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Trade Sphere strategy

Overview

The Trade Sphere Strategy is a simple, yet powerful approach that seeks to capture explosive profits based on weekly options expirations on high volume, high beta stock and Index options with anywhere 0-5 days until expiration.  While to scope of the strategy focuses on catching outsized moves in the options on a stock or ETF, risk is controlled with nominal position sizing and fractional hedging ideas.   

Features

  • Signals delivered via auto trade available through Global Auto Trading

  • No subscription required.  Fees based on value provided and our Dynamic Value Fee

  • Opportunity to profit regardless of market direction

  • Clients can scale account based on goals and profitability 

What is Trades

  • Zero Days til Expiration (0DTE) trades on Index ETF Options (SPY, QQQ, IWM)

  • 1-2 Days til Expiration on Stocks with High Options Volume

  • Momentum Trades on Stocks with High Volume Options (Far OTM strikes)

  • Earnings Trades on Stocks with High Volume Options

  • Hedging of directional trades when moderate or greater imbalance in directional bias exits

  • Macro Themed Trades around major eco events 

How It Works
 

  1.  Submit New Client Agreement Form (here)

  2.  We review the request and reach out to client once review is complete

  3.  Client configures auto trade at Global Auto Trade  

  4.  Client monitors performance and risk based on their goals and objectives

  5.  Requires 'Cash' brokerage account (not margin) to avoid PDT rules 

Trade Size and Allocations

Each trade we issue, based on contract size and auto trade, will generally be $500 or less of risk per trade.  This is defined as a 'unit'.  Clients should keep in mind that with this strategy that trades are taken understanding that some positions, even consecutive ones, may expire worthless.  However, the scope of the strategy looks to produce a portion of outsized wins for overall profitability each week.

When a trade is issued, we specify the number of contracts for each trade 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 has specified this: , 2x, 3x etc. if trading with higher scale, more on this below. 

Based on how we position overall it is optimal that clients are able to trade with at least the minimum size (1 unit/$500 per trade) that we issue.  This is not a recommendation for how much a client should risk per trade and each client must determine for themselves if this is suitable. 

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

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.  Below is a scaling example based on total, net profit levels. 

Based on how positions are normally taken, and accounting for hedging, the max risk per week is generally $2,000 to $4,000, or 20-40% of a $10,000 Risk Budget at any given time.

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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