Gamma Nova Strategy
Overview
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The Gamma Nova Strategy is focused on stocks with highly liquid options and trading momentum-based moves, for potentially explosive profits on a risk-adjusted basis. Trades consist of front-week expiration options.
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The strategy considers the 'Whole Account' concept in trade sizing, risk/position management, and notional hedging elements.
Features
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Signals delivered via auto trade available through Global Auto Trading
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No set or subscription fees. Fees variable based on value provided and invoiced to client
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Opportunity to profit regardless of market direction
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Designed for clients to incrementally scale trade sizing with account growth
What it Trades
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Directional/momentum option trades on highly liquid, high beta stocks for front-week expiration.
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When issued, trades have anywhere from one to three days before expiration.
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Intra-week hedging with daily expiration Index options, or ITM or OTM stock option hedges (Delta-Skew) against core directional trades.
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Macro, Momentum and news-based option trades, on both Index (QQQ/SPY) and Stock Options, with one to several days before expiration.
How It Works
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Submit New Client Agreement Form here
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Determine Risk Budget (see below)
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Periodically review performance and make trade size/scaling adjustments as needed
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When applicable pay any invoiced fees
Trade Size & Allocations
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The strategy is designed for clients that are willing to start with up to $1,000 of risk per trade, with some trades risking as low as $250 per trade, all at 1x scale. This variance is based on several factors to include total positions open, the individual trade signal's strength and liquidity for a ticker's options.
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Regardless, clients should be aware that every trade that is taken that some positions can and will expire worthless (-100%). There are no stops used and since generally front-week options are traded the premium spent is the stop. This does not mean if sentiment changes or the signal fails initially that the position will not be closed for less than a total loss. Conversely, all Core Trades taken are taken with the expectation that they can do at least 100% return, often more in some cases.
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We specify the number of contracts when we send the signals for auto trade at 1x scale. The strategy is designed for clients to 'mirror' this sizing in order to properly execute the strategy. This is a crucial aspect and that a client is comfortable with this sizing at the minimum (1x scale) to start, as this maintains the integrity of combined trade and risk structures and ratios. However. this a not a recommendation for how to size, as each client must determine their own risk.
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This is a feature of auto trading that allows a new client to onboard at anytime, start at 1x the size we are trading per trade, and then scale as their account grows, still mirroring the trade structures and ratios with hedges. Clients who wish to may also start at a higher scale than 1x if they choose to do so.
Risk Budgets & Scaling
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While each client must determine their own risk, in order to properly participate in the strategy a $25,000 Risk Budget is generally the optimal minimum starting RB or account size needed to allow the strategy to properly execute at 1x scale.
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This is not an individual recommendation or advice for how much to risk, merely how the strategy was designed and clients must determine if this is suitable for them. In many instances, the amount of that a client establishes as their Risk Budget, if at the amount mentioned above, will be suitable to fund an account with and execute the strategy to start with at 1x scale.
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Since we usually have some form of 'hedges' on the directional positions, the AVERAGE weekly risk (capital outlay) between $2,500 to $5,000 per week total at 1x scale. However, the maximum capital outlay (premiums purchased) may be as high as $7,000 to $10,000 per 1x of Scale if there are recent captured profits to support the additional risk.
The primary risk exists in range bound markets with premium decay against both sides (Core and Hedges). In short, the weekly risk is overall defined by total capital outlay (long premiums).
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At increased scaling levels these amounts are the multiple of that increased scaling level for the dollar amounts with the percentage of the client's current Risk Budget remaining the same.
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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 by 1x with every $25,000 in net profits after fees, or each time they capture net profits equal to their initial Risk Budget.
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An example of this would be:
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Client starts with a $25,000 Risk Budget (1x Scale), average position size of $1,000 or less
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Client captures $25,000 in net gains, scales to 2x, now has a $50,000 total Risk Budget, average position size of $2,000 or less
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Client captures another $25,000 in net gains, scales to 3x, now has a $75,000 total Risk Budget, average position size of $3,000 or less
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Etc....
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