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STEAL This INSANE 1-Minute Market Maker Trading Strategy (75% Win Rate) — Transcript

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0:00This is the weapon. This is how
0:01institutions trade. When I teach this to
0:03people, they say you're crazy. This
0:05strategy has 75% winning [music] rate.
0:08>> And with this strategy, how frequent
0:09would you say trade opportunities come?
0:11>> This one has one or two [music] trading
0:13opportunities in the day. That's why
0:15it's so important to understand what
0:16happens there. Why? Because
0:18>> are you ready to take a step beyond
0:20order flow into institutional order flow
0:23and options flow? Or no one better than
0:25Freddy Siento, a [music] 20-year market
0:28maker. I use this strategy to pass
0:30funded accounts. I can put 10 ENQ
0:32contracts so I can make $6,000 in one
0:35move. I truly believe every retail
0:38trader, whichever strategy they have,
0:40they should know about this. You don't
0:42necessarily need to change your
0:43strategy, but it will help you to
0:45increase your winning rate. It's kind of
0:47the base of everything. In this episode,
0:50he holds nothing back as he breaks down
0:52exactly how to use options flow as a
0:55retail trader and more specifically even
0:57as a prop firm trader.
0:59>> I realized my edge is to enter the
1:01market when the big [music] guys enter
1:03the market. I was hedging $1.5.
1:06>> What does that equate to?
1:07>> $1.5 billion.
1:08>> With that big amount of money, I moved
1:10the market. I I [music] move it a lot. I
1:12sold another million dollars and Goldman
1:14Sachs was there. If a Gold Bman sax is
1:16there, I gonna reverse all my position
1:19because
1:20>> over two hours of institutional insights
1:23from a true institutional trader. Have
1:25your notepads ready for this very
1:27special episode on chart fanatics.
1:29>> We are just starting to get this
1:31knowledge that institutions have and
1:33they don't share obviously. [music] And
1:34one Italian guy, he told me, Freddy,
1:36that looks illegal. [laughter]
1:38And I say, well,
1:40>> I think a best place to start because
1:42again, this is a topic that is
1:45>> extremely extremely sought after right
1:47now. And I think this might be one of
1:48the first videos going out on a major
1:51platform that can go really quite in
1:53depth. We're going to spend a little bit
1:55of time on the whiteboard, but we've
1:56have a full presentation breaking it
1:58down step by step, uh, which I thank you
2:00for. But just to get things started like
2:02why is institutional order flow and and
2:05specifically options flow why is that so
2:09important to traders today? um I think
2:12is um is so important because actually
2:15the especially on indices like S&P, NDX,
2:19Q's, ATFs like Q and SPY what's
2:23happening is um institutions like um
2:28pension funds endorsements uh mutual
2:31funds after I guess 19 um when when the
2:36crash 1987
2:38the black Monday when the market went
2:40down 22% in one single day.
2:43>> They realized they need to hedge. If
2:45they don't hedge, they're going to be,
2:47you know, wiped out as happened at the
2:49time. And just happens that in 1973
2:54um the Chicago Board of Exchange, they
2:57launched the first um option contract, a
3:00standardized option contract is the same
3:02year when Black and Schles, you know,
3:04these guys, the mathematicians and great
3:06guys, they they come up with the pricing
3:08model. So from that moment on the market
3:11they start to realize they need to hedge
3:13their portfolios. If you go around the
3:15world um pension funds, endolments,
3:19mutual funds, everyone they are loan
3:22let's say the market but they need
3:24protection right it's the same when it's
3:26the same way you have a car you buy a
3:28car or in your house you need to buy
3:29insurance right um so before that these
3:33guys didn't have insurance they just you
3:35know long and and when things were very
3:37bad they just wipe out um then we had
3:40the uh 200
3:44uh.com crash
3:46um and and that I think that was when
3:48when all these you know big guys say we
3:50need to hedge we need to use options
3:53which is if you think in a in a nutshell
3:56options is like insurance.
3:57>> Mhm.
3:58>> Yeah. for them. And
4:00now what's happening nowadays? Well, it
4:02happens the com then the 2008 crash uh
4:06where I lost everything. [laughter]
4:09>> It was a great experience. You know, you
4:11learn a lot of course.
4:12>> Um
4:12>> was that your first personal like you
4:14know trading during a crash in that
4:16environment? Yeah, I was working in
4:17Australia um as a junior broker and and
4:21it was great, you know, it was you know
4:23being there as a junior broker seeing
4:26inside how big clients our clients were
4:29from Europe. Um you see many things like
4:32the importance of the VWAP for instance
4:34all these guys came and and placed the
4:36orders and bigw and basically I start to
4:38see the markets are playing p as playing
4:40poker.
4:41>> They're playing on the what you saying
4:42the VWAP.
4:43>> Yeah.
4:43>> Yeah. Um and also you know putting
4:46orders, taking orders, learning
4:47everything inside was amazing. But then
4:50the financial crisis came and and you
4:52know everyone lost their job, companies
4:54went crash and that was a great
4:57experience. But what's happening in the
5:00market I think after that people start
5:01to realize we need we need to hedge our
5:03portfolios, right? And and that's been
5:06an explosion of that. um what's happened
5:09and as we're going to see here um in
5:122021 before that you can trade options I
5:16don't know uh three days options a week
5:18options you know months so people were
5:20trading those options to to find
5:22protection other people found it that
5:26was a great great as um product to
5:29actually uh speculate in the market
5:32>> because it has an asymmetry like you pay
5:35small premium and you can take 300 300
5:38400 returns. So that's that's um I
5:42always mention like um Nicolas Talev in
5:45his book um antifragile
5:48he basically say if the only way to make
5:51um wealth you know to make money in the
5:54markets is when you trade an asymmetric
5:56product yes
5:57>> and options are asymmetric product you
5:59know you pay small premium you can have
6:01200 300% returns so I guess other uh
6:05market participants start to come into
6:07the market to actually profit from that.
6:11But what I really think changed
6:13everything is 2021 when um the SEC, the
6:18Securities and Exchange Commission in
6:21United States, they say we're going to
6:23um allow to trade zero DT options and
6:26and zero DT options are options that
6:29actually start to trade at uh 9:30 when
6:32the bell rings in New York
6:33>> and basically they expire at 4:00. So
6:36that's that we will see that those
6:38options are crazy like the guy who's in
6:42the middle the market maker he needs to
6:44hedge that trillions of dollars
6:48immediately like you know quickly and
6:51and without thinking nowadays they do
6:53machines. When I was in my time, I was
6:55trading um for this investment bank in
6:58London. I was market making um outrise
7:01swaps in the foreign exchange market
7:04>> and it was billions of dollars,
7:06sometimes like two jars of Euro dollar,
7:09two jars of sterling, they came and I
7:11had to hedge that in the market and I
7:14realized sometimes I moved the stock the
7:16spot market it moves because of me.
7:19>> I mean not because of me because I was
7:21hedging.
7:21>> Mhm. So in the options space is the same
7:26but with zero DT options is like
7:28exponential. Yeah, if if you imagine as
7:31I I tell to my um you know the guys I
7:34coach, they say imagine when there were
7:36two a month a week auctions the market
7:40maker we will see it is is hedging the
7:43hedging pressure is like you know the
7:45guy is driving a car at I don't know um
7:4980k an hour so it's very slow he can
7:51turn he can turn very easily but with
7:54zero DT options he's like going in a F1
7:56car
7:57>> Ferrari so he's going 300k per hour. He
8:00need to put the brakes in a curve and
8:02then steer the wheel 300ks again.
8:05>> So that's that's that's kind of a
8:07>> that's not the difference. So the
8:10volatility has increased.
8:12>> I don't think the volatility has
8:14increased actually there were a lot of
8:16>> say pressure into
8:17>> the pressure for the market makers.
8:19>> Understood.
8:19>> And the best the funny thing not the
8:21funny
8:22>> I know volatility in options is a
8:24different meaning. It's vogue right?
8:25>> Yeah. I'm learning. I'm
8:27>> no and and it's it's actually there were
8:30some papers at the time that says that
8:32oh zero options is going to create huge
8:35volatility in the markets but actually
8:37it's the other way around. They have
8:38kind of come into the markets and
8:41stabilize the market somehow. Um and
8:44nowadays if you think about what is
8:46happening now how the world is changing
8:49I truly believe all these you know hedge
8:52funds uh portfolio managers they used to
8:55come into the markets into the options
8:57to hedge their portfolios with one month
9:00three months options I think now they do
9:02it in zero
9:04>> well see what happened with um United
9:06States and Iran
9:09um before that was the um the war
9:12between United States and China
9:13>> the tariffs. Yeah.
9:14>> The tariffs and you know the world is
9:16changing very quickly.
9:18>> The speed of reaction is necessary.
9:20>> Yeah. So if you have a portfolio it's
9:22interesting would you say that the zero
9:24DTE almost
9:26>> helped to facilitate or was created to
9:29facilitate this speed of information
9:31>> because if we go back to when you were
9:33sort of doing the institutional market
9:34making the speed of information even
9:36then
9:37>> was slower than it is today. Yeah. Even
9:40though it was faster than say the '9s or
9:42the 80s, right? Back then, even the
9:44information was so slick. Before the by
9:46the time a retail investor knew about
9:48it, it was already priced in probably a
9:49week before. Y
9:50>> while now it's instant almost and
9:53therefore having the option of zero DTE
9:56allows the funds allows even everyday
9:58people to be able to, you know, hedge
10:00and be able to maneuver a lot faster
10:03>> which is necessary for the markets of
10:04today.
10:04>> Yeah. Let's take a break for a minute
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10:56back to the episode. And
10:57>> and that's where big opportunities for
10:59us retail traders come. Um because I
11:04truly believe every trader, retail
11:07trader, even trading options or trading
11:09futures with wherever whichever strategy
11:13they have, they should know about this
11:16>> definitely
11:16>> because um you know Fabio Fabio
11:18Valentini great great guy friend great
11:21friend
11:22>> um we've been talking about his we've
11:24been talking about these zero options
11:26he's implementing in his um kind of
11:28strategies and and and It's actually it
11:32helps you don't necessarily need to
11:34change your strategy if you have one
11:36which is already uh working for you but
11:39it will help you to increase your
11:42winning rate and to reduce your losses
11:44which we will see how.
11:45>> I love that and I think that's a perfect
11:47segue now that we've set the stage of
11:50you know the history and the importance
11:53of uh this institutional flow and
11:55options flow in particular. I think for
11:57the whiteboard here. Yeah.
11:59>> Why don't we just help the audience
12:00visualize, you know, what this flow
12:03looks like.
12:04>> Okay.
12:04>> Um and then we can take it from there.
12:06>> Yeah. So, um as we said before, um all
12:10these institutions, pension funds,
12:13endowments, mutual funds, name it, all
12:15around the world, they need to hedge
12:17their exposure, right? The the best
12:20example that I always tell is JP Morgan.
12:22They have a hedge fund. um is 22 billion
12:26dollars hedge fund.
12:28>> Wow. and they come into the market every
12:30three months to do a call which is an
12:33option strategy to hedge their hedge fun
12:35which they use it with auctions and
12:38people if people doesn't know about
12:41these things it will it will be the day
12:44when they say oh my good they got the
12:45market today was very crazy very tough
12:48but well you didn't realize it was JP
12:51Morgan you know they they they basically
12:53sell um we will see they they sell a
12:57fall far away on the upside, they sell a
13:00put far away on the downside. When they
13:03sell options, they get credit, you know,
13:05they they they get the money and with
13:07that money in the middle, they buy a put
13:10to protect the 22 billion portfolio. I
13:12think that was the last time I saw it a
13:14couple of months ago. And each node was
13:18like 40,000 30,000 contracts, which is a
13:21lot. It's is massive. So that creates a
13:23pressure in the market that creates a
13:26pressure on the market maker who needs
13:28to hedge this and that's we will see
13:30they go into the futures and that's
13:32where you see this price the last time
13:35the market went up up up up and didn't
13:38stop.
13:39>> So people with kind of mean reverting
13:41strategies trying to sell this market
13:44they're going to get so many losses
13:47>> only by knowing this you know as as I
13:50said before they reduce the stop losses.
13:52buy because if they knew this they just
13:54don't sell the market because they know
13:56you know
13:57>> it's not the environment
13:58>> it's a big guy with $22 billion
14:00portfolio hedging in the market and I
14:03don't go against that
14:04>> but um to start with the white board um
14:07so you have all these big institutions
14:10right they need to come into the market
14:13they have to there is um they are forced
14:16to yeah they have to they are forced to
14:18so they come into the um they come into
14:21the market, right? Um and they do it
14:25through options. Okay. So, they do it
14:28here to options. Okay.
14:31Um this works very well in indices. So,
14:35and and there is a reason for that.
14:37We'll we will see it. So, they come into
14:40the S&P um and they come into the SPY.
14:43>> Yeah.
14:44>> They also come into the NDS, which is
14:46the one I love to trade. Not the NDX,
14:49the the futures.
14:50But I love what's happening in the NDX
14:53and obviously the QQQs. Bear in mind
14:56this one, these guys are professionals,
14:59you know, they are top of the top. Um,
15:02and when I say top of the top, I when I
15:05was uh working in London here, um,
15:08usually you go out and, you know, with
15:10your broker, you met other traders. You
15:12know, I felt so little because most of
15:14these guys in the big banks, they were
15:17um they have degrees in maths, physics,
15:21PhDs. I, as I told you, I have two M's
15:24degrees, but these guys were like, you
15:26know, the top of the top and and you're
15:28like, my goodness. Of course,
15:29>> as if you're like a different language
15:30almost.
