How to get the most value out of Quant Yeti ?

 

Options can be intimidating at first, but once mastered, they are far superior to trading equities, ETFs or futures. Trading options is not easy and it requires some experience, so if you are brand new to options, then Quant Yeti is not for you. 

To manage risk properly it is not wise to be long options outright (naked) over extended periods of time. We close most of our trades within a day or two, but sometimes we will turn them into vertical call spreads (or vertical put spreads).

It is important that you understand what a vertical spread is and how it works. It also requires a specific setting with your broker before they allow you to short options. If you do not have the ability to short options in your account, then Quant Yeti is not for you.

We do a lot of things differently, so expect to be surprised. Mark Cuban once said: "diversification is for idiots", and Quant Yeti agrees with that. If we understand what we are doing, then there is no upside in adding dozens of positions to our portfolio. The more positions we hold, the more likely it is that our returns become more "average"... by definition. How many "best ideas" can we possibly have? There must be one or two ideas that are simply better than the rest, no?

Instead of spreading ourselves too thin, we do our homework first and formulate a fundamental thesis about a certain industry, asset class or stock. Then we cross-validate the thesis with price action. If price behaves as the thesis would suggest, we have a winner. Now we just need to pick our entries wisely and here we do the exact opposite of what a regular chartist does. We go long at price levels the majority of traders would use to place their stops.

Have you ever been stopped out, just before price reverses and the stock moves in the direction you thought it would, but now without you? These things don't happen because of bad luck. They happen by design. The big boys understand how we little guys think and they use the liquidity "our stops" provide to open their positions. In short, they take advantage of our fears and buy when we freak out.

Since we have a fundamental thesis to back up our investment decisions, it becomes a lot easier for us to buy weakness or sell strength. Our approach is quite active, but by the end of the day, we have at least 50% of the account in cash, so we can deploy that capital if an opportunity presents itself the following day. This is a very important part of our strategy, because it adds flexibility and is essential to managing risk properly.

We also believe trading should be fun and we will place aggressive bets (small size) here and there. Sometimes on earnings, sometimes into OPEX (option expiration), but we are never reckless. Risk management is our top priority.

This does not mean that we don't makes mistakes. We do. We have losing days, probably losing weeks, but every order we place, has been evaluated in advance and we only take a shot when the potential reward justifies the risk.

To get the most value out of Quant Yeti, it makes sense to simply copy all trades. The problem with picking and choosing which trades to enter is, we open the door to chance. If we miss a winner, but then opt-in for the next trade which, as Murphy's law has it, is a loser, our confidence is shaken. If that loss scares us enough, we probably skip the following trade which, of course, is another winner. Then we decide to increase position size for the next trade to make up for the missed profits. Unfortunately, the one trade we choose to be aggressive on, is a particularly large loser... and the downward spiral begins. Add some "revenge trading" to the mix and all of a sudden we see ourselves betting the entire account on a trade that is just too risky, because we are angry at the world and desperately want to get back to even.

The problem with luck is, bad things (=bad luck) will happen. It is just a matter of time. So if we pick and choose which trades to enter, we introduce chance to our performance and, most importantly, to our emotional state. We must avoid going on tilt because this is what causes people to blow up their accounts. That is why it is wise to follow all trades (or none) and avoid picking and choosing.

We don't want to sugar coat anything. Quant Yeti will make mistakes and lose money at times, so please don't expect to be profitable every day, but we believe in 100% transparency and that is why the entire order history of the account and performance charts are posted to the site and are updated at least twice a week. 

As of May 22, 2020, the account shows a profit = +762.50%. 

Every time Quant Yeti makes a move in the account, members are notified via text message which option we are buying/selling (ticker, quantity, expiration, strike... and price we are willing to pay). Most of the time we outline a trading strategy in advance and telegraph ahead of time which option we want to buy at what price. There are scenarios though when Quant Yeti places an order first and then sends out the text message immediately thereafter.

Monthly Membership (30-day free trial)

If you decide to sign up for the Monthly Membership, you will not be charged for 30 days, so your first month is free. Quant Yeti will send you text messages when we make a move in the options account. If you find this service helpful and don't cancel within the first 30 days, it will turn in a paid subscription ($149/month) at the beginning of the second month. Cancel anytime.

Learn more