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Week of February 5, 2024 - Weekly Performance by Strategy




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Notes

  1. All results above are based on 1 unit position sizes. Each strategy page specifies what constitutes 1 unit.

  2. Clients trading more than 1 unit of risk per trade (2x, 3x, etc.) realized the performance published above correspondingly to that amplified magnitude.


Summary

Quiet week economically but the market continued its charge higher. For the most part, significant earnings have come on gone with only a few key names (for our purposes) yet to report. This coming week we have SHOP and AMAT, NVDA next week and SNOW the last week of February. With all of those except SHOP having significant relevance to the AI/Chip theme driving the market right now, we may look to have exposure - either directly or indirectly.


Any direct earning's plays going forward will be in the Trade Sphere Strategy, but with these unless our data indicates they can return >3:1 reward-to-risk they are generally not worth the exposure. This, along with the risk we would take being highly dependent on 'working with profits' that have already been captured in the strategy. Since we just started Auto Trading the Trade Sphere Strategy I would expect any earnings plays will not be taken until next cycle.


Options Grid Just in a modest drawdown here, as indicated by the performance. No excuses, no sugar coating it.


Of the last 5 trades, 2 have been modest sized losses (one this past week), 1 very small win to start the year and 2 basically breakeven trades (actually losses but less than $100 each).


With this, we are still encouraged by what is to come, because even though drawdowns suck, they are part of the game and the one we are in is well within the confines of any reasonable risk parameters relative to the potential upside of the strategy - both historically and what we expect going forward.


I expect we will see some of the next several trades have more of a clear directional skew, likely to the upside, as baring any major bearish news the market seems inclined to be in 'melt up' mode. We are not one to fight the trend.


Trade Sphere We didn't get into any trades until the end of the week and we have some modest bullish exposure on the Russell (IWM) for Monday's expiration. I expect the coming week will give us some signals with potentially large upside and I would not be surprised in the least for us to see 8-10 signals total (counting hedges), maybe even more. 0DTE signals possible as well, as there appears to be some mispricing in these options that could bode well in our favor.


Per the sample scaling schedule for this strategy we are shooting to have the clients that are currently auto trading at 1x to be in the position to scale to 2x within the next 90-120 days.


10x Project Small gain this past week, but nothing worth writing home about. Same as TS, I expect more signals this week and as of now gun to my head I would say they will be more bullish in nature. A little slower start here than we wanted this year, but clients are still up about 10% so far on the year on the standard 25k Risk Budget.


While last year did not take off like a rocket, we are expecting to produce enough value that clients that a currently onboard at 1x scale to be at 5x scale or greater before the end of the year, per the sample scaling schedule and how the strategy is designed.


Futures Flex No exposure, no trades.

Looking Ahead

CPI, PPI, Retail Sales this week. That's the narrative. While it seems clearly evident that there will be no rate cut at the March FOMC meeting, the market is looking for signs for what could be possible for the late May/June 1 announcement.


Whether around key events, or just the market in price discovery mode as it appears to be now, for our purposes, about 50-60% of the weeks of a given trading year will prove to be fairly insignificant in terms of the PnL our strategies capture. 10-15% of the weeks will be an outright gut punch for taking L's (but still well within the confines of defined and historical risk parameters). Then 20-25% of the weeks we have trades on will make the majority of the profits for the year. That's the way things work and we have this out there to manage expectations.


With that, we are pretty much due for a big week all the way around and while we don't get to pick when they happen, statistically speaking I expect at least one in the next 2-4 weeks for each of the strategies. We follow the process in the meantime.


Here's to a good week ahead!










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