15:31>> Oh, yeah. But but they're great guys.
15:33But um yeah, that's that's what I tell
15:37to people is, you know, people who comes
15:39into the market to trade a moving
15:41average. And I'm sorry to people who try
15:43moving with Irish and that kind of
15:44thing.
15:46>> First of all, they need to realize where
15:48are they getting into, you know, they
15:49for me when I go into the market every
15:52day, I I said myself that I going to go
15:55against the the the brightest minds in
15:57the world, right? So So I I respect the
16:00market in that sense. But anyway, um
16:02this is what happens. These guys, these
16:04institutions all around the world, they
16:06come here to trade options, right? To
16:09hedge their portfolios. Yeah.
16:12>> One difference with um um and is this is
16:16two-way.
16:17>> Okay.
16:18>> Why? Because in the middle we have
16:21the market makers.
16:22>> Yes.
16:23>> Right. Um what is the function of the
16:25market makers? What they do? They
16:27provide liquidity. They provide
16:28liquidity to these guys. Okay. So when
16:32you buy when you trade options and and
16:34one of the nice things of options is you
16:36can buy uh you got calls
16:40and you have puts right and you can buy
16:43them or you can sell them.
16:45>> So it's like four um if you see it's
16:49like four ways to trade. It's not like
16:50futures that you buy and sell. Here
16:53>> you can buy protection but you also can
16:55sell it.
16:56>> Yes.
16:56>> Yeah. And from this you get hundreds of
17:01combinations. Yeah. Right.
17:03>> You can do butterflies, colors, credit
17:05spreads, name it. You can take these
17:08four u dimensions and you can do so many
17:12uh configurations, so many structures.
17:14>> Well, I think that's why when I
17:16interviewed Jim Carson, we were just
17:18talking.
17:18>> Yeah.
17:19>> He mentioned that zerodt options and
17:22options in general are kind of like a
17:24new technology in a sense. Yeah.
17:26probably because of these combinations
17:28that
17:28>> even any other type of asset class
17:30doesn't really allow.
17:31>> No,
17:32>> you know, yes, you might have more
17:33leverage there or you might have these
17:34different elements, but
17:36>> in essence, it's just buy and sell.
17:38Yeah.
17:38>> Right. Uh versus options has all the
17:41Greeks involved and then there's all
17:42these combinations that allows you to
17:44get very creative
17:46>> with your structuring of a trade and an
17:48idea.
17:49>> Yeah. Probably one of the best um
17:51podcast that you did that I love it was
17:54um what is it? IMRA IMRA guns IMRA guns
17:57>> IMR yes
17:58>> yeah and and I love what he mentioned
18:01you know when the markets are going down
18:03he's got a strategy to sell options and
18:06and the analogy is like if you if you if
18:08your house is in fire how much are you
18:10going to and if you got a house and you
18:12buy a fire insurance how much it's going
18:14to cost you but if your house is in fire
18:16how much is going to cost you
18:17>> yes
18:18>> you know so so so that's a great way to
18:20explain you this options is is a complex
18:24product, but is it
18:26>> it allows to these institutions to
18:29create so much, you know, and to do so
18:31much.
18:31>> Mhm.
18:32>> But we're going to get to the point
18:34where we're going to trade futures on
18:36this and I promise.
18:37>> So, we got these market makers, right?
18:39So, basically, how they make their
18:40money, they they they don't take
18:43positions on these guys.
18:44>> Yeah.
18:45>> They just charge the spread, right?
18:48That's their job.
18:49>> Yeah.
18:50>> They charge the spread, you know. Um if
18:52someone wants to buy a call, they sell
18:54it. Someone wants to sell a call, they
18:57buy it from them. You know, same with
18:59puts.
19:00>> They act as the counterparty.
19:01>> Yeah.
19:02>> And and what what I realized from
19:05thinking of my job here in London is
19:08they they can't say no. You know,
19:10whatever flows cames, they have to
19:12provide liquidity. And I remember in my
19:15job, I have to I I I couldn't say no,
19:17sorry, the market is not right right
19:19now. No, I have to provide liquidity.
19:21Even if I don't like it, even and that's
19:23the advantage of retail trader compared
19:26to an institutional trader. We have to I
19:29have to have a position every day. I
19:30have to be hedging everything. While
19:33you're a retail, you can just wait as
19:34we're going to see
19:36>> for the right moment. But anyway, these
19:38guys, they charge the spread and and
19:41they manage they need to manage their
19:44portfolio. Yeah.
19:46One of the things with options is and
19:49let me put it with an example here. Let
19:52me put in this color. When someone buys
19:55a call, this is the call profile, right?
19:57So this is the strike. So when the
20:02client buys a call at this strike,
20:06he pays little money for let's let's say
20:09little money, it's a little bit for the
20:11for the premium and he's got an
20:14exponential
20:16um uh probability of winning or he's got
20:19like this exponential exposure which is
20:22called I'm going to put it here because
20:24we're going to see a
20:26tried to explain it as as we explained
20:28before it's called convexity.
20:31Yeah, this is a such an important
20:34concept that we need to understand and
20:36convexity really means that if you trade
20:39futures
20:40>> and the futures market moves let's say
20:431% and Q
20:45>> the same move this is just for academic
20:47purposes it's not like the real
20:49>> of course
20:50>> but if someone trades NDX or QQQs
20:56he's most likely it's going to have like
20:57300%
20:59Yes.
21:00>> So that's why another reason why the
21:03options are so attractive right now and
21:05they're increasing as we saw in the
21:07slide that I show you. They are like
21:09exponentially increasing the the use of
21:12options and people trading options.
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23:08>> But so that's that's that's an important
23:11moment. That's why people came. Now
23:14what what we're talking about the market
23:16maker is like on the other side the
23:18market maker which is selling the call
23:21which is is the profile of the call.
23:23>> Listen if if this client something
23:26happens and the price didn't go up he
23:29will lose the premium. He will be like
23:30tiny compared to you know this
23:32convexity. But look for the market maker
23:36he lost a lot. basically his has
23:40unlimited
23:43losses exposure.
23:44>> So he can loss everything.
23:47>> Yeah. So that's that's that's kind of an
23:49asymmetric race.
23:51>> So what what is he doing? So basically
23:53he's he's happy to provide options
23:56flows. He's happy to charge the spread,
23:58>> but he needs to hedge this because if he
24:00doesn't hedge his exposure, his risk,
24:04>> he could, you know, bankrupt his
24:06company. So basically what they do they
24:10they they are the market makers right.
24:13So what they do and as we saw in this in
24:16the in the slide basically they they
24:19have a portfolio of options right
24:23all these options they're put in their
24:25portfolio.
24:25>> Yes.
24:26>> Okay. Okay. They're happy they charge
24:28the spread. Now they need to manage
24:30this. How they manage that with
24:32something called the Greeks.
24:35>> Probably you have heard about them.
24:36[laughter] Yeah.
24:36>> Right.
24:37>> So the first um and this comes from Brad
24:40Shaw's pricing model, the one that we
24:42were talking in 1973.
24:44>> Mhm.
24:44>> Um it's kind of the base of everything
24:48because they say, "Okay, now I need to
24:50hedge this race. I'm happy to do this,
24:52but I need to hedge. I don't want to
24:53lose money. My job is not to lose money.
24:55My job is to provide liquidity, charge
24:58the spread, make some money. I'm not
25:00going to go against these guys because
25:02this could be one of the greatest minds
25:04in the world, you know. So why are going
25:06to go against against them? So that's
25:08not going to happen. So what they do
25:10they use the grace and the first is the
25:12delta which is like that. So basically
25:15delta tells the market maker listen as
25:18long as you're delta zero don't worry
25:22because market can go you know something
25:25could happen and and as long as you're
25:27delta zero you're going to be h okay so
25:30as we saw in the slides and let's let me
25:34put it down here this is the market
25:36maker yeah with the unlimited losses
25:40potential from the selling of the call.
25:43So basically delta is telling him or or
25:46that Greek is telling him listen if you
25:49go to the futures market
25:52and you buy let's say this is NQ this
25:54someone trade NDX so the underlying spot
25:58from the NDX is NQ so if you go to the
26:02market and you buy NQ given by delta
26:06that's okay why because it doesn't
26:08matter if the option goes down you are
26:11going to be h so your P&L is going to be
26:14zero. You are going to lose money on the
26:16options but because of the hedging
26:18buying futures if the market goes up you
26:22bought futures so you're going to hedge
26:23your exposure.
26:24>> Understood.
26:25>> In del in terms of delta what impacts
26:28you know delta being zero or not like
26:29what does it represent? Um, we will say
26:32in a minute, but as I told you before,
26:35zero DT
26:36>> are like these guys are driving a
26:38Formula One car
26:40>> and they have to be, you know, the the
26:43the amount of money that they need to
26:44hedge in the market is huge.
26:46>> Mhm. you know and the the thing that
26:50zero DT are in the market now allow us
26:52day traders in futures and options as
26:55well to actually have and as as we saw
26:58in the we will see in the examples
27:02you know to take amazing trades like
27:05with very low risk.
27:07>> Mhm.
27:07>> Okay. Why? Because they need to hedge
27:10this quickly with a lot of money. So the
27:12price get to the level when these guys
27:14are positioned and the market maker
27:17needs to go and buy hundreds of
27:20thousands of contracts on ENQ and that
27:22moves the market.
27:23>> Okay,
27:24>> but anyway this is this is kind of
27:25clear. So this what is this this is what
27:27this guy market maker is doing. Yes.
27:29Okay.
27:30>> In order to be delta hedge. Okay. And
27:33this is just an example because as I
27:34said before options buy calls uh this
27:38these institutions they buy calls sell
27:40calls buy puts sell puts. So basically
27:42this guy has a portfolio right and he
27:45needs to constantly be hagging all these
27:47positions. So the first great um the
27:50Greeks that he use is delta and he say
27:52okay you know as long as you're delta
27:53zero you're fine. Um so what's happening
27:57then sorry is um market moves you know
28:01markets are not static they're actually
28:03moves
28:04>> and
28:05if you let me do it on on the on here.
28:09>> Yep.
28:09>> Um all these bricks they have um a shake
28:13right so this shape of a call is
28:16something like this right it goes from
28:19zero to one. This is this is the delta
28:21of an option. Now if you think about
28:25this as this is price okay and this is
28:29delta
28:30okay price moved up which is right price
28:34move uh down which is left
28:35>> okay
28:36>> so the price is going to move now this
28:39guy let's say here he was delta zero
28:42okay but for any reason the market moves
28:44up now this is x0 sorry mat I'm going to
28:48get into a little bit of maths
28:50>> no I like it
28:50>> um so this is x0 where the price is
28:53delta the neutral.
28:54>> Mhm.
28:54>> And now the market let's say move from
28:57this price to this price.
28:59>> Yes.
29:00>> Which is X1. Okay. If you see the delta
29:04change. So his delta is not zero
29:06anymore. Okay. So he needs to calculate
29:09the market maker needs to calculate the
29:11move of this. He needs to move. He needs
29:14to calculate this curvature.
29:15>> Yes.
29:16>> Right. So we use maths or they use
29:18maths. And basically if we calculate the
29:21slope of these two points.
29:23>> Okay.
29:23>> Right. Which we use with the second
29:26order derivative. Probably you remember
29:27them from a school or when we were
29:30studying derivatives. So this is this is
29:32the second order derivative which is
29:34called gamma which we represent like
29:37that.
29:38>> Mhm.
29:38>> Or we can represent like that doesn't
29:40matter. So what's gamma? Basically gamma
29:43is the change.
29:46This is uh the math representation for
29:48change which is the same as delta but
29:50doesn't matter. Oh no sorry we need to
29:56the change of delta
29:59right
29:59>> okay
30:00>> with respect to the change of a spot
30:02price you see so the spot price is
30:04changing
30:05>> yes
30:06>> I promise this is going to have it's
30:08going to make sense when you when we
30:10>> before when you were you know doing this
30:12as a market maker you would have to do
30:14these formulas you could yourself if I'm
30:16not mistaken right
30:17>> no that that that's the advantage of
30:19being working for an institution that
30:22>> okay
30:23>> um you have a team of quants you have
30:27>> they'll be doing it
30:28>> yeah they will doing it but you need to
30:30understand it
30:30>> yeah but what I mean is at one point it
30:32was a manual process
30:34>> it's always been
30:35>> always been okay
30:36>> yeah we'll put that bit out [laughter]
30:39>> no you you to be honest um the job
30:44probably these guys are not going to
30:45hate me but the job of an institutional
30:47trader is easier compared to a retail
30:49trader
30:50>> really Yeah, because you go everything.
30:52You go I have I remember there were like
30:54three coins, you go three economies, you
30:58go it, you know, I need one more screen,
31:00they put it. I need one more, they put
31:02it. And and basically is is you got
31:04everything, you know.
31:05>> So your job really is then to just
31:07execute
31:08>> execute and and manage and have this
31:10ability to to to do it well, be calm
31:13under pressure.
31:14>> Mhm.
