income and globally convex to basically limit draw Downs which the liability to so what was your worst draw down like you're basically been you you basically have two full years under your belt two full years of which your
[09:05] returns are extraordinary we'll talk about a little bit but have did you have any really bad draw Downs in those periods um I was running like a 90day gold TLT S&P structure uh during the Russian invasion of Ukraine and that had
[09:21] kind of taken me about a 20% draw down but apart from that was zeros my largest draw down has been about 8% from that time forward and it's been pretty good quarter yeah yeah I mean 8% is is really nothing given you know given some of the
[09:36] returns and then 20% during that one event just when you're starting out is is also like pretty small yeah on a Rel Bas so you really haven't had to feel that you know the crazy pressure of yeah yeah yeah what I like to say is that you
[09:51] know we should look at ourselves as Risk Managers first and then kind of capital allocators second what has happened to you since you well like you talked about the Russian invasion of Ukraine and then you know obviously trading a bunch of
[10:06] different products at the time it sounds like you've you've more um transitioned into essentially just trading in the snps correct the S&P
[10:18] is very accurately priced fall the friction cost to get in and out is extremely low which I think a so to find friction cost this would be priced being cash settled with no rism assignment and then also the liquidity
[10:36] of it in general with the width of that bit ass spread and then the fee structure and commissions on such a large instrument are relatively low that I think it's the best aenue if you're playing a pure short ball perspective to
[10:48] take and what do you think is the B what what how would you um Define or quantify the bid ass differential of the SPX uh I would quantify as the price to cross it
[11:01] my data it's about 2% on the entry and about 5% on the exit if we using a stop it would also be about 2% 2% of the of the premium or 2% of the not the price
[11:17] of the index no the premium yeah okay option got it so if you're doing a if you're doing let's just say uh what Delta you usually hang around with uh
[11:30] I'm usually in between about the seven and 20 test so okay playing crosis basically right so so you're probably in the neighborhood of I'm just in a second so the zeros at that Delta you're probably where are you somewhere
[11:48] in like the $6 range is it um it depends on the volatility and it depends how long you go to buy your wings uh I do go up to dollar to $3 seems to be a good sweet spot as well on each side or total uh
[12:07] each side I do lean a little more on the blit side for credit selling and then I'll hold longer dated calls so I kind of look at the call side as a sharp buffer kind of for combo so you skew it a little bit yeah I mean we're always
[12:21] dollar on one side and a dollar on the other yeah oh you're going to be you're volatility risk is actually kind of weaned a little bit yep and then and then and you're talking about 2% on that number yeah to get in to cross the cast
[12:36] for the that's so that's just for for under so people it's a half a tick basically H it's a you know half a tick two cents two and a half something like that and then on the getting out you think it's like double that correct and
[12:50] that's an agant it could definitely in times of high volatility be 10% potentially but over enough occurrences yes and that's that's closing correct yeah are you are you ever letting things expire or you mostly always closing uh
[13:03] to get 2% Alpha from not closing it obviously if I'm threatened and I need to manage my risk that comes foremost so if that Delta is kind of getting close
[13:15] as I put the trade on right because the the offset of um the other side of saving the 2% or the 3% or 5% whatever it is on letting it expire the other
[13:30] side of that is this massive potential Delta risk with two minutes to go correct which I would like to avoid as much as possible the way I think of managing my risk is I want to limit the degradation of adjusting those options
[13:45] to capture the premium but I also want to use risk management basically shaped re form of the distribution that I like and and you only use SPX right you're not using spy on the SPs okay because with spy you'd have you know post
[13:58] assignment risk you know postmarket movement stuff like that the SPX SS to cash so at 3 301 or whatever the last ticket is you're basically done correct are you ever using anything other than o SPX options
[14:14] to hedge zero day SPX options like are you using ES or the The Minis the micros the es options the Spy anything else just STX okay so you are you are the
[14:27] ultimate one trick pony correct and also when we talk about hedging to is I think in positioner but I always if I'm selling a credits beted I'm basically
[14:40] fall so it's basically even out to offset my exposure systematically yeah but let's understand when you say credit spread you're really not trading a
[14:52] credit spread you I think you're really just trading you have a synthe what you call a spread because you're buying some cheap way out of the money option but the reality is that is just a synthetically naked option it's a
[15:05] reasons and you're doing that for risk reasons but you know I mean you don't really that money is just a give up money correct okay yes so are you going
[15:18] to like the cheapest option you can find uh yeah within reason 99% of days if nickel Wing but are you the only reason you get nickel wi is because it's a zero
[15:30] day but are you doing are you going longer duration so I am holding longer duration options that I basically start legging in in about a week out and then I take those up to one day out and then those will be all long options and by
[15:44] doing that I can kind of capitalize on maybe large overhead moves or if we get an extreme Market Direction even though those long options kind even out to zero in the long term it benefits your portfolio and can offset some risk it's
