Road Trip Trade Rate of Return

JasonT

New member
I was looking over the returns of the RTT since inception back in 2016 and the Yield on Capital and Yield on Margin returns (3-5% avg / 1.5-2.5% per month) are phenomenal while the Yield on Account isn't (4-5% / year). I understand it's because each trade is only a small percentage of the overall account so each one is a small contribution to the total. Is there a smart way to get the kinds of returns on the overall account to be more like the Yield on Capital return or is it deemed too risky to have say 2 trades on with 50% of your capital in each one?

I love the setup and it's proven that each trade can generate a great return that beats the market but when it's spread so thin it makes the overall account lag the market. Seems like it would be easier to just go the Warren Buffet route and buy the S&P and kick back rather than spend so much time working the trades. Any thoughts on how to get the overall account yearly return up to 20-25% that this trade is capable of? This is not a criticism by the way, the trade is genius and obviously works. Just trying to figure out the smartest way to deploy my capital that will beat the market enough to make the investment of time and anxiety worth the while.
 

DGH

Member
Staff member
Hi Jason. Yes, it is certainly possible to achieve higher yields. I'm sure you understand that the "Class" positions are structured from an educational/didactic point of view. We are attempting to teach a methodology which will ensure, as much as possible, consistent returns over a long period of time. In this way, a positive expected return can be achieved by traders with modest account size and shorter time horizons (unlike the Warren Buffet style). To generate larger returns a trader might choose to invest more capital in fewer trades (as you suggested) and continue to "add premium" to each cycle, along with judicious use of risk reversal hedges as time passes and the market moves. This approach should generate a risk graph with broad profit potential and higher returns while still leaning slightly bearish and permitting high yields when the market moves towards the tent. Obviously such a strategy would incur more risk and would be more labor-intensive.
 

JasonT

New member
Thanks Dan, I appreciate your insight. So would you say shooting for 20% / year is a realistic goal? After putting in the work to understand the trade of course, I know I can't start there but just would like to know what to aim for.
 

DGH

Member
Staff member
Hi Jason. Yes, I think 20% is feasible, but will require a bit more trading (adding premium and hedging) as well as some changes to allocation of trade capital. As you know, part of the original RTT concept is the "time diversification" enabled by more frequent trade launches with smaller capital size. Again, we established the Service with the goal of teaching retail traders with relatively modest accounts. I wish you all the best.
 

status1

Member
I had the same concern when I first started with RTT back in 2016
While the strategy looked relatively safe it takes too long (for me anyway) to make a decent profit and you may have to adjust it so that may loose some additional profit due to comission and slippage since you have to RH So I started adjusting it and trying different strategies I tried doing the RH at the beginning of the trade which gives me more credit but that was too risky so I moved the PCS further out but of course that reduces the profit so I reduced the time to less than 30 days and with SPX it works very well as there are 3 expirations every week to choose from I even tried it without the debit spread and it works very well in this bull market Now that the SPX is at new highs I have to be more cautions so I am trying to put back the debit spread just a small one to have a little early warning

The return on margin of 3-5% is fine with me So I am doing 4% on margin per trade but because I am doing it on less than 30 days I can get 2 trades in one month so that's about 6-7% per month Ideally if I could get 2% per week that would be 100 on margin per year I had a couple of trades that did that but you can't expect the market to move at that clip forever but it can certainly do that after a pull back but a little over 3% in 10-14 days is not too bad

The only question is how much to risk per trade I am risking about 50-60% per trade which sounds like a lot but with the trade being outside the 1SD and in a bull market I feel it's relatively safe and so far this year starting after the drop early this year I have 100% win rate on a monthly basis
I had one trade in April that was kind of a BWB that was still inside the 1SD That I had a temporary loss of 16% but I was able to roll it out twice in the same month and by the end of the month the the market recovered and the trade was positive for the month
If I had placed just a credit spread I would have placed it further OTM and probably would have been fine
Also being that far OTM there is virtually no adjustments unless the market is tanking The only thing to be aware of is when the market is at all time high with low vol that's why I am hesitant to place those kind of trades so I haven't placed any trades so far in September but the yield on capital looks on track to make 20% this year which is huge for me
This is the most amount of money I made with options so far if I don't jinx myself now and give it all back
 

JackW

New member
So I started adjusting it and trying different strategies I tried doing the RH at the beginning of the trade which gives me more credit but that was too risky so I moved the PCS further out but of course that reduces the profit so I reduced the time to less than 30 days and with SPX it works very well as there are 3 expirations every week to choose from I even tried it without the debit spread and it works very well in this bull market
Hi Status1,
Not sure if you are doing RTT style trade (BWB) with 30 days duration or only PCS in 30 days or a combination of both. Can you elaborate?
 

status1

Member
It was a gradual process
I was already doing unbalanced condor type trades last year with 60 DTE that had mixed results but I came across the Bull trade from John Locke and try to implement that into my trade
So I would do something like 1by6 condor where I buy 1 spread and sell 6 at 10 DTE than later on after a few trades as the vol picked up I would drop the debit spread and just have a simple credit spread
I also figured that since the time decay accelerates in the last 2 weeks it might be better to place my trades in that time frame
So I tried the Bull trade with 2 weeks and worked for a while when the iv was high but I did not want to get any closer than 1SD and I actually settled on about 1.25SD which worked quite well until recently when the SPX got closer to the high and vol went down
Than I stretched the DTE to 3 weeks to get a little more premium I try to get at least 1$ premium on a 25 wide so that's where the 4% per margin comes from

I switched to RUT for a couple of trades until that dried up also
Than I tried the NDX which looked like I could get a good premium far OTM but in reality you can't really get filled at those prices because the bid/ ask prices are so wide unless the market goes against you than the prices get quickly inflated and it would be just as hard to get out but I managed to do a few trades in NDX until that also hit a new high

So now I am back to SPX and trying a new strategy while waiting for the volatility to pick up
It's a twin peak butterfly kind of trade I made it with a wide bearish fly and added a put credit spread in the middle so it looks like 2 butterflies next to each other so I should make some money on the downside if it moves that way in the first week or two or I could wait for 1 month if it stays here otherwise I would have to adjust it if it tries to go up too far
This one is for Nov 9 so it has plenty of time to decide which way it wants to go
 
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