31:15>> And Yeah. and and because you got
31:17everything now as a retail is very
31:21difficult because you don't have all
31:22these resources course you have to study
31:24by yourself
31:25>> and and for just to point out the
31:30obvious question that people may have at
31:31this point
31:32>> is that they may go well this seems a
31:34really complex
31:35>> no worries it's going to get to the
31:37point where we're going to trade it very
31:38easily
31:38>> no I like that no what I'm getting at
31:40though is you know because I understand
31:43the desire for simplicity I understand
31:46and the desire um because it's much
31:48easier to manage and and try and
31:49implement. But the reality is that we
31:51are trying to trade. One of the hardest
31:55things you can do in life is trade the
31:57markets, right? And to be disciplined
31:58enough to follow an edge and and create
32:00edge and identify edge. So you know I've
32:04be come to the understanding over recent
32:06years of interviewing you know people
32:08like yourself and others who are
32:09professional and institutional traders
32:11is even though they may be as you say
32:13professional institutional traders to
32:14your point that you just made right now
32:16is as a retail trader it's going to be
32:19difficult right
32:20>> and the way to make it simple is to
32:23spend the time to understand complexity
32:26and to understand and and take the time
32:28to research and learn
32:29>> y
32:30>> it will become simple after.
32:32>> Yeah.
32:32>> Right.
32:33>> But you shouldn't be put off by
32:35complexity
32:36>> or something that may seem difficult to
32:39understand because that is the challenge
32:41of a trader is to put in that necessary
32:44work and to figure out the puzzle
32:46pieces, if you will, of the markets that
32:48are available and thanks to people like
32:50yourself, Freddy, who are opening the
32:53eyes and giving that education entirely
32:55for free here. um you know the the
32:58option if you to use a better word the
33:01option to learn is never been greater.
33:03>> Yep.
33:03>> Right. Um, and I'm only st pointing that
33:06out for anyone who maybe is up to this
33:08point and think, ah, you know, maybe I
33:09don't need this because I would rather
33:11use my moving average or my support
33:13resistance and just follow my
33:15technicals. When in reality,
33:18>> you know, having this understanding,
33:19yes, may take research, yes, may take
33:21time, but the understanding that you
33:23will have at the end of it is far
33:27greater than anything else that you'll
33:28have. And as to your point, Freddy,
33:30through having this knowledge and
33:31through practice, you'll get to a point
33:33where you'll have lower stop- losses,
33:35you know, greater performance and
33:37increase your win rate. And at the end
33:38of the day, if that's not the goal of
33:40every trader, I don't know what is.
33:41>> Um, but I'm excited. So, not to take you
33:44off off a different tangent. I wanted to
33:46just take that moment quickly. That
33:47that's that's totally right. You know,
33:49as I say before,
33:51um, you don't need to change your
33:54strategy.
33:54>> Exactly. Yeah. But if you if you know we
33:58this is I I promise this is going to
34:00come down to levels in the market where
34:03>> uh you see a level which is a we call it
34:05or it's been called a cold wall.
34:07>> Yes.
34:08>> For a reason because the price is
34:09magnetized to that level and then
34:11reverse.
34:12>> Mhm.
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34:50sure you go check them out with the link
34:52in the description below. And let's get
34:54back to the episode.
34:54>> So, if you have a strategy, let's say
34:57many people use the 30 minutes volume
34:59profile
35:00>> where they wait for the price to to
35:02break up that value area high.
35:05>> Yes.
35:06>> Right. And and and I did it with um I
35:08asked my permission to Fabio if he
35:09contact and he said, "Yeah, yeah." We
35:11were trading together one day and I
35:13remember his strategy one of his
35:15strategies is something similar and it
35:18was a cold wall just there and I was we
35:21were trading and and he took the long
35:23because his is his strategy with certain
35:26winning rate which means he will have
35:28losses eventually or he's very good at
35:30break even.
35:31>> Yes, he is. Yeah.
35:31>> Um and I said he took the long and he
35:34said Freddy what do you want? What do
35:35you think? And I say like I'm thinking
35:37to take a short he said why? said
35:39because it's a cold wall just there 30
35:41ticks where you took the loan and he
35:43immediately put himself in break even he
35:46you know he's he's a guy who like to
35:48learn
35:48>> he's amazing yeah
35:49>> and he put his um break even price 30 40
35:52ticks touched the cold wall I took the
35:55short position and the market collapsed
35:58and and then in the same way one day he
36:00took a short position on on his strategy
36:04and and I didn't do anything and he said
36:05what do you think and I said like
36:07implied volatility skew is telling me
36:10the price is not going any lower. I I I
36:13don't have the crystal ball. I'm not a
36:14guru or anything, but we will see that
36:17as well. The the the volatility skew is
36:20telling me the implied volatility of
36:22these options on the bottom. The market
36:24is not going any lower at the moment and
36:26as is showing. So he took profits and
36:31then the market reverse and and rally
36:34and as I say like that that's a nice
36:36example why because usually people take
36:39a short position and once the market
36:42makes a new structure on the way down
36:44they take the stop loss in profit you
36:47know far away from where the price is
36:49and then they waiting for the price to
36:51continue lower and then what happens the
36:53price reverse and they lose these
36:56amounts of of profit.
36:58If you knew options, if you knew there
37:00is a put wall, if you knew that the
37:02implied volatility or the skew, the bull
37:04skew is telling you that the price is
37:07not going any lower, you will take
37:09profits on the bottom. And that's what
37:10Fabio did. He took profits right at the
37:13bottom. when we have a look the the
37:15bullish cube and the price value and
37:18that's everything is down to this. uh I
37:21encourage everyone doesn't matter your
37:23strategy just spend some time to learn
37:26this because this is what's moving the
37:29market right now and the wave of uh
37:32gamma exposure I don't like to call it
37:34gamma exposure as as Jim Carson say
37:37because everyone now say oh gamma
37:39exposure gamma exposure and you got so
37:41many system like gamma exposure it's not
37:43really only gamma exposure it's the
37:45whole flow of options you know implied
37:49volatility bq
37:50volatility surface that we need to talk
37:53about that as well. It's all this
37:54complex that actually is expressed in
37:58certain levels that you can actually
38:00help you to maximize your profits,
38:02reduce your stop- loss or I I think I am
38:06a
38:08options flow trader which trades futures
38:11based on options flows. Um but anyway,
38:14so what's happening now? Imagine you're
38:17the market maker. This is a good
38:19example. You're the market m market
38:21maker.
38:22>> Yeah.
38:22>> And you're providing liquidity to all
38:24these guys which are as I said before
38:26they're the brightest minds in the world
38:29>> and your risk is on limit.
38:32>> Yes.
38:32>> And this is this is showing that your
38:34risk is on limit. So you covered your
38:36delta which you done it which is this
38:39one.
38:40>> Now the price is going to move. Okay.
38:42Now you need your second order
38:44derivative which is gamma. Mhm.
38:45>> So gamma is telling you uh the change in
38:48delta with respect to change of a spot
38:51is going to give you a number and
38:54companies like the one I work with this
38:56um guess what they translate that into
38:59dollar amount.
39:00>> Okay.
39:01>> Why try to replicate what the market
39:02maker needs to do. So now second part
39:05market maker needs to go and trade his
39:09gamma.
39:12Why? in order to be delta neutral again.
39:16And how does it look here?
39:17>> Okay,
39:18>> let me create another color. So it means
39:20that he let's going to put a number so
39:22people understand. If you already bought
39:24half a million dollars,
39:26>> right,
39:29in futures trying to hedge this position
39:32as the price move higher,
39:34>> he needs to go and buy more
39:38>> futures. Okay. So, probably GMA just to
39:41put a number is telling him uh you know
39:44what you need to buy another 200K.
39:48>> Okay. And is that because of the slope?
39:51>> Yeah.
39:52>> That it's indicating.
39:53>> Yeah. The the the price move the delta
39:56>> is going to increase.
39:57>> It's going to increase
39:59>> and to keep it neutral. Yeah.
40:00>> You need to increase the position.
40:02>> Yeah. So, he needs to go and buy another
40:04200,000. So, he already bought 500,000.
40:06Now, he needs to buy 200,000. And this
40:08is where the overlap for those futures
40:10traders out there. This is why the
40:12options flow already is well is already
40:15understood from a foundational level.
40:17But now we're starting to see really the
40:19specifics here because then once you
40:21start to understand, okay, we're going
40:22to start seeing an injection of futures
40:25orders coming in. You're I guess as a
40:27futures trader, your job is to try and
40:28follow along with the market makers
40:31institution. Well, it's kind of the
40:33byproduct of the institutions, right?
40:35And and I realized this uh when I was
40:37market making derivatives. I I used to
40:40do outright which is forwards and swaps
40:42in the foreign exchange market.
40:45>> Um
40:46one day I can it it was I I know people
40:49say there is no aha moment in trading
40:51but I was hedging
40:54I'm I can't say what client but I was
40:56hedging 1.5 jars of sterling. So that's
41:01that's a lot of money. But that was a
41:04der that was a client who came into the
41:05derivatives market.
41:07>> Mhm.
41:08>> And if you think derivatives market is
41:10just a PayPal. So the guy the client not
41:12the guy the client he told me Freddy I
41:15need to or I need to buy 1.5 jars of uh
41:20>> What does that equate to? 1.5 jars.
41:23>> Uh is uh $1.5 billion.
41:25>> Wow.
41:26>> Um in derivatives, right? So obviously I
41:30have to do I didn't have to I have all
41:32the systems for me I calculate the
41:34present value say okay the pres okay I'm
41:36going to do it but because these
41:39derivatives
41:41uh they have time with this so it
41:44doesn't mean that he want it now it
41:46means that okay I want to buy 200
41:49millions in a month 300 millions in 3
41:52months and like that in different times
41:55you know different moments in time in
41:56the future.
41:57>> Mhm.
41:58>> Okay. Okay. So I calculate everything
42:01bring the cash flows to present value
42:04and I need to cover my delta this one
42:06here.
42:06>> Y
42:07>> so basically my delta is saying okay I
42:09going to sell to this client this amount
42:12of money on this time in the future. So
42:16what's the most liquid uh or the the
42:19liqu the calculation involves the
42:21underlying which is the spot. So it
42:24makes sense for me to go and buy the
42:25spot already. So I buy the spot to delta
42:29hesh and then when the time comes I give
42:31it to him.
42:32>> Yeah
42:32>> that's in the in the foreign exchange
42:35but we I have to calculate my delta and
42:38in few occasions I noticed with that big
42:40amount of money I move the market
42:44>> and I I I move it a lot like like and
42:46and I thought to myself like no I mean I
42:49press the buttons but it was it was the
42:52institution like me as a market maker
42:54who moves the the spot market.
42:55>> Mhm. and and then I realized this is a
42:58nice hedge. I never I'm sorry I never
43:02believe in indicators
43:05uh these kind of things because they're
43:06lagging. And when I when I when I did
43:09that for a few times I realized my edge
43:12is to enter the market when the big guys
43:14enter the market.
43:15>> Yep.
43:16>> You know because they're going to move
43:18the market. Um and and I and I have that
43:21in my mind for a long time
43:23[clears throat] and I I always tell this
43:26to people. So I have that and then when
43:29I was trading because I I was um trading
43:31derivatives and also sport.
43:34One day I was in my platform which um
43:37the minimum amount was 1 million. So 1
43:39million euros 1 million sterling.
43:41>> And there were certain moments in in the
43:43market where you see there is activity.
43:46And I remember one day I sold a million
43:48dollars. Um that was Euro dollar and
43:51that was Goldman Sachs on the bit and I
43:53said okay. And the market start to tick
43:55up I sold another million dollars and
43:58Goldman Sachs was there and I were like
44:01okay I going to sell another million. So
44:04if he Goldman Sachs is there I going to
44:08reverse all my position and I going to
44:10put my cell long. So I sold the million.
44:12So it was three million already and
44:14Goldman Sachs was there. So based on on
44:17what I did, I was like on my experience
44:19I'm thinking [clears throat] so I bought
44:218 million euros to cover my tree and to
44:24be 5 millions long
44:26>> and the market just
44:27>> so that that moment I thought like if I
44:29have a trade retail it has to be with
44:32something like this. That's going to be
44:33my age. I don't want to trade lagging
44:35indicators. I don't want to trade moving
44:36average. It has to be I want to be in
44:39the market when the big guys are in the
44:40market. was
44:43but you know and this is comes to that
44:45so now we know the importance of gamma
44:49right what so gamma and gamma the
44:52importance I'm sorry the importance of
44:53gamma is if you think about it
44:58the price move up let's start from from
45:00from from zero the price move up right
45:04so an institutional an institution came
45:07make transactions in options market
45:09maker provide liquidity
45:12market maker put those options in the
45:16portfolio and then they need to hedge
45:18his Greeks right by hedging his race
45:21look what he did first he bought half a
45:23million this is just educational numbers
45:25>> y
45:26>> so basically he moved the price a little
45:28bit up right so that's why maybe this
45:32price move from x1 to uh sorry x0 to x1
45:37>> but then his delta change so he needs to
45:40go to the market and buy more. So this
45:42is like self reinforcing. So who is
45:45moving the market is not anyone else but
45:48the market maker himself.
45:49>> Mhm.
45:50>> You see he buy he moves the market up
45:53and then his delta change so he needs to
45:55buy more.
45:56>> Yeah.
45:56>> So he's actually there are moments and
45:59you see in NQ maybe the market is just
46:02going up and up and up and up and that's
46:04like kind of snowball. The guy is buying
46:07because he needs to be delta hedgeh.