[15:57] I'm just holding those to expiration yeah they offer you some offsetting of margining and then they also offer you I would to say diversity of risk as well
[16:10] so yeah we're looking at our sources of profit we have credit spreads obviously thing that is actually going to be uncorrelated is going to be wo now are you always doing are you almost always vertical uh on my on on these credit
[16:28] like are you doing you know uh one DT 2 DT 3 DT I will do some calendarized structures I think those do offer a lot of Edge and kind of having more of a
[16:42] bega will help as well so I do offset with Cal Resturant so tomorrow morning um first thing happens Market opens yeah are you already in a position
[16:54] first half hour two minutes both so tomorrow morning I will have 7 Days six days SP four 32 1es all along and then I'll also have a one day that I put on
[17:07] at the afternoon before that'll come to zero and then right at 9:32 once the opening price dis February occurs I will basically start trading credits where it's every two minutes until Mark hand looks every two minutes until like 350
[17:24] basically so you're just going to continue to lay them out correct basically like as the market moves it will yeah you're not doing both sides you're just doing one side of the
[17:37] time um I'm managing each side individually but I'm putting on trads as condo so at the end of the day how many positions is that uh it comes out to between 15200 depending on the trend which all basically go with if it's tram
[17:51] in some certain direction and because they're all you can afford to do that because they are all technically spread off correct on averaging in the volatility over the course of the day so volatility
[18:04] could be extremely I get it what happens what happens on a day obviously on a nor on a regular day where there's you know some contraction whatever you know or we either in a l state or Contracting State you're fine what happens on a day when
[18:19] you know uh Market goes Market stays unchanged vix goes up big Market stays on chains vix go Mark goes down vix goes up big what happens uh it's pretty random I would say that very large moves toward the end of the day when to have
[18:34] more you have Boer at the same small Channel I'm exposed to but if we rip off standard deviation of move and that we go in something you could be completely
[18:47] fine what percent of your trades come off at the end of the day uh shortfall 100% so any credit spread is in cash and then I'm I'm always long the Tails long
[18:59] G long VGA and long Delta every day 4pn and and 99% of my account in cash that's really interesting so you take the crap home with you and then you just start correct ah very interesting so I should I should give a little more context here
[19:18] so you started out when when you first decided to commit to this business essentially full-time trading you had a couple hundred thousand do correct and
[19:30] over the course of two years you're now up to 1.5 million correct okay so that I because I we have to show that this is what you know you haven't really have you added capital or is it m mostly all profits uh it's probably all profits I
[19:45] put in a little bit from a real estate investment that it really started compounding with a larger account value that got me to one5 are you surprised by your success or are you um because it's totally okay if you said no this is this
[20:01] is what I expected you know like I think that the way I was trading and if you are able to be good at it in the zero day tener the benefits of compounding and lack of correlation and basically like the length of kind of a bare Market
[20:15] in Zer when you say lack of correlation what are you what what are you referring to uh I mean if the market is tanking those are some of the best days to sell zeros because there's so much demand for volatility so you mean lack of relation
[20:29] though to like to to some other event because you don't because you're not holding something overnight correct okay which is PR what up the ball sure and the consistency of it with it being rced every day generally lends to a
[20:43] smoother panl verb over a court your time of course with the the other side to that is though that there is statistically less Edge significantly less significantly less Edge like yeah it's insane how much less Edge there is
[20:58] like I you you're playing you're playing you're trying to master essentially you're attempting to master a zero sum gain and because somebody has to win and mathematically there is a in AER some I totally understand yeah I get it but
[21:13] it's very difficult correct okay I just want to be clear that this is like so that easy and plenty of people have tried and failed and this is you know there's there's a lot of bodies out there um this is this is something where
[21:29] it's probably a very small percentage of people that have got to the point where they can you know put as much on the line every single day as you do you're using a significant percentage of your hand yes every single day correct okay
[21:45] yeah let's be clear this is not this is not for the faint of heart this is now you're you're young this is what you should be doing I mean it's kind of how I had for like 15 years um so it's not it's totally not
[22:01] unreasonable or crazy it is from the sense of being like a parttime uh self-directed investor yeah but it's not any different than if you owned your own business correct right same thing you you're you're you're
[22:15] leveraging your own assets which in this case are cash and you're managing it all strategically have you have you did you have you ever like varied and done something like you're just like you know I'll never going to do like I I just I
[22:29] can't believe I just did that um not really I can get a little feedback from maybe I was size too large but after I really started to catch my stride with
[22:42] profit I sized back down to being like I don't want to draw down but I ever have to pay a volatility tax to get out of so psychologically that changed a lot and then my stressor with executing it each and every day just basically completely
