Strategies for Trading at All-Time Highs and Managing Profit in a Stagnant Market
• Discussion on trading challenges at all-time highs, with a focus on how to handle stagnation and potential pullbacks.
• Introduction to the “big ass fly” strategy for taking advantage of accelerated premium decay, especially in low VIX environments.
• Exploration of the “gap and trap” concept, with a critical view on the validity of pattern names in trading.
• Practical advice on staging exit trades and managing profit-taking efficiently in rapidly changing market conditions.
• Encouragement to utilize the analyze tab in Thinkorswim to better understand trade positions, with a focus on reducing anxiety through thorough analysis.
• Casual conversation about personal hobbies and investments, reflecting on the importance of balancing work and personal life, including a discussion on the benefits of having a hobby like pool or car collecting.
Summary
the group focused on the complexities of trading at all-time market highs, particularly when the market shows little movement, making it difficult to gauge the direction. Ernie introduced the “big ass fly” strategy as a powerful tool for capitalizing on premium decay, particularly when the VIX is low. This strategy was highlighted as particularly effective on days when economic reports influence market behavior, creating an environment ripe for premium decay.
Ernie critiqued the use of pattern names like “gap and trap,” explaining that while they are often used to justify trading decisions, they lack the empirical backing necessary to be reliable. The discussion then moved to practical trading advice, including the importance of staging exit trades in Thinkorswim and using the analyze tab to manage trades effectively. Ernie encouraged participants to reduce their anxiety by thoroughly analyzing their positions and making informed decisions based on that analysis.
The meeting concluded with a more casual conversation, where participants shared their personal hobbies and investments, emphasizing the importance of having a balanced life outside of trading. Ernie also shared his plans for a new business venture, highlighting the value of pursuing passions alongside professional responsibilities.