46:09When he buys the market moves up and
46:12then his delta change so he needs to buy
46:13more and then when he buys more his
46:15delta change so he needs to buy more. M
46:18this is just one example because at the
46:20end of the day he will have a portfolio
46:23not only a call but he will have a
46:25portfolio calls and puts long and short
46:29but this is something um more um deep
46:33into into analyzing this but um at the
46:38end of the day he will have this hedging
46:40pressure in the market. Okay. Now he
46:44will have his gamma
46:46obviously. Now we have another order uh
46:49second order derivatives which is um we
46:52can talk about charm
46:54>> and we can talk about bana but we're not
46:57going to talk about them because
47:00these are very important for long-term
47:02options like one month three months
47:04options and probably with the interview
47:06with Jim Carson he told you about opex
47:09the important of opex and what is called
47:12the triple witchings right so when opex
47:15comes is the the the as of that last
47:17week when the options expire like this
47:19kind of one month, 3 months options and
47:23these two second order derivatives are
47:25one are very important because they
47:28create magnets in the market.
47:30>> They create levels where which is called
47:33pin effect. The market goes to a pin
47:35effect come back it doesn't go down then
47:38come back again then come back again
47:40because this second order derivatives
47:42charm is with respect to time. You see
47:46we've been studying everything with
47:48respect to price.
47:49>> Yes.
47:49>> But charm is with respect to time. So
47:53basically charm is telling the market
47:54maker
47:56this option is going to spar today and
48:00how much money you need to hedge in the
48:02market not with the move of the spot but
48:04with the move of time
48:06>> because at the end of the day at 4:00
48:08that option is going to value zero. The
48:10price of that option which was 300% at
48:14some point is going to be zero. Yep.
48:16>> Right. And bana is with respect to
48:18volatility.
48:20>> Understood.
48:20>> Okay. So we trade um I I I trade the
48:25first two hours. That's it. Um because
48:28of this it doesn't make sense for me to
48:30trade
48:30>> beyond that.
48:31>> Beyond that
48:32>> and and we will see why there are some
48:35academic and professional studies of
48:37what happened the first two hours in the
48:40morning. Um institutions position
48:43themselves in options. Yep. Then it
48:45comes that that's what I'm so against.
48:47Sorry gurus. Um when it came to the
48:50retail war, people were say, "Oh yeah,
48:52there's no liquidity because the traders
48:53go for lunchtime." And I was thinking,
48:56my goodness, I was having breakfast and
48:58lunch in my desk and never kind of it
49:01were no time
49:03>> because I have to be there.
49:04>> So it's not because we go to lunch, it's
49:08because a different flow positioning and
49:11and all the structure that we seen. Mhm.
49:14>> So anyway, um I don't look into this too
49:18because we trade zero DT options and for
49:21me it's enough to trade the first two
49:23hours. We are learning still. So we are
49:27learning how to trade charm but charm is
49:30very difficult because at the end of the
49:32day close to 4:00
49:35is a lot of hedging you know a lot of
49:37hedging speculators options this these
49:40options are going to spar so it's very
49:42difficult it's not as predictable as
49:45trading delta and gamma I trade gamma
49:47actually
49:48>> during within the first two hours and
49:50then during the day bana doesn't change
49:52that much like the volatility from the
49:55options doesn't change that much which
49:56is quite different from the volatility
49:58of of retail traders use ATRs and all
50:00these kind of things
50:02>> right
50:03>> so if you think about this is what's
50:05happening and and and this is the whole
50:07structure now the job that and this is
50:11pretty new this basically start to make
50:13sense from 2021 so it's only five years
50:17>> compared to I don't know b your bands
50:19and all these kind of things that has
50:20been for
50:21>> decades
50:21>> decades so we we're still learning a lot
50:24but what we have now is enough to
50:28uh understand
50:31for me if you ask me this is how the
50:34market works and and this has made sense
50:38in the indices because most of these
50:40guys come for hedging.
50:41>> Mhm.
50:42>> Right. They have to they're forced to.
50:45That's why I like your interview with um
50:47Imbra because he said he you know I
50:50think he's very knowledgeable and he
50:52said they have to they're forced to.
50:54>> Yep. Yeah. What are your thoughts?
50:57Random question, but we're going to see
50:59potentially a significant change in the
51:02next couple months depending on you how
51:04the market reacts, but we're going to
51:06see single stock futures come in.
51:08>> Yep.
51:09>> Do you think
51:11we're going to see is this information
51:13you think going to be start to be
51:14applicable?
51:15>> People are already are doing it.
51:17>> Really?
51:18>> Yeah. Because the actually um
51:20>> so I know you have single stock options.
51:21you got single stock options and this is
51:25pretty similar what's happening there
51:27>> and so do you think that we may even see
51:29an increase
51:30>> y when single stock options uh futures
51:33sorry comes along
51:34>> y
51:34>> because a lot of uh you know we see
51:37occasionally the the indices see a bit
51:40of choppy price action
51:42>> a lot of people may then look for the
51:43single stock futures for that volatility
51:45and those movements
51:46>> yeah but you know what you trade this
51:48that's what you want you want volatility
51:50>> that's what I mean so like and you see
51:51those choppy days, people then may take
51:54their sort of opportunity and start
51:56looking at the single stock futures with
51:57the same premise
51:59>> being able to see the flow within
52:01options over to the single stock futures
52:04then potentially.
52:04>> I think so. Yeah, I I I this is this
52:07makes sense as I said before because
52:09institutions came to h
52:11>> so that must be the same reason and
52:13people you know they always will come
52:16very clever people who say oh I can
52:18profit from this.
52:19>> Yeah. you know and and we do profit from
52:21this you know because as I said before
52:24at the end of the day this is uh going
52:26to be translated in few levels
52:28>> this yeah I was say the same yeah I know
52:30but I love what we've done here and I
52:32think it's extremely clear uh and we've
52:34taken this step by step and I'm sure let
52:37us know right now drop a comment like
52:39how do you feel at this point in the
52:40video drop a time stamp and say um you
52:43know just answering that question of you
52:45know in terms of the foundation do you
52:46have a good understanding but from here
52:48we're going to actually pull out the
52:50laptop full presentation breaking it
52:52down step by step. Um so we'll do that.
52:54Now what I was thinking is we'll keep
52:56the whiteboard out just in case when
52:58we're explaining uh from the
52:59presentation if you want to visualize
53:01anything or draw anything out at least
53:02the options there. Um and yeah, we'll
53:05take it from there. So now we're going
53:07to go through this presentation going
53:09step by step more in detail of exactly
53:11what we've covered so far but then
53:13actually as Freddy said how this boils
53:16down to just levels within the market.
53:19So I'm super excited. Um and where
53:21should we begin then here? Well, I I I
53:24named this presentation for you, the
53:26hiding architecture that drives the
53:28financial markets because everything
53:29that we see here, we actually going to
53:32see it um down to what it is to trade,
53:36right?
53:37>> Um and for me, the market's always been
53:40a puzzle. You know, I always I was lucky
53:43enough to be an institutional trader
53:45because I never I I as I said before, I
53:49I never believe on these uh indicators
53:51because I did actually I did a um um
53:56data analysis
53:58and and I go like 11 indicators. I tried
54:01to um mix them up and and I got like
54:0410,000 or 7,000 combinations
54:07>> and none of them were good. Yeah. So I
54:10feel like this is doesn't work. So it
54:13needs to be something else. And and I
54:14was I say I was lucky because I came
54:17into the markets trying to solve the
54:20passful. I never came into making money.
54:23>> But I was lucky because I was working
54:25for a bank. I get my pay. I get bonuses.
54:27I have insurance. I have you know I I
54:29didn't have that need to you know make
54:32money to survive.
54:33>> Yes.
54:33>> Which allow me to actually start to
54:35think you know I want to solve this
54:37puzzle. I want to really learn
54:40>> what moves the market, why these big
54:42guys, Goldman Sachs, JP Morgan, City
54:44comes into the market and moves when you
54:46know when I was um
54:47>> Do you feel like having that need to
54:49make money can sometimes distract us
54:51from trying to figure out the puzzle and
54:53instead of the puzzle we go for whatever
54:55the quick fix of making money is? Yeah,
54:57unfortunately now that I've been retail
54:59trader for uh three and a half years, I
55:02guess
55:03is is is you see the need for making
55:06money, you know, and and you see the
55:08quick and it's a a human nature, the
55:11need to make, you know, um learn things
55:15very quick, learn very fast, and just
55:17tell me the the pattern and I make
55:20money,
55:20>> you know. That's that's but that's very
55:22human that people
55:24>> you know people sometimes they're tired
55:25from their jobs they they 10 hours
55:27working and of course
55:28>> and they and they probably hear someone
55:31oh you know this guy make a million
55:32dollars in the markets this guy made a
55:34million so they they okay I want to make
55:35a million dollars but if you think about
55:38it um I I love the process where I am
55:42now it's been more than 20 years and I'm
55:45still got a lot to learn.
55:48>> Yes. you know,
55:48>> well, that's what I was going to say
55:50earlier as you know that example we
55:51talked about like not being scared of
55:54complexity, having that student mindset
55:57to learn and evolve. Um, you know, and
56:00and yourself is a great example of that,
56:02the examples you gave of Fabio, a
56:04phenomenal trader in his own right, but
56:06yet still a student of the game.
56:07>> Oh, yeah. And you know he even when I
56:10post trades and I'm by no means you know
56:12a phenomenal trader and I'm trading FX
56:13using technical patterns and you know
56:16nothing complex but he will when I have
56:18had some trades he will ask me questions
56:20about it like you know that sound that's
56:22a great entry how did you do that what
56:23are you doing you know and that shows
56:25you the
56:26>> the elite traders or the ones who can
56:28put themselves into that bracket they
56:30never stop learning you know and that's
56:32not to say hey they're changing the
56:33strategy all the time it's just a case
56:35of constantly making sure that they're
56:37doing their best making sure that if
56:39there's a puzzle piece missing or they
56:41don't have an understanding of, they
56:42will at least learn it to have an
56:44understanding, should it be usable?
56:46Should it be something that provides
56:48better edge, better risk management, you
56:50know, better uh, you know, take profits
56:52as we talked about earlier, like these
56:54little things, they seem little, but
56:56they're actually Yeah, exactly. That
56:59they seem very minute, but in the grand
57:01scheme, that's the bigger picture.
57:03>> Yeah. Exactly. and and and you know um
57:07talking about Fav again he he when
57:09actually I was teaching him to uh these
57:12options close to him and he was very he
57:14said look you know it's going to take me
57:166 months 7 months to learn this
57:17>> I like that yeah
57:18>> and and he was you know and and he was
57:21very kind to get me uh let me staying um
57:24get into his uh you know he's got a
57:26course he tra he teach people
57:28>> and he was very kind to you know let me
57:30in and I talked to the community and and
57:32and he said like, "Yeah, it's going to
57:35take me six, seven months if I want to
57:36learn how you sculp, right? And how
57:39because the idea is to maybe combine
57:42everything with his style. Although I
57:45got my own style, but it's learning, you
57:47know, never never stop learning."
57:49>> Um, so anyway, for me is is the puzzle
57:51like solve the puzzle always has been
57:55how can I solve this puzzle, right? This
57:57is what we already saw here.
57:59>> Yes.
57:59>> So at the the end of the day, what's
58:01going to happen?
58:01>> You did a great job. You you did an
58:03amazing job of drawing that out
58:05honestly. Yeah.
58:05>> So, at the end of the day, what we want
58:08as a futures trader is to be able to
58:11trade futures based on all this
58:13information, right?
58:14>> And that's it. Get our trades, make our
58:17money.
58:17>> We have a deeper understanding now. You
58:19know, we've heard a lot over recent uh
58:21months. This is being recorded in uh mid
58:23June. Yeah. 22nd of June. Uh but over
58:26recent months, you know, we've been
58:27hearing a lot about Jane Street, right?
58:29and how much they've been making
58:31>> been making as a market maker. Um
58:33>> and it's very interesting now we have a
58:35bit of a deeper understanding of you
58:37know how they're going about doing that.
58:38>> Yeah. and and and also it's not that
58:40that I I I just learned they also they
58:45yes they provide liquidity they don't
58:46take positions but
58:49>> they have a portfolio right but
58:52>> if they're very long in deltas which is
58:55a concept where we will see if they're
58:57very long in deltas in certain levels of
58:59the market
59:01they will reduce the implied volatility
59:04of the options at that level and what it
59:07means is In the options market,
59:10supply and demand play a big role.
59:12>> Mhm.
59:13>> What is considered as a cheap option or
59:15expensive option plays a huge role
59:19because prices tend to move or the
59:22options market tends to move where cheap
59:23options are
59:24>> of course
59:25>> and we will analyze that in the
59:26volatility surface.
59:28>> All right. Um so this is at the end of
59:31the day what we want to do is here we
59:33want to go into the futures and be able
59:35to profit from this knowledge. Okay we
59:39already mentioned who are they they are
59:41they don't take positions they just
59:42provide liquidity.
59:43>> Mhm. Now
59:46zero options the options that had been
59:49introduced to the market in 2021
59:52nowadays they represent 60% of the daily
59:55S&P volume and the whole indices right
59:58that's very important and that we we'll
1:00:01come into this because that's that
1:00:04change the game right but also why
1:00:08options are so important so I got this
1:00:10graph for you this is this is the
1:00:13increase in options
1:00:14volumes,
1:00:15>> right? And the projection in the future.
1:00:18>> Oh, wow.