[22:58] change that like even all of my trading my screens are all in Gray scale so I get no emotional response from red or green on the screen it's just purely I want to get what the back test is and I want to create my occurrences and I know
[23:11] that in turn you know trading is an art but math is a exact science now so it's do a bunch just pass out does your dad think you're crazy uh I think everyone thinks kind of I'm crazy and example I like to give is in you know 2022 I had
[23:25] gotten laid off and I was literally driving Uber and people are like oh know going have trait fulltime have you heard of zero DT options that talk to people in Silicon Valley in the car to do that and you know it's kind of that
[23:40] belief in yourself of breaking patterns of what you previously were doing and most in yourself it's you know the universe kind of Blends towards you of
[23:53] meeting people and learning new things and you get small insights from it how scalable do you think what you're doing actually is because there has to
[24:08] be you know I mean the world of finan is massive you know talking hundred trillion dollar whatever so but but in your little world is it scalable uh from the research I've done
[24:24] if you're doing credit spread trades in zero DT basically depending on a stop in at a bit ask of what most people are doing with I mean it's almost impossible
[24:36] to be 5% of the open interest just to be fair yeah so it's very scalable and then I also run a lot of structures that I may use a stop loss on but because I have those longer dated options if we were to Gap or something crazy were to
[24:51] the longside home with you overnight who cares if you have a gap you know I mean that's that's all bonus for you I mean even another concept is if you're trading one DT shorts with zero DTE wings during the day you're still taking
[25:07] them off with the close yeah you know what goes to One faster if you get a massive move on Gap the zero because if it goes in the money that one DT still has a little bit of time yeah on so such with that as well yeah yeah well you
[25:20] work no no you have to you have to own the the longer duration so yeah so it doesn't matter um yeah otherwise you're talking about you know an index that's just too expensive to have the naked side to it and but you know you can
[25:35] understand why the chunky options in the S&P 500 never go down yeah it's worth it put you know that's $1,000 out of the money trading for whatever it is and and
[25:51] you're like because there's plenty of people out there that that need to buy that for all the other stuff that they sell exactly do you think think that you can scale it beyond the s or is it just really you know an SPX S&P 500 product
[26:08] uh structure yeah I think it goes into every product that is cat selled so you could do it in Gold you could do in crude you could do in ZN you could do in well those are not I mean they're not really cash settled yeah they're they're
[26:21] they're that the problem in the commodity world is you that nothing is Cash settled unless it's unless it's the quarterly expiration you know like like their expirations all settle into Futures you know which is that is the
[26:34] advantage that that's been able to give all that business into the SPX is the fact that that really is the only cash I mean there's other you know like there's need exactly and just the way the structure is with skew and the SPX and
[26:50] how big it is I just don't really think you'd want to go away from it no yet no no it's crazy and um you know 20 years ago you couldn't do this correct it
[27:02] didn't exist yeah yeah do you ever lift a leg um meaning do you do you ever um when you have multiple verticals out and
[27:14] you are you know the reason I'm assuming that you have the put and the call side on is because there's no additional Capital required to have the other side on so you want the additional credits but are
[27:29] you ever lifting individual legs at all or is it almost always what goes on as a spread comes off as a spread oh which is very tasy is but yeah so all inner trade as a condor but I'm only managing the short leg if I get threatened on one
[27:44] leg itself keeping the long leg in place correct yeah you don't care how wide the spreads are nope that's a very fun conversation
[27:56] because you know what we don't have a lot of people um that talk about trading the way you do and that can articulate you know like the zero space I mean
[28:09] listen in a year if you're making 100 to 200 trades a day and you have 250 days and I'm assuming you work every day uh I take that days off but that's it you
[28:21] take what FC days off but that's you take fed days off yeah why uh it's it's Discovery I would kind of lend it to trying to trade between 930 and 931 it
[28:37] just hasn't really settled on what occurred is um and you know slippage tends to be a little higher on those I I've looked at it in general and there's not really there's a negative expected return on it so I would say some credit
[28:50] is that so you make between 25 and 50,000 trades a year yeah yeah and and that's like let's say it's in between let's say it's 30 35,000 you
[29:03] you know that for most people that is like 10 lifetimes over so one of the reasons that you've gotten that you that you've been able to achieve what you've essentially shortened 25 35 50 years of trading into into two years 18 to 24
[29:20] months there's a lot of feed back in that uh time period Wonder traits going exactly it's really that that whole um just how fast the learning curve
[29:32] decisionmaking now is probably like ridiculous I'm guessing in everything yeah and the thing with that too is I come back to the conviction of it which
[29:44] is your decision- making and your confident based on your learnings and well now you own every single decision there's not there's nobody else involved market wins but it's still your decision what a fascinating discussion Mark I
[30:01] love this this was um gave us a chance to talk about something different and um that was really fun I think tasty nation is going to be uh is really going to enjoy this thanks so much for coming to Chicago and thanks so much for telling
[30:16] your story it's awesome keep it going all right thanks Tom