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options grid strategy

Overview

The Options Grid Strategy is designed for active options traders who looking to trade high volume, liquid options on indexes and momentum stocks with a hedged approach based on relative value. Dependent on market, and individual ticker conditions, positions taken can either be 'pair' trades, delta skew trades, or delta neutral trades, all of which offer unlimited upside, yet with limited risk in any market conditions.  Benefit from modest and strong directional moves, even while being directionally agnostic.  

Features
 

  • Signals delivered via auto trade available through Global Auto Trading

  • Typical hold time 1-4 days

  • No set or subscription fees.  Fees variable based on value provided and invoiced to client

  • Opportunity to profit regardless of market direction.  

  • Designed for clients to scale account with captured profits

What it Trades

  • Straddles and Strangles on Index ETF and Stock Options (2-3 day hold time typical)

  • Overnight delta-neutral and delta-skew trades on Index ETFs 

  • 'Pair' Trades on Index ETF and Stock Options (2-5 day hold time.  Ex: SPY calls and QQQ Puts at the same time)

  • Marco themed trades when warranted 

How It Works

  1.  Submit New Client Agreement Form (here)

  2.  Determine Risk Budget (see below)

  3.  Set up auto trading through Global Auto Trading

  4.  Periodically review performance and make adjustments as needed

  5.  When applicable pay any invoiced fees 

Trade Size & Allocations

Each trade we issue will generally require $500 to $1000 of capital per leg with multiple legs possible. 

When a trade is issued, we specify the number of contracts for each trade (leg) and this is communicated to auto trade and that number of contracts is executed in the client account.  Or a multiple of that if the client is trading at higher scale.  Example: 2x, 3x etc. More on this below. 

This is vital considering that when multiple legs are taken the size of each position and how they work together is important. 

Any deviation from this LOWER in scale will result in adverse results in performance, as the contract size used per trade leg is vital due to incremental exits on positions and the hedging/skew aspects of most trades.  Bottom line is results may suffer initially and likely over time if a client does not trade at least 1x scale (mirror our baseline sizing). 

Each client should inform us if they either initially start trading larger size than 1x (what we publish), or when they decide to scale up sizing over time. This is vital to ensure proper liquidity management of each trade and the strategy as a whole.   

Risk Budgets & Scaling

The Options Grid Model Portfolio has a notional value of $50,000.  This amount is NOT required to participate in the strategy.

 

Each client should consider defining a Risk Budget prior to trading.  This is simply the amount of total capital they are willing to risk in order to achieve their individual goals.  Basically this is the maximum drawdown a client is willing to take as well as the initial amount they may consider funding their brokerage account with

Below are several examples of starting risk budgets that clients commonly use.

Standard Risk Budgets:    $10,000 to 20,000

Minimum Risk Budget: $5,000 

This is for illustrative purposes only and not a recommendation or advice, but may be suitable to participate in the strategy considering the position sizes taken.  

With risk and all factors combined in the strategy design, this strategy is designed for clients to scale and add an additional unit of risk/increase position sizing with every $10,000 to $20,000 in net profits after fees.

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