1:00:18>> So, if you see the the dark blue are the
1:00:21options um equity options and the green
1:00:24ones are options on indices. Look what
1:00:27happened at 2021. They start to get
1:00:29explosive move
1:00:31>> and the projection is even bigger. I I
1:00:33remember when I was looking because I I
1:00:35need to look a lot of data in order to
1:00:37if you see this is a process which has
1:00:39been taking more than four years maybe
1:00:41understand this but
1:00:44um at one particular month the options
1:00:46market grew like 300% monthto monthth
1:00:50>> wow
1:00:50>> so that's huge um to put it in I like to
1:00:54put you know easy things so this is the
1:00:56options close if you see these waves
1:00:58this is the futures and this is the
1:00:59stocks
1:01:00>> and so you can See the options flows
1:01:03huge. They are huge. They they they're
1:01:06huge. Um this is a a year-to-day
1:01:09percentage of zero DT. They went from
1:01:1221% in 2021 when they were launched to
1:01:16nowadays 63% of daily volume. Okay. And
1:01:20bear in mind what I told you before in
1:01:22ser options market makers are driving a
1:01:25F1 car and they need to hash very quick.
1:01:29Okay. Um, I I just put this because it's
1:01:33important. Um, in October 2025, last
1:01:36year, it was a record of 110 million
1:01:39contracts traded.
1:01:40>> October 10th. That wasn't October 10th.
1:01:43Was that when Trump wasn't there?
1:01:45>> Yeah. Yeah. I can't remember, but it was
1:01:47>> around there, right?
1:01:48>> It was around that day something
1:01:49happened and and that was a record day.
1:01:51M
1:01:52>> and for us for our you know futures
1:01:56trading on September 3rd
1:01:5970% of all options volume were zero DT.
1:02:03>> Wow.
1:02:05>> What doesn't really mean if you if you
1:02:07if you think about it daily we trade
1:02:10$3.3 trillion
1:02:13on volume.
1:02:14>> Wow.
1:02:15>> Imagine 70 60% are zero DT. Imagine how
1:02:19much money the market makers need to
1:02:22daily hedge in the market in the futures
1:02:25right. Um so that actually telling you
1:02:29okay the moves that we see in the
1:02:31futures are not actually random you know
1:02:35um I remember when I was studying there
1:02:38were this discussion between these
1:02:39scholars in many papers markets are
1:02:42random no markets are not random when
1:02:44you see this this is okay maybe markets
1:02:47are not random okay and if we somehow
1:02:51manage to follow that dealer hedging the
1:02:54market maker hedging
1:02:56Maybe we can profit from that, right?
1:02:58Because it's it's huge money. Okay? And
1:03:01remember, more than 60% are COT
1:03:03auctions. Keep that in mind. Okay? Now,
1:03:07imagine knowing before it happens, you
1:03:10know, that moment where the market maker
1:03:12needs to go and buy hundreds of millions
1:03:15of dollars in the ENQ.
1:03:16>> Mhm.
1:03:16>> That would be I mean for us that would
1:03:18be amazing. It would be
1:03:19>> of course
1:03:20>> it would be take the subjectivity of the
1:03:22market you know because markets people
1:03:25trade not the markets but subjectivity
1:03:28on some strategies
1:03:29>> you know like like trading this
1:03:31>> well this is what everyone's hunting for
1:03:33right certainty they want certainty and
1:03:35we're not saying this gives certainty
1:03:37but it allows you to have a very direct
1:03:41insight because that's what
1:03:43>> you hear probably loads of retail
1:03:44traders say I want to trade like an
1:03:46institution I want to trade like a bank
1:03:48But then what they do is then take these
1:03:52a lot of the time it's gurus but just
1:03:53general you know sentiment from social
1:03:56media of like this strategy is
1:03:57institutional this strategy is the how
1:03:59the banks trade right
1:04:01>> but this is actually where we no one has
1:04:04to say it we can look at it we can you
1:04:06can see it it's in the math of the
1:04:08market itself
1:04:09>> and and I'm going to give you a tip and
1:04:12we will see in a minute how the
1:04:13institutions work trade is analyzing the
1:04:17volatility surface
1:04:18which we will analyze it and we will
1:04:20trade on that. And
1:04:23so right, we have the structure. We know
1:04:25this guy for me this guy moves the
1:04:28market. And it's funny because when you
1:04:31think about what we seeing here um you
1:04:35know in the retail world there are you
1:04:36know you see um uh market manipulation.
1:04:40This is how the institutions manipulate
1:04:42the market and they show a graph where
1:04:45the price go down and then rallies you
1:04:47know these kind of things. And then from
1:04:49my experience it's not like that. It's
1:04:52it's like I immag
1:04:54says institutions they're forced to come
1:04:57into the market. They don't care about
1:05:00the retail. Honestly, I'm telling you
1:05:02100%. They don't care. They don't care
1:05:04about the stops of the retail. They
1:05:06don't care about this liquidity. They
1:05:07just need to come into the derivatives
1:05:09in the options market to h the
1:05:11portfolio.
1:05:12Maybe they need some levels right
1:05:17for accounting purposes, for hedging
1:05:19purposes. They kind of, you know what, I
1:05:21want to do a caller on this level, which
1:05:24is what we talk about like before JP
1:05:27Morgan W, which hedge fund. They need to
1:05:30cover 22 billion position in SPS. So
1:05:33they come into the market, they analyze
1:05:35with the quant team and say, "Okay, I
1:05:37gonna make this caller to h my
1:05:39exposure." But it's they, you know, it's
1:05:42$22 billion. They don't care about
1:05:45retails.
1:05:46>> Yeah. Exactly. Right. And that's just
1:05:48the nature of human nature in terms of
1:05:51where people are placing their stops are
1:05:53just going to be in in the path.
1:05:55>> Yeah.
1:05:56>> You know, that's just the natural order
1:05:57of things.
1:05:57>> Yeah.
1:05:58>> Exactly.
1:05:59>> So now we're getting closer to to solve
1:06:02the puzzle. We need to understand first
1:06:05of all this mechanical influence which
1:06:07we already kind of see it of market
1:06:09makers hedging these zero DT options and
1:06:12they go into the futures. Why? Futures
1:06:14are liquid the most and and I always
1:06:17remember Jim Carson say you know that's
1:06:20the perfect way to hedge your exposure.
1:06:22Why? Because they're so liquid.
1:06:24>> That's why you know when when he p on X
1:06:26he put a cross on a bananas. You know
1:06:28the monkey want his bananas. It's just
1:06:30this. That's where you find your bananas
1:06:32in the futures markets. And then we need
1:06:36to understand the volatility surface.
1:06:37>> Yes.
1:06:38>> And I I urge people don't leave. Don't
1:06:40be afraid. I going to try to explain it
1:06:43very easily. And this is how
1:06:45institutions trade.
1:06:47>> Institutions don't trade moving areas.
1:06:49They don't trade cross you know the
1:06:51night moving average cross the 20 the 20
1:06:54the 50 and then I take the position. No,
1:06:56they they trade using the volatility
1:06:58surface. Okay.
1:07:00Now what's the mechanical influence on
1:07:03zero? We already saw it. Um when we see
1:07:07the first order derivatives, they need
1:07:09to hedge their delta and they use the
1:07:12second order derivatives gamma u to keep
1:07:15hedging as the market moves. And when
1:07:18the contract is going to expire or very
1:07:20close to expire, charm the second
1:07:22derivative tell them you need to hedge
1:07:25certain amount of money because time is
1:07:27running out.
1:07:28>> Yeah.
1:07:28>> Yeah. Um and then banner volatility but
1:07:32as I say before this is dependent uh
1:07:36volatility dependent and what we do in
1:07:39in day trading sculping we volatility
1:07:42doesn't change during the day so we
1:07:44don't care but people who trade options
1:07:46they should look into bottom okay
1:07:49>> now this is what delta looks like we
1:07:53already saw it but what's important to
1:07:55know is zero options
1:07:59If we have 5 hours for the price or for
1:08:02the option to expire,
1:08:03>> y
1:08:04>> this is going to be the the profile of
1:08:06delta. You see is is soft curve and we
1:08:09already saw that
1:08:10>> you know that's what the market maker
1:08:12this is going to be translated into
1:08:14dollar amount.
1:08:16>> Okay.
1:08:16>> But look what happened when the market
1:08:18when we have only one hour. So
1:08:21>> it's exponential.
1:08:23>> Yeah. And and it changed the slope. So
1:08:26what it means is as time passes the
1:08:29market maker needs to be more
1:08:31aggressively. He needs to hedge more
1:08:32aggressively. Okay. And also when the
1:08:37price get to an important level he needs
1:08:40to increase the h.
1:08:41>> Yeah.
1:08:42>> And that's when you see these big moves
1:08:44into the market. They get to a level and
1:08:47then come back.
1:08:48>> Yep.
1:08:49>> That come back is what we trade. And it
1:08:51has a logic, a mathematical logic,
1:08:53right? But this is this is what happens
1:08:56in delta neutral hedging right we
1:08:59already saw this and it's like okay this
1:09:02is the client buying the call this is
1:09:04just an example this is the market maker
1:09:06taking the other position selling the
1:09:08call so he needs to to be in order to be
1:09:11delta neutral delta zero he needs to buy
1:09:14ENQ futures
1:09:16>> understood
1:09:16>> yeah liquidity that's where they find
1:09:18the liquidity
1:09:20>> now
1:09:22second order derivative price move.
1:09:24Price is not static. So he needs to use
1:09:27his second order gamma in order. This is
1:09:30translated in dollar amount. All right.
1:09:33>> This is going to tell him how much money
1:09:34he needs to keep hedging.
1:09:36>> Yeah. So that from your example earlier
1:09:39for educational purposes original
1:09:41position 500k this is then going to
1:09:43dictate okay I need to add 200.
1:09:45>> I need to add
1:09:46>> add accordingly.
1:09:48>> Yep. And it's very interesting when you
1:09:51analyze calls delta and puts delta when
1:09:55the price get to a certain level the
1:09:57market maker is buying buying
1:09:59aggressively.
1:10:00>> It gets to a level and then you you see
1:10:03the market kind of not collapse but
1:10:05reverse a lot and everything has to do
1:10:07with this analysis of delta calls and
1:10:10puts. Okay.
1:10:12Now I know it's a lot of um kind of
1:10:15maths but I'm going to try to explain
1:10:17this very quick.
1:10:18>> Okay.
1:10:19>> Um
1:10:21the blue line is one month options to
1:10:25expire. So this is an option who is
1:10:27going to expire in a month.
1:10:28>> Yeah.
1:10:29>> If you see they kind of exhibit a normal
1:10:31distribution which is really soft.
1:10:33>> What it means? It means that the market
1:10:35maker in his hedging you know going into
1:10:38the futures and hedging is not as
1:10:40aggressive. M
1:10:41>> it has to be
1:10:42>> self hedging.
1:10:43>> Why? Because the option has time.
1:10:45>> Mhm.
1:10:46>> And probably you have heard from your
1:10:48other um interviewers here that options
1:10:51are uh they have three dimensions.
1:10:54>> Yep.
1:10:54>> Yeah. They have implied volatility,
1:10:56strikes and time. So time is very
1:10:59important for options and and basically
1:11:02this option the market maker doesn't
1:11:04need to hedge it that much. Now as we
1:11:06get close to expiry the green one is
1:11:09going to expire it in 3 weeks. Now you
1:11:11see that the the curve is compressing
1:11:14right when the option has three days is
1:11:18the yellow one and the zero options had
1:11:21this kind of it's called in mathematical
1:11:24terms leptocartic
1:11:26shape you see
1:11:28>> extreme peaks
1:11:29>> yeah what it means is market maker needs
1:11:32to be very quick and very aggressive
1:11:35>> it goes back to your F1 example right
1:11:37>> so this is I like the F1 example
1:11:40So um
1:11:42um
1:11:44the mechanical and this this is the kind
1:11:47of technical words given by um um the
1:11:51the mechanical hedging obligations
1:11:53generated by zero DT options are by any
1:11:57institutional measure massive in a scale
1:12:00>> streaming gamma which is this is
1:12:02streaming gamma concentrations and
1:12:05executed at machine speed
1:12:07>> that's the words from Mandi Su from CBO
1:12:10research. I don't know if you're going
1:12:11to if you're going to get into um into
1:12:14options flow, you you have to follow
1:12:16Mandy. She's
1:12:17>> you need to reach out to Mandy. Yeah.
1:12:18>> Ah she's actually uh Jean Carson
1:12:21interview her.
1:12:22>> Oh really?
1:12:23>> Yeah. Yeah. In his in his book in his
1:12:25podcast
1:12:26>> recently. Yeah. Yeah.
1:12:27>> Yeah. So so she's very knowledgeable.
1:12:30I'm subscribed to her um weekly um
1:12:34>> newsletter
1:12:35>> newsletter. So basically this is the
1:12:37research from them and I put it here
1:12:39because so people to understand this is
1:12:41not me this is not something that I you
1:12:43know I came to my research no this is
1:12:46people who has been researching this
1:12:47with time okay
1:12:50now we need to understand volatility
1:12:52surface we understood now how the market
1:12:55actually works right and the structure
1:12:58and the and why market makers move the
1:13:00market
1:13:01>> now we're going to get to the second
1:13:02part which is I mean the aim of
1:13:04everything is to get to a trading
1:13:06you know
1:13:07>> to the trading where we can trade this
1:13:08and we're going to show it
1:13:09>> but before that
1:13:11>> and and giving what you say before
1:13:14>> this is how institutions trade
1:13:17>> they and and honestly I never look at
1:13:19moving average in my life when I was
1:13:21institutional trader I never look at
1:13:23that because it didn't make sense to me
1:13:25>> and so
1:13:28it's it's is it's is it's a term
1:13:30volatility surface everyone hear about
1:13:31volatility surface and for some people
1:13:34especially A future trade is a mystery.
