DO YOU ABANDON YOUR PLANS WHEN THINGS GET TOUGH?

Market / Macro Context & Observations (Price Action Framework)

• The host discusses an intraday down move and describes current conditions as an “inside day” so far.
  • Market performance at the time: down ~0.38%
• The day’s trading structure is framed relative to:
  • 15-minute range
  • Cash open
  • VWAP
  • Hourly mid band
  • Overnight high/low (with the overnight low described as “way down here”)

Expected Move (Options-Implied)

• The host references the SPX expected move.
• They note price breached the expected move and is trading below it, implying an elevated likelihood of moving outside typical bounds.

“Fair Value” / Positioning (Volume Profile)

• Uses volume-profile language, including point of control.
• Claims price is “fairly priced” on the e-minis and cautions against assuming markets are automatically oversold/overbought.
• Expects the “50 line” (likely a value-area / indicator line) to be touched while the market remains in the current down mode.

Trend / Technical Read

• Notes price bounced off the 200-day moving average.
• Interprets the larger backdrop as a continuation of a bear market, with:
  • Prior up move showing flat to negative volume (exhaustion / divergence)
  • Current down move showing increased volume (bear continuation signal)

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Strategy: “1-1-1” Options on Futures (“Whale” Naming)

• The group teaches/uses a futures options spread framework referred to as:
  • “1-1-1” (also called “the whale” / “whale baby” in chat)
• Mentions comparisons to other named strategies (e.g., “jade lizard”), but emphasizes that the core is the 1-1-1 / 1-1-2 variation.

Core Operational Rules (Risk/Position Limits)

• Strong emphasis on not violating risk or position limits, including:
  • Delta
  • Theta
  • Buying power
• If any of these become too high (e.g., deltas too big, theta too big, or buying power too high):
  • Do not initiate new trades (“don’t trade dummy”)
• If already too long / buying power is tight:
  • May close partially to reduce risk

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Position / Risk Checks (Stated Examples)

• Example metrics shown in one account/segment include:
  • Delta: ~49.09
  • “Fader”: 64.25
  • Theta: later around 113.28 (with a target range discussed)
  • Buying power usage:
    • Max stated: “maximum buyer power of 35”
    • One reading shown: 21.739 (described as under allocated)
• Theta guidance (explicit range in the subtitles, though transcript is garbled):
  • Wants theta roughly between 1.1 and 0.5

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Concrete Trade Execution (Numbers & Timelines)

Managing an Existing Setup (Risk-Driven Exit)

• The host evaluates an existing 112 setup and chooses to manage risk rather than hold through the day.
• Closing decisions are driven by:
  • Buying power
  • Being “too long”
• Expiration behavior and payoff framing is discussed, including:
  • An option-related “current price” cited as 4136.75
  • A payoff example at expiration: +3.43
• The transcript also references down percentages (e.g., -5%, -12%) and dollar impacts (e.g., -189, -1000), though exact mapping is unclear due to subtitle garbling.

IRA Account Example

• They demonstrate that similar logic can be run in an IRA.
• Example dynamic shown:
  • When the market goes down, deltas get more positive.

Tranche Building / Scaling In

• The position is built using multiple tranches:
  • They mention a “standard tranche is two,” but on a down day they do three
• Construction details:
  • Enter a long put vertical (futures options spread) with a stated width of 50 wide
  • Mentions selecting strikes using ~$10 increments (subtitle errors obscure exact strike text, but strikes repeatedly shift downward)
• Target pricing / expiries:
  • They aim to collect around 20 (economic meaning is garbled in subtitles, but context suggests credit/debit target for the spread)
  • An example order shows year 2025 (contract month unclear due to subtitle errors)

Order Style / Execution

• Uses limit orders and attempts cancel/replace when not filled quickly.
• If not filling promptly, they decide to be less aggressive (“make it less advantageous”).

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Performance Metrics & Account P&L Reporting

Daily Tracking

• “Net licks” / daily tracking shows a value formatted as 26 105.02 (garbled; likely a dollar metric).

Trade Outcome Example

• Trade-level outcome is mentioned after commissions:
  • $29.49

Multi-Day / YTD Claims

• Claims two days in a row 29.49
• Mentions ~six thousand dollars year-to-date profit (after commissions), stated as “actual profit… after commission”.
• A portfolio/year metric is cited as $6,000 (period described as year-to-date).

Clarification on Earlier Drawdown

• They state they are not down $7,000 on the currently-followed approach.
• They clarify the earlier loss referenced in subtitles came from an earlier phase / other plan (names in subtitles appear garbled, e.g., “nacho” / “hedge fund these excellent adventure”).

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Risk Management Philosophy (Explicit Recommendations)

• Emphasizes process and mindset:
  • “Develop your plan, trust your plan, work your plan, and have tenacity.”
  • Perseverance over panic during drawdowns
• Avoid “shiny object” behavior:
  • Don’t abandon a working strategy just because conditions worsen—avoid chasing something new.
• Catastrophic risk minimization:
  • “We can’t hedge all the risk.”
  • Position sizing is tied to delta/theta/buying power constraints.
• Includes a strong cautionary line:
  • If you can’t sleep at night, you’re doing it wrong (paraphrased from tone/intent in subtitles).

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Disclosures / Disclaimers

• No explicit “financial advice” disclaimer appears in the provided subtitles excerpt.
• They do frame the strategy with account/strategy constraints and emphasize probabilistic expectancy over gambling.

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Instruments / Assets / Tickers Mentioned

• SPX (S&P 500 Index)
  • Referenced for expected move and positioning/volume context
• E-minis
  • Mentioned in relation to “fair value”
• 1-1-1 / 1-1-2
  • Strategy framework (not tickers)
• Futures option spreads
  • Used as the core instrument type in the method
• Treasury bills / bonds
  • Mentioned as a future/next segment concept (no specific ticker shown)
• Movie titles (not financial instruments):
  • “Inside the Edge”
  • “Two for the Money”

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Methodology / Framework Steps (Best-Effort from Subtitles)

1) Market Positioning Assessment

• Check for inside day vs range structure
• Compare price vs options-implied expected move
• Use volume profile concepts:
  • point of control
  • “fair value”
• Note technical references:
  • bounce off the 200-day moving average
• Look for exhaustion/divergence:
  • Prior up move: flat to negative volume
  • Down move: confirm with increased volume

2) Trade / No-Trade Decision (Risk Gating)

• Monitor:
  • Delta within target bands
  • Theta not “too big”
  • Buying power usage not above ~35
• If limits are violated:
  • Do not open new trades
  • Optionally close/trim to reduce buying power/exposure

3) Options Spread Construction

• Enter a long put vertical with a chosen spread width (example: 50 wide)
• Scale using tranches (example: three on a down day)
• Use limit orders + cancel/replace
• If fills lag:
  • become less aggressive on pricing

4) Discipline

• Avoid “panic” exits
• Avoid switching to “shiny objects”

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Presenters / Sources Mentioned

• Bobby (host/lead)
• Ed (presenter; mentions homework/film viewing)
• Beth (mentioned participant/off-screen)
• Clinton (intern at tastytrade, described as university of Alabama)
• Quentin (transcript mixes names; described as the intern/student)
• Dr. Jim (referenced via Twitter post about tracking weight trends vs daily numbers)
• Tom King (mentioned regarding naming “whale” types)
• tastytrade / tastyworks
  • Mentioned as platform/software source
• CME
  • Mentioned as requiring separate work for custom futures option spreads