Welcome
Welcome to the Apex Predator Algorithmic Option Trading website! That’s a mouthful, so let me explain what this website is all about, why I started it, and why the name. In reverse order: the name Apex Predator came to me on a day of superb trading, when I felt especially on top of my game, when I felt the benefits of the model particularly keenly. I was looking for / waiting for setups amongst the stable of stocks I monitor continuously and that I’ve come to know well. I also knew exactly at what prospective return level to pounce and how best to structure the trade. I knew that when those conditions were achieved, my odds of a successful trade went way up. No guarantee of a successful trade, of course; but way better odds. I felt like a grizzly prowling the woods looking for lunch. A polar bear on the ice searching for seals. An Apex Predator. This wasn’t arrogance, it was confidence – born of knowledge and experience. Apex Predator seemed like an ideal name for a service and a website, and exactly the right attitude with which to take on the market. It certainly has become my attitude every week day at 9:30AM EST, when the market opens. Check out Why Apex Predator? for some evidence.
I started this website because I felt I had some valuable expertise and experience garnered over a long career, and that I’d developed something of value that would be of interest to others. Value that’s of interest to others should be monetized. It’s the American way. In my youth, I was asked by my employer to start up a quant group, and to evaluate the company’s exposure to derivatives and run the derivatives group. A year or so later, I was asked to start both a risk management and a compliance group. For 15 years I was Chief Risk Officer and Chief Compliance Officer of this major insurance company’s $100 billion investment portfolio. I have either been a modeler or led a modeling group in the institutional investment arena for over 20 years. Modeling investments is my life’s work; it seems clearly, as I look back on it all, what I was born to do. I like to think I’ve developed a certain intuition for what works and what makes sense. More recently, in fourteen years of retirement, I’ve developed trading expertise (during my working career, I invested but did not trade). This trading expertise, coupled with my modeling background (finance theory from my Berkeley MBA + math from my Brown engineering degrees + coding learned on my own), is a powerful combination – one I rarely saw during my career. Back then, you were either a trader/portfolio manager or you were a modeler/coder. Combining these skill sets lets me translate what I experience and learn during trading into the model; the model, in turn, informs how I trade and makes me a better trader.
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What’s on Offer
The value proposition offered in this website is as follows:
Basic Free Membership
As a public service, and as a way of demonstrating a portion of what’s on offer – to entice you to become a Premium or Apex Predator member, I offer a writeup of my thoughts on option basics (including accounting treatment), option trading (covered writing, specifically), and the modeling of option trading. I intend it to be a practical rather than theoretical treatment. A road map to making money. I’m only interested in what works. I wish I’d had this free section of the website available to me 13 years ago when I retired. It would have saved me a steep learning curve.
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Premium Membership
The Premium membership makes available the output of the model: the optimal parameters for trading. By modeling the option trading process, I’m able to go back in time (currently 16.5 years’ worth of daily trading through two nasty drawdowns) on a stable of 40 well selected stocks, and test how best to trade: when to sell an option, when to buy it back, when to let it expire, and how to optimally structure the trades. Further, with this membership I’ll disclose the stable of stocks on which I write options. I will update the stable as I discover new juice, though for the most part this is a sticky group of stocks – I don’t often hunt for new juice. Lastly, a Premium membership provides access to a decent chunk of the code I’ve written to do all this. Fair warning: I will not be making available the code for the key function that does the option selling and buy backs, nor the main routine that calls the various functions. That would be giving away the store. But the code for the other functions will be disclosed (with explanatory commentary). If you’re someone who wants to learn how to model a serious investment process, and you like getting under the hood of the car, you should find this membership appealing. It will certainly help if you know how to code, but I do provide some instruction in the essentials of the C language. I anticipate updating and releasing one or two chapters a month until I get through them all (except for the BuySell function and the Main routine). These chapters have all been written, but for an earlier version of the model. I need to update the text to cover all the improvements I’ve made this year.
The free part of the website and the first two items in the Premium membership should provide you all you need to be able to successfully trade options. It distills all my learnings on this topic. It’s worth noting, that unless you have $500K to $1MM to deploy to this strategy, you will likely not be able to replicate my trading results. The reason is that each option contract is for 100 shares. This means that selling 1 contract on some of the juiciest stocks in the stable requires $50K to $70K to secure the trade (in the case of puts) or purchase the underlying (in the case of calls). To obtain reasonable diversification, you’ll want to have at least 10, and better, 20 times these amounts to deploy. And of course, it’s best if you’re doing this in an IRA, or the short term gains tax will kill your return.
The third item in this membership, the code, is more for model geeks like myself – but also serves to demonstrate that there’s real content on offer here. As the model (and my trading) continues to evolve and improve, there will be periodic updates to the optimal parameters and to the stable. For example, if I code and test a new indicator and it performs better than the current one, or I develop a market regime detecting capability that allows me to better fit the governing trading parameters, I’ll update these sections of the code and repost updated optimal parameters. I can make no promises on improvements, but it’s hard for me to believe there won’t be some.
The Premium Membership is offered for $100 annually.
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Apex Predator Membership
The Apex Predator membership will provide trade alerts. Now, let me be clear: I’m not providing investment advice. That’s a no-no. I’m not licensed or certified to do that. I’m simply allowing you to look over my shoulder as I trade, for a small fee. You need to use your judgement in your trading. These alerts will initially be model influenced trades that I do in my portfolio. Over time, I anticipate the model to take a more direct role in recommending specific trades, but more work is needed to make this a reality. I don’t plan to turn everything over to the model (autopilot) for the foreseeable future.
I’m in the market every day it’s open. Many days I don’t do a trade, but I’m always checking in periodically. As with antelope hunting, you can’t chase them – they have to come to you. Sometimes I’ll set limit orders, but more often than not I’ll pull the trigger myself. I’ve gotten this exercise to the point where a typical day consists of an hour just after the open taking the pulse of the market and seeing what in my stable might be getting close enough that a deal or a buy back is likely, a quick look during lunch, and then the last half hour before the close. But there are lots of atypical days. You have to roll with the market. All trades will be posted promptly, within a minute or two, unless it’s a rock and roll day and I need to do 15 trades in a row – in which case there will be a bit more delay.
The Apex Predator Membership is offered for $250 annually, with the proviso that I garner subscription interest from at least 100 people. Below 100 subscribers, and the incremental income it generates, it’s frankly not worth my time to post my trades or the trade alerts from the model (should I successfully develop the model to that degree). I’m better off spending the time on modeling and trading rather than daily website updates. An Apex Predator membership also provides all the benefits of a Premium membership.
So there you have it. I encourage you to take a free tour. If you wish to become a member, register or contact me. Lastly, I hope this seems as much fun to you as it does to me: the mating of an intense intellectual endeavor with profit generation in the greatest casino of them all – the U.S. stock / option market.
Next in sequence: Why Apex Predator?
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