1:13:36You know what that thing? Yep.
1:13:39>> But is is this is the weapon. This is
1:13:41how institutions tra and this is the
1:13:44symmetry
1:13:46knowledge from an institution and
1:13:48retail. You know, retail. Unfortunately,
1:13:50we have all these gurus, gurus, you
1:13:52know, selling courses
1:13:54$8,000, $5,000 for okay, let's going to
1:13:57try a berban. I'm like, oh my goodness.
1:13:59And us. Um now I tried to explain this
1:14:04and I was thinking and I was talking to
1:14:06um the guys from Guess which are the you
1:14:10know after Jim Carson I think they're
1:14:11the most knowledgeable person to
1:14:13understand this.
1:14:14>> It's two guys John he's um he's kind of
1:14:18the maths guy he trade options and and
1:14:22Jazz he trades futures.
1:14:23>> Oh no. So I think in pandmia combination
1:14:26>> in pandemia they they get together and
1:14:29they they know the market they know this
1:14:31structure from a to so they got together
1:14:34and actually um guestbot which is the
1:14:37platform that we use in order to see
1:14:39this I'm going to show you later they
1:14:42develop for themselves they never
1:14:43thought they going to sell it or
1:14:46anything
1:14:46>> they or they made it for themselves
1:14:48understood. Yeah,
1:14:49>> the tray, right? And and so I was
1:14:51talking to John before I came and I
1:14:53said, "John, how can I explain this so
1:14:55people don't get and he came up with
1:14:57this amazing idea?" He said, "Listen,
1:15:00there are two types of traders, right?"
1:15:03Sorry, no normal traders, but the
1:15:04traditional trader, what he does with
1:15:07all his strategy is like looking at the
1:15:09clouds and see, okay, it's a gray cloud,
1:15:13it's windy, you know, in countries like
1:15:16mine, you see the birds flying and a
1:15:18normal trader could say, okay, it's
1:15:20going to rain.
1:15:20>> Mhm.
1:15:21>> Or maybe it's going to rain because the
1:15:22clouds are miles away.
1:15:24>> Mhm.
1:15:25When you understand the volatility
1:15:27surface and its relationship with price
1:15:30is like seeing the same clouds but have
1:15:33an instruments to say okay this is the
1:15:36air pressure this is the wind conditions
1:15:39this is the humidity
1:15:41>> all these kind of really advanced tools
1:15:45that can actually tell you with more
1:15:47more precise more probability actually
1:15:49it's going to rain.
1:15:50>> Yeah. So if you think about this is the
1:15:53difference from the traditional retail
1:15:55trader and an institutional trader,
1:15:58right?
1:15:59>> Yeah. Similar example, um Andrea Jimmy
1:16:03when we did our our chart fanatics, he
1:16:06was like the difference and that he's
1:16:08referring more so to order flow but with
1:16:10a mention of the options flow. Um
1:16:12similar example is like having just a
1:16:14normal gun,
1:16:15>> right, just with a a red dot site. Yeah.
1:16:18Versus having like thermal scope and
1:16:19night vision. and target tracking and
1:16:22everything. Um, it's having that level
1:16:25of detail
1:16:26>> to make a more informed decision based
1:16:29on actual data versus
1:16:31>> just visually looking uh maybe at
1:16:33technical analysis or even as you
1:16:36mentioned uh use of indicators.
1:16:39>> Yep.
1:16:40>> A lot of people try and rely on
1:16:43indicators as if it's that data
1:16:45>> you know when in reality this is the
1:16:47data. Yep. Yep. So it's volatility
1:16:49service that data essentially.
1:16:51>> Okay. Understood.
1:16:52>> And and and there is a relationship
1:16:54between volatility surface and a spot
1:16:56price.
1:16:57>> All right. We we saw it in kind of
1:16:59second plane you know what what's
1:17:00happening. But the volatility surface
1:17:02being a three triangal
1:17:06um we will see it how actually help us
1:17:09to trade. At the end of the day I guess
1:17:11everyone is kind of waiting. Come on
1:17:12give me the trade. How can I trade this?
1:17:14But at the end of the day, this
1:17:16knowledge is important in order when
1:17:18you're going to trade and we see
1:17:20>> well we're very lucky. We have a very
1:17:21good audience who you know really
1:17:23appreciate the depth. I believe for the
1:17:25most part ever so often you see a
1:17:26comment like ah get to it but reality
1:17:28being as we mentioned earlier
1:17:30>> listen
1:17:31>> we we could show you levels but if you
1:17:32don't understand those levels you it
1:17:34doesn't mean you're going to doesn't
1:17:35mean anything to you
1:17:36>> and honestly a race I truly believe
1:17:39every single trader should notice
1:17:41because it's going to help tremendously
1:17:43doesn't need to change their strategy
1:17:46um as Andreas has an strategy volume
1:17:48profile you measure 15 or 30 minutes
1:17:51>> you know
1:17:53same as Fabio you know is it's not that
1:17:56change the strategies is to have some
1:17:59you know like lenses like vision you
1:18:02know I'm usually I take this long
1:18:04position oh wait a minute this is a cold
1:18:05war
1:18:06>> you know I'm not going to take it
1:18:08>> exactly
1:18:09>> or as you mentioned earlier taking
1:18:10profits
1:18:11>> taking profits letting some come back
1:18:13and and losing out
1:18:14>> exactly so
1:18:17um if you see this is this is the um um
1:18:21volatility surface Okay. And the
1:18:24volatility surface is 3D because you
1:18:26have implied volatility on the vertical
1:18:29axis and then you have the price the
1:18:32strike prices and time. So that creates
1:18:36that kind of surface. Okay.
1:18:39>> Now the thing what happens on why is
1:18:42this is so important when someone an
1:18:44institution came and they need to buy
1:18:47options. I'm not saying a call a put he
1:18:51needs to buy auctions. he's buying
1:18:52volatility. And actually, if you talk to
1:18:55options traders,
1:18:57they don't trade
1:18:59uh direction. They trade volatility.
1:19:01>> Mhm.
1:19:02>> You know, they they they don't care.
1:19:04What we see, what we know here is they
1:19:05don't care about um direction. They just
1:19:08trade volatility.
1:19:09>> Yes.
1:19:09>> How far is going to get there? Yes. But
1:19:13it's going to get really quickly or it's
1:19:15going to get really slowly.
1:19:16>> Okay.
1:19:16>> You know, that that kind of things. And
1:19:18and that's what they care. And I
1:19:20remember when I was an working here in
1:19:22London. Um I love options. Always love
1:19:26options. Actually, that's why I'm in the
1:19:27markets because um when I was at junior,
1:19:30I did very well in options. And then um
1:19:34I was in the in the desk with these
1:19:36guys, the options guys in in here in
1:19:38London. And one day I was sitting with
1:19:40them trying to understand things and
1:19:42they say, "Look, you see these options?
1:19:44We put in the draw, we close the draw,
1:19:46we don't look at them anymore." And I
1:19:48was like, "Why?" He said, "We just don't
1:19:50care. You just whatever it goes up or
1:19:52down, okay, we're safe."
1:19:54>> Mhm.
1:19:55>> You know, and and I found it amazing
1:19:57because, you know, what you trade, what
1:19:59I trade or what we had learned before
1:20:01is, oh, it has to go up or has to go
1:20:03down. But never I don't care where it
1:20:05goes
1:20:06>> as long as it
1:20:07>> as long as it moves or doesn't move that
1:20:09quick.
1:20:10>> Yeah.
1:20:10>> So, that's that's what these guys plays
1:20:12uh play. So for us what is important to
1:20:16know that when someone came to buy
1:20:19options
1:20:20um create this spikes right is is just
1:20:24imagine you have the volatility surface
1:20:26someone came and buy options and create
1:20:28this cone in the volatility surface.
1:20:31>> Yes.
1:20:31>> Why? Because they they take liquidity
1:20:33from the market and implied volatility
1:20:37increase. Right. Um so why is that
1:20:40important? Because in the hedging
1:20:43process obviously we cannot go deep
1:20:45because we don't have u 30 hours to
1:20:48explain
1:20:49but as they buy this that create this
1:20:52this spikes and that attracts the price.
1:20:55>> Mhm.
1:20:56>> Okay.
1:20:57And attracts the price because the
1:20:59market maker needs to buy. Remember the
1:21:00hedging process.
1:21:01>> Yes.
1:21:01>> He needs to buy. So what happened when
1:21:03they get to the top of that pig?
1:21:05>> The market is going to reverse.
1:21:07>> Mhm.
1:21:08>> Why? Because there is no more hedging to
1:21:09do. there is no more buying. Okay? And
1:21:12the price has to come back. If you if
1:21:15you think this volatility surface
1:21:18um imagine that you have a a ball, you
1:21:21know, a little ping pong or table tennis
1:21:23ball and the ball moves around that
1:21:25volatility. If the ball goes up to the
1:21:27pig
1:21:28>> has to come back.
1:21:29>> Yes.
1:21:30>> It's physics, supply and demand.
1:21:32>> Yeah.
1:21:33>> Okay. And the same way when someone
1:21:36sells options, they sell volatility.
1:21:38What it means they make options cheap,
1:21:41right? And when they make options
1:21:43cheaper,
1:21:45they create these pockets on the
1:21:46surface, right? And the pockets, what it
1:21:49means that if if you think about the uh
1:21:52table tennis ball that is moving around
1:21:54that that kind of surface, it will tend
1:21:57to go to that pocket.
1:21:58>> Yes.
1:21:59>> Okay. That's again physics and supply
1:22:01and demand in auctions.
1:22:04>> That's an amazing information. Once you
1:22:06have that information, you know what the
1:22:09price is going to do, right? And
1:22:13for the guys who trade traditionally,
1:22:16volume profile is this spikes of um
1:22:20buying volatility is like that um high
1:22:24value nodes.
1:22:25>> Mhm.
1:22:26>> Right. Where they they want to trade
1:22:28these high value nodes and these pockets
1:22:30of selling volatility is like the low
1:22:32value nodes.
1:22:32>> Mhm. you know where they go to there and
1:22:34then the price
1:22:35>> spikes for
1:22:36>> move very quick to that low volatility
1:22:38and then it spikes why because there is
1:22:40no buyers there's no volume you see in
1:22:42the volume profile that kind of
1:22:43>> yeah yeah we've had Carman Rosato Fabio
1:22:46Andrea all show the low volume
1:22:48>> look how amazing is we explaining from
1:22:50the volatility surface now uh spectrum
1:22:53everything comes now to the point where
1:22:55buying options is buying volatility and
1:22:58crazy those spikes selling options is
1:23:02crazy
1:23:03pockets. All right.
1:23:05>> So, understanding the relationship
1:23:07between bold surface and spot actually
1:23:10create trading opportunities.
1:23:12>> Yeah.
1:23:13um for that's and that's the work that
1:23:16gu um guess whatot has done say listen
1:23:19I'm going to take this old information
1:23:20John and jazz and you know what we're
1:23:22going to do we're going to put it in a
1:23:25tradable easy way so we can trade
1:23:28because they never thought to sell it so
1:23:30we can trade easily now the fact that
1:23:33zero options are more than 60% nowadays
1:23:37on a $3.3 trillion market
1:23:41>> Mhm. What it means that if you manage to
1:23:44get that pick of volatility or pockets
1:23:47of volatility
1:23:48>> and you manage to understand that how is
1:23:51that going to affect the market how is
1:23:54the market maker what needs to do there.
1:23:57>> So then they create this is code you
1:23:59know you you can get this data free from
1:24:01the CVOE the problem it will have like
1:24:0410 15 minutes delayed.
1:24:06>> Oh okay
1:24:07>> and the problem you will have the row
1:24:08data. So what guess what has done is
1:24:11>> taken that
1:24:12>> taken it put a lot of coding a lot of
1:24:14knowledge um they know a lot you know
1:24:17honestly after Jim Carson I think these
1:24:19guys are the ones who know most about
1:24:20the market and and and they put the
1:24:24knowledge for us to trade very easily.
1:24:27We're gonna go through some examples to
1:24:29see, you know, all these, you know, we
1:24:32try to do it the quick and and easy way,
1:24:34but it's it's is it's it's a lot to
1:24:36take, but how to translate this into
1:24:39actionable trading examples.
1:24:42And I like to think of this as I know
1:24:46it's not, but it's like playing poker.
1:24:48>> Mhm.
1:24:49>> Why? Because I imagine myself sitting in
1:24:52a table where on my right I go the
1:24:54market maker.
1:24:55>> Mhm. And in front of me I go the
1:24:58institutional guy who put big money in
1:25:01the market on certain level. Yeah.
1:25:03>> And he has to do something.
1:25:05>> And then on the other side there is
1:25:07another institutional who knows what I
1:25:09know. So he's going to play against you
1:25:12know he's going to do it the same game.
1:25:13But
1:25:14>> being an institutional is going to put a
1:25:16lot of money. I'm only going to put my
1:25:18one or two ENQ contracts.
1:25:20>> I trade ENQ. I don't trade micros
1:25:22anymore because with this um it's
1:25:25amazing with this
1:25:28trading and Q my stop losses and I know
1:25:31when I teach this to people they say
1:25:33you're crazy my stop losses are 30 to 40
1:25:36to 50 ticks that's it there is is that
1:25:40precise that that's my stop losses
1:25:43>> they are like oh you put ATR how many
1:25:45ATR 150 ticks 200 ticks and like no
1:25:49>> remember the market maker is going in a
1:25:51F1 car at 300k per hour. If the market
1:25:55moves in a level, it has to move. It
1:25:57will move. If it doesn't, you get out of
1:26:00it quickly.
1:26:02>> So this is we we um guess what has
1:26:06create three one two three four or five
1:26:09kind of models. So the first one which
1:26:12people can trade options in XPX or they
1:26:15can trade futures on ES. I trade ENQ
1:26:18basically because when you see I don't
1:26:21know if you ever seen uh because you
1:26:22trade foreign exchange but when you see
1:26:25the the charts on SPX which is the you
1:26:29know S&P 500 500 or the SPY which is the
1:26:33cheaper contract ETF
1:26:35>> or NDX or Q's or ES or NQ when you see
1:26:40when you put all this graph at the same
1:26:42moment you know they're behaving in the
1:26:44same
1:26:45>> so if the market goes up in SPX, SPY
1:26:48goes up, ES goes up, QQQ goes up, NDX
1:26:51goes up. If the market gets to a level
1:26:53and then come back, all of them will
1:26:55come back
1:26:56>> and and I think it's this market maker
1:26:58relationship that needs to have you know
1:27:00that actions actually create that same
1:27:02structure.
1:27:03>> Understood.
1:27:04>> So the spot um that's why I'm looking
1:27:06XPS for this trade, you know, for the
1:27:09levels, I'm trading NQ.
1:27:10>> Mhm.
1:27:11>> Okay. People can trade ES
1:27:13>> of course. Yeah.
1:27:13>> Yeah. So it's it's just the same thing.
1:27:16So for instance um have a look the one
1:27:18on the left you see price on XPX. Uh by
1:27:22the way this is the platform of guestbot
1:27:24on the subscription which is called
1:27:26classic.
1:27:27Bear in mind this is not the same as
1:27:29just getting the data. It has a lot of
1:27:31coding because remember what we talk
1:27:35about the market maker he's providing
1:27:37liquidity
1:27:38>> and then at the end of the day he goes
1:27:40at the end of the the the process he
1:27:42goes into the futures to trade right but
1:27:46what happen if someone come to the
1:27:47market maker and say listen I want to
1:27:49buy a call at this strike and then
1:27:52someone else come and say I want to sell
1:27:54a call at the same strike so the market
1:27:56maker is not going to h the buying of
1:27:59the call and then he's going to hedge
1:28:00the selling of the call. What the market
1:28:02maker is going to do, he's going to
1:28:03match them.
1:28:04>> Of course. Yeah.
1:28:05>> And then charge the spread from this
1:28:07side, charge the spread from that side.
1:28:09>> Fantastic you guys.
1:28:11>> But if you think about it, he doesn't
1:28:13need to do anything on the futures
1:28:14market.
1:28:15>> Yes.
1:28:16>> And as we saw before, there is a
1:28:18relationship between the futures and the
1:28:20options. So the options move the spot
1:28:23market,
1:28:24but then as we will see, the spot market
1:28:27will move the options. So it's a it's a
1:28:30it's a circle relationship.
1:28:32>> So on this on this side what's happened
1:28:34the market went down to this what is
1:28:37called the max or the pick put gamma.
1:28:40This these red bars on the left are puts
1:28:45all the complex of put in the XPX market
1:28:48and the green ones are the calls.
1:28:50>> Yeah.
1:28:52>> So what's the logic? Why why the price
1:28:54you see came to the put? We can have it
1:28:57bigger.
1:28:58>> Yeah. That would be perfect.
1:28:59>> Um. Huh. The market came to the put
1:29:04which is called max put gamma or pickp
1:29:07put gamma. You see what happened? It's
1:29:10rejected.
1:29:11Try to come back and it's rejected.
1:29:14>> Mhm.
1:29:15>> People who
1:29:16>> in terms of this particular example is
1:29:18it the the red dash line?
1:29:21>> Yeah. That would be the war.
1:29:23>> That would be the war.
1:29:24>> Okay.
1:29:24>> That's within zero DT options. This is
1:29:27the put wall.
1:29:29>> Yep.
1:29:29>> Which provides resistance. Anyone who is
1:29:32trading whatever strategy will
1:29:35>> and I like to have this level
1:29:37>> to get that level. It's taking all the
1:29:39information we've discussed so far.
1:29:40>> Oh yeah. Yep.
1:29:42>> Okay.
1:29:42>> You see everything comes to this.
1:29:44>> Yeah.
1:29:44>> Yeah.
1:29:45>> So
1:29:45>> well you you did say that so we're now
1:29:47seeing it.
1:29:47>> Yeah. So now it's is for instance for me
1:29:50it's easy to this is this strategy uh we
1:29:53will see has 75% winning rate
1:29:58>> and I like to trade in ENQ okay
1:30:01>> and with this strategy how frequent
1:30:03would you say trade opportunities come
1:30:06>> this one has one or two trading
1:30:09opportunities in the day that's it
1:30:12>> sometimes it doesn't so you don't trade
1:30:14it but we have another models which I
1:30:16trade more
1:30:17>> okay Um but this this this is look if if
1:30:20you don't have this information you
1:30:23would never know I can't move that you
1:30:26would never know that this is going to
1:30:28reverse.
1:30:29>> Mhm.
1:30:30>> And why reverse is the question. Yeah.
1:30:32Everything that we saw but we can use
1:30:35the board again.
1:30:35>> Yeah of course.
1:30:36>> Okay. So
1:30:40why why the price reverse there? And why
1:30:42do I like to see this as playing poker?
1:30:45Let let's let's let's keep with the uh
1:30:48call example so people don't get you
1:30:50know going to change. So remember this
1:30:52is the payoff of a call. All right. And
1:30:54this is the strike. Okay. So this is the
1:30:57institutional. Um let's going to put it
1:30:59here. The institutional.
1:31:02All right. And this is the market maker.
1:31:04>> Mhm.
1:31:04>> Okay.
1:31:06I love this. Sorry. This is I love this
1:31:10more than making money.
1:31:12And imagine um options have something
1:31:17called convexity which we already talked
1:31:19about it. So convexity is that
1:31:21exponential exponential payoff of the
1:31:24options. Okay.
1:31:26>> So I just wanted to to to mention it
1:31:28>> of course.
1:31:28>> And
1:31:30now
1:31:32imagine you are an institution right and
1:31:35you decided to put this call in the
1:31:38market.
1:31:38>> Yeah.
1:31:39>> Okay. So what's going to happen in your
1:31:41portfolio? So you have one portfolio
1:31:44which is options, right?
1:31:47Let's call it you bought that call. So
1:31:48you have call positive. Okay. the market
1:31:53maker who sold that call.
1:31:56Uh
1:31:58yeah,
1:32:00he's going to have in option. Oh, he's
1:32:03going to have in options terms
1:32:07still the same market maker in the
1:32:09options space.
1:32:12He's going to have the opposite, right?
1:32:14He's going to have cool negative in his
1:32:17portfolio.
1:32:18But remember because he needs to hedge
1:32:21his position,
1:32:24he also have an NQ position.
1:32:26>> Yeah.
1:32:26>> Right. Which is positive. So on NQ, he's
1:32:30going to be positive. Okay.
1:32:32>> Okay.
1:32:33>> Now,
1:32:34gamma
1:32:36this institutional
1:32:39he put the position out of the money
1:32:42maybe when the price was here. Once the
1:32:45price get to his level u he's gonna let
1:32:49me see if I can do it right. He's gonna
1:32:51look at his gamma profile. This is gamma
1:32:53profile remember.
1:32:55>> Yeah.
1:32:55>> The top of the gamma profile is going to
1:32:58be his delta which is called delta 50.
1:33:02Why? Because at the money options
1:33:05which are here options at the strike
1:33:08they have a delta of 0.5. What does it
1:33:12really means? It means that
1:33:15actually it's 50% probability that the
1:33:17option will ended up out of the money or
1:33:20in the money. It's just a probability
1:33:22game. But for the institution, if you
1:33:25see the gamma is the peak of his profit.
1:33:27>> Okay.
1:33:28>> So this is the point where he will make
1:33:30most of his profits.
1:33:31>> Mhm.
1:33:32>> Now you think and you say Freddy, but if
1:33:34the price keep going higher, he's going
1:33:36to make money because the price is going
1:33:38higher. Yeah. But there is two reasons
1:33:40or three reasons to take on account.
1:33:42First of all, the convexity of the
1:33:44option means that
1:33:47before it gets to the strike, this
1:33:49options increase in value exponentially.
1:33:51>> Yeah.
1:33:52>> Up to this point.
1:33:53>> Mhm.
1:33:53>> After this point is going to behave one
1:33:55to one because it's going to go, you
1:33:58know, same as low. So, it's going to
1:33:59behave one to one. So, he's not going to
1:34:02make the same amount of money as he made
1:34:04before.
1:34:05>> Doesn't make sense
1:34:07>> for it to continue. If the market
1:34:09continues to go up.
1:34:11>> Yeah. The in terms of the position he
1:34:13has now to what could happen.
1:34:15>> Yeah. Under
1:34:16>> he make let's let's say
1:34:18it from here to here he make let's put a
1:34:21number random numbers
1:34:23>> $100,000.
1:34:24>> Wow.
1:34:24>> Yeah. 100k.
1:34:26>> But for it to move higher
1:34:28>> let's say moves the same distance.
1:34:30>> Yeah.
1:34:30>> Right.
1:34:31>> Let's to put a number. He's not going to
1:34:33make $100,000. He's probably going to
1:34:35make I don't know 60,000.
1:34:37>> Okay. for the same distance is because
1:34:39that convexity.
1:34:40>> Yeah.
1:34:41>> So that's already a risk for him,
1:34:44>> you know.
1:34:44>> Yeah.
1:34:45>> Why? Because if the price and that's why
1:34:48the gamma goes to
1:34:50>> now you're risking 100 to make 60.
1:34:52>> Uh kind of. Yeah. So if you see gamma
1:34:55profile is going up.
1:34:56>> Yeah.
1:34:57>> Up to here and then it start to
1:34:59decrease. Doesn't mean he's going to
1:35:01lose money. It just mean he's not going
1:35:03to make the same amount of money as he
1:35:05made before because of the convexity.
1:35:08>> Yeah.
1:35:09>> Now,
1:35:09>> okay.
1:35:10>> Yep.
1:35:11>> There is something um else that is okay.
1:35:15He make a lot of money on the way up
1:35:17because of this convexity. Now, what
1:35:19happen if the price come backs? He's
1:35:22going to lose a lot of money as well.
1:35:25Obviously, great portion of the money he
1:35:27made, he's going to lose it. Okay? So,
1:35:30these guys are very clever. remember so
1:35:32they they know when they get here is a
1:35:35good point to get out.
1:35:36>> Yeah.
1:35:37>> Now the second point which we didn't
1:35:39talk about is called theta decay right
1:35:43>> which is like that. So this is the
1:35:46symbol for theta. This is theta decay.
1:35:48What Tad DK is telling in zero DT
1:35:50options is like listen
1:35:52you're making $100,000 but usually like
1:35:56TAD decay um I'm putting this away TADK
1:36:00has a shape like this you know
1:36:04and if we think zero DT options start at
1:36:089:00 in the morning oh sorry 9:30
1:36:11and then they expire at 4:00
1:36:15>> somewhere between
1:36:18I would say midday and 1:30 in the
1:36:21evening this TA decay kind of explode
1:36:25and had this shape what it means the
1:36:27decay it means that this option are
1:36:29going to lose value.
1:36:30>> Mhm.
1:36:31>> Imagine that is like the government who
1:36:32is going to tax your position.
1:36:34>> Yeah.
1:36:35>> Right. So that's why options are complex
1:36:37because people have to be aware of
1:36:39direction volatility and now time you
1:36:42remember we talked about that before.
1:36:44>> Exactly. Yeah. So time is like you have
1:36:46this and the and every minute the
1:36:48government sorry about talking about
1:36:51governments that the government is tax
1:36:52your position.
1:36:54>> Mhm.
1:36:55>> So imagine you already make 100k now you
1:36:58got the risk that the price come back to
1:37:00you. You're going to lose your profit
1:37:02and on top of that decay is going to you
1:37:06know reduce the value of your option
1:37:08>> even more. Yeah.
1:37:09>> So these guys are very clever and they
1:37:11say you know what are you ready? They
1:37:13are informed traders. They know these so
1:37:15they say you know what I get out of here
1:37:17>> which is what we see in the screen.
1:37:20>> Okay.
1:37:21>> Now what happened when they get out of
1:37:22the position? So now they sell the call.
1:37:26>> This is all at a foundational level
1:37:28boils down to math right and numbers. So
1:37:30then these levels
1:37:31>> they're math. That's
1:37:32>> it's just all that math that the
1:37:34institutions have the market maker has
1:37:36being presented into these levels.
1:37:38>> Yep. and and how to trade it is the most
1:37:40important part like you know
1:37:42understanding and and understanding that
1:37:45is is important because you see bunch of
1:37:47red you know red bars
1:37:50>> more yeah
1:37:50>> what does it mean well it doesn't well
1:37:52this this means something but the fact
1:37:55that this is the major concentration
1:37:57this one here is telling me this is a
1:38:00big guy there um I can see but this is
1:38:03billions of dollars on gamma
1:38:04>> this this is actually a gamma profile
1:38:07yeah
1:38:07>> this
1:38:09um the market expressing gamma terms,
1:38:13>> right? And this is telling me just just
1:38:14to give you an example. Um and and this
1:38:17is early in the morning. You see this
1:38:19net gamma?
1:38:20>> Mhm.
1:38:20>> It means that if the market moves 1%
1:38:24the market maker would need to go and
1:38:26hedge $7 billion
1:38:29>> understood
1:38:29>> in the future. So can you imagine how
1:38:31much is 7 billion? That's a lot. And
1:38:33sometimes it comes to 200 300 billions.
1:38:36Wow.
1:38:37So, so now you see now people hopefully
1:38:40they they start to get aware how much
1:38:42money they trade in the market. It
1:38:44doesn't mean they're going to trade it,
1:38:45but it means that if the market moves,
1:38:46they need to h that amount of money.
1:38:49>> So, back back to these guys. So, they
1:38:51they h you know, oh, sorry, they close
1:38:53their position. So, they say, "Oh,
1:38:55market maker, thank you very much. Do
1:38:57you remember the call that I bought?
1:38:59Now, I need to sell it back to you." So,
1:39:01basically, they get zero position in
1:39:03options. Obviously, they make the
1:39:05profit. Y
1:39:06>> and they h the portfolio. Remember they
1:39:08use this to hedge the portfolios.
1:39:09>> Mhm.
1:39:10>> Now we go to the market maker. So the
1:39:13market maker say oh okay now I sold an
1:39:17option. Now I need to buy it back
1:39:19because the guy this institution is so
1:39:21>> it's finished. Yeah.
1:39:22>> Zero. Okay. So what happened now with
1:39:26the futures? He's got an imbalance.
1:39:29>> Yep. So what he needs to do in order to
1:39:34be delta neutral remember his job is to
1:39:36provide liquidity not to take positions.
1:39:39>> Yeah.
1:39:39>> So he's got an imbalance of futures. Now
1:39:42he needs to go to the market and sell
1:39:44futures and that make those as I say
1:39:47before remember that I talked about cold
1:39:49walls.
1:39:49>> Yep.
1:39:50>> So that's when the market there is no
1:39:52more options. He needs to sell futures
1:39:54and that makes the market goes up up. we
1:39:58get into the cold wall
1:40:00and then there is no more options to h
1:40:04market is going to finish very soon. So
1:40:06now he needs to sell futures and that's
1:40:08what happens. Right? This example is
1:40:11exactly the same but
1:40:14it's the opposite. He was selling
1:40:15futures on the way down.
1:40:17>> Yep.
1:40:17>> To hes now that the institution closed
1:40:20his position he needs to go he needs to
1:40:23go into the market and buy futures and
1:40:25that value futures create this move.
1:40:27>> Yeah. And in terms of this uh particular
1:40:31screenshot
1:40:32is uh time frame wise like those candles
1:40:34what what time frame is that
1:40:36representing?
1:40:36>> One minute.
1:40:37>> The one minute. Okay.
1:40:38>> Yeah. And now we will see how much that
1:40:42represents on ENQ. All right. Now I got
1:40:46I got here that that was an amazing day.
1:40:48That happens once or twice on the day on
1:40:51the week. Sorry. Where we got the buy.
1:40:56>> Yep.
1:40:57Now market
1:40:58>> these levels adjust though accordingly.
1:41:00>> No the levels are there. This is spx
1:41:02levels. What is adjust is the gamma.
1:41:05These are gamma. Yeah.
1:41:06>> Gamma gamma lines. Gamma profiles or
1:41:08gamma values.
1:41:09>> So will they be your walls?
1:41:11>> The walls would be the bigger one.
1:41:13>> Understood. Yeah.
1:41:15>> Either inputs or calls.
1:41:17>> Mhm.
1:41:17>> So this example is actually this one.
1:41:20Market goes to a cold wall.
1:41:22>> Yep.
1:41:23>> Right. And gets there. nothing else to
1:41:27hedge above and the market reverse,
1:41:30right?
1:41:31>> Mhm.
1:41:31>> So if you if you see this, you say like
1:41:34you when I look at this and say of
1:41:37course it's this if if it's so the
1:41:39market has positioned himself to certain
1:41:42level once the price get there that's
1:41:45it. They call the day take profits and
1:41:49market maker needs to sell it balance of
1:41:52futures. Mhm.
1:41:53>> Now the futures the formula for options
1:41:56price it has the futures inside u yeah
1:41:59the the spot. So if the spot is coming
1:42:02down because the market maker is selling
1:42:04futures
1:42:05>> yep
1:42:05>> that moves the market down.
1:42:07>> Yeah.
1:42:08>> All right. So so again everything that
1:42:10we saw before is just to trade this. And
1:42:13as I say before, why I like to see this
1:42:15as a a poker a poker game because I know
1:42:19what the market maker needs to do. I
1:42:22know what the institutionals did.
1:42:25>> Mhm.
1:42:26>> And most likely and we can see it here.
1:42:29That's why I love guest. Yeah. It's
1:42:31amazing. So look look hang um look as
1:42:37the price hopefully well we haven't got
1:42:40through the the you know the system
1:42:44but you know I got the market maker on
1:42:46my right I know these guys who position
1:42:49themsel here. Yeah,
1:42:51>> they what they doing
1:42:54but look there are other guys who are
1:42:57actually looking at this and they say
1:43:00you know what we're going to buy calls
1:43:02at this level
1:43:03>> just below the
1:43:05>> no they probably bought it here when the
1:43:07price was at 7,470
1:43:11they start to buy call
1:43:12>> okay
1:43:13>> here which is this so imagine this is
1:43:167470
1:43:20Yeah.
1:43:20>> And imagine this is 7,500.
1:43:25So when the price went here, what they
1:43:28they are looking at this. So they buy
1:43:32calls
1:43:33some way. They buy some structure. They
1:43:35just position themselves here and look
1:43:37what happened. Look what happens when
1:43:40the price get there. They just the price
1:43:42reverse there.
1:43:43>> Yeah. So actually people who comes to
1:43:46trade gamma let's it's no gamma but the
1:43:49options flow through guestbot
1:43:51they if they don't understand what's
1:43:54happening they probably going to make a
1:43:56lot of mistakes trading those levels.
1:43:57>> Mhm.
1:43:58>> That's why it's so important to
1:43:59understand what happens there. Um this
1:44:02is an example what I do. So as I said
1:44:05before this is on the top is XPX but on
1:44:08the bottom is NQ.
1:44:09>> Okay.
1:44:10>> So basically I take the same position in
1:44:11NQ. I go long and then on this levels I
1:44:15go short.
1:44:15>> Mhm.
1:44:16>> And and that's it.
1:44:17>> Do they line up quite frequently? So
1:44:19like that this one
1:44:20>> it's is Yes.
1:44:21>> On the left you can see it's hit the the
1:44:24wall on the on the
1:44:26>> Oh yeah. Because because the wall is on
1:44:28SPX is not in NQ.
1:44:29>> That's what I mean. Yeah. So would you
1:44:31find that they sometimes aren't exact?
1:44:33>> No. No. No. Like the walls on SPX and
1:44:36walls on NQ sometimes. Yeah. But I think
1:44:40the ENQ, which is the NDX traders, I
1:44:44think SPX being the biggest market,
1:44:47>> okay,
1:44:48>> they probably take their analysis based
1:44:50on XPX and they position themselves on
1:44:53>> on.
1:44:53>> So with a position like this, where how
1:44:55would where would you be sort of looking
1:44:57to execute and put your stop loss and
1:44:59your sort of take profits?
1:45:01>> Yeah. So in ENQ I'm looking to buy
1:45:05>> at the level once you just buy directly
1:45:07or you need to see something. I use
1:45:10different things and um what I mean is
1:45:13if the price is going very um if the
1:45:16slope of the price is going very hard
1:45:20you know the slope is is is going with a
1:45:22lot of speed
1:45:23>> it's like physics it's going to cross
1:45:24the level
1:45:25>> okay
1:45:26>> so I wait for the level to be recover
1:45:28>> okay
1:45:28>> and then I could have an stop loss by
1:45:31structure you know
1:45:32>> below the the wherever that low was
1:45:35>> yeah because remember what I say before
1:45:38these levels they have to go. This is
1:45:40the market maker driving a F1. If it
1:45:43goes it has to go.
1:45:44>> Yeah.
1:45:45>> If it doesn't get out of it because
1:45:47something else is happening behind the
1:45:49scenes that we don't see. And usually
1:45:51that happened and so I take the position
1:45:54in cube. Now if the price is coming with
1:45:57a low slope more gentle I know it's not
1:46:02going to break it. It just kind of
1:46:04>> How would you describe that one there?
1:46:05The the top left. Um
1:46:07>> would you describe that as a
1:46:09>> look? But look. Yeah. Look. Oh, sorry.
1:46:11Let me
1:46:12>> It's okay.
1:46:13>> How can I Okay, look what what happened.
1:46:16We were very fast.
1:46:18>> Yeah.
1:46:18>> But I'm far away from my level.
1:46:21>> Yeah.
1:46:22>> And then look, the prices the prices
1:46:23stop here.
1:46:24>> Mhm.
1:46:25>> You know that that that deep uh move
1:46:28down and then kind of cushion that move.
1:46:31>> Yeah.
1:46:31>> Then it slowly went here, reversed
1:46:34slowly and then went up. So the I'm
1:46:37going to show you the positions I take.
1:46:38>> Okay.
1:46:39>> So this is basically here.
1:46:40>> Mhm.
1:46:41>> You know, I I I try to take positions
1:46:44here and put my stop loss below.
1:46:46>> Okay.
1:46:46>> Yep.
1:46:48>> And then you're are you targeting the
1:46:50the wall on the the upper side in this
1:46:52example or?
1:46:53>> Well, I try to, but as you can see,
1:46:56sometimes the market reverse, so I like
1:46:58to protect myself.
1:46:59>> Okay.
1:46:59>> I like to
1:47:00>> So would you say this is quite a fast
1:47:02>> Oh, yeah.
1:47:02>> Fast take profits or scalping? Um well
1:47:05fast 300 ticks, 400 ticks, 500 ticks as
1:47:10long as as I say because it has to move,
1:47:12you know, it has to take that. Do
1:47:13>> you manage similar to how uh Fabio, you
1:47:16know, quite aggressively like moving
1:47:17your stops into profit as price to
1:47:20reclaim areas?
1:47:21>> Yeah. Yeah. I I usually found it very um
1:47:24profitable strategy to go in with a few
1:47:28contracts, two contracts. So I can take
1:47:30profits in one and then leave one stop
1:47:33loss or break even.
1:47:34>> Understood?
1:47:35>> Because to be honest, sometimes when
1:47:37because I'm trading in Q, if I go with
1:47:40one contract, sometimes I take profits
1:47:43and the market do a little bit of
1:47:45reverse and then keep going higher,
1:47:46>> of course,
1:47:47>> and I'm out of the trade.
1:47:49>> And obviously ENQ, I don't know if you
1:47:51trade ENQ or
1:47:52>> I've seen it. I've not I've not traded
1:47:54it myself. So one contract of NQ is a
1:47:56lot of money, you know, is is one move.
1:47:58You could easily people who doesn't, you
1:48:01know, take something like this, they,
1:48:03you know, they I could easily make
1:48:05$2,000, $3,000,
1:48:07but that means you can also lose them
1:48:09very,
1:48:10>> of course. Yeah.
1:48:10>> Yeah.
1:48:11>> But with with with these levels, you
1:48:13know, you can take two or three
1:48:14contracts.
1:48:15>> Yeah.
1:48:15>> Because they know most of the time this
1:48:18strategy is 75% win rate.
1:48:20>> Mhm.
1:48:20>> You know, um why some Oh, sorry. Why
1:48:23sometimes it doesn't work and I'm going
1:48:25to show you it. It is that it doesn't
1:48:27work. It's just like if these guys
1:48:30position themsel lower in another
1:48:32institution came and put the market even
1:48:36lower that's going to attract the price.
1:48:38So gamma levels
1:48:40in an easy way to understand
1:48:43the the the maximum put gamma and the
1:48:46maximum call gamma are magnets.
1:48:48>> Yeah. you know they mag they magnetize
1:48:50the price because what we see already
1:48:52the market maker
1:48:54>> and once they get there they reject the
1:48:56price because of this. So as an example,
1:48:59let's say price didn't well it gave a
1:49:02reaction but didn't follow through and
1:49:04it broke through that level. You might
1:49:06take a break even or stop loss whatever
1:49:08it may be. Would you then be looking at
1:49:09this level as as
1:49:12>> I will need Yeah. I will need to wait
1:49:14for this level to be the maximum gamma.
1:49:16>> Okay. So then that's when the dashed
1:49:17line comes in.
1:49:18>> Yeah. The last you know I got I got a
1:49:20very good example for you.
1:49:21>> Perfect. on that um it has a 75 winning
1:49:25rate
1:49:26and to put in words is because
1:49:28institutional hedging right options
1:49:30complexity I'm trying to I didn't miss
1:49:34anything market maker hedging pressure
1:49:36in the futures market
1:49:37>> yep
1:49:37>> because of the gamma exposure this is
1:49:39gamma exposure on the market maker yeah
1:49:42>> u the Greeks which you we already talked
1:49:44delta gamma and theta decay
1:49:46>> the time yeah
1:49:46>> glad that I didn't miss that
1:49:49>> uh very fast on zero option as Mandy,
1:49:52you know, the words of Mandy.
1:49:54>> Yes. Yes.
1:49:55>> Is is is fast. Um because of the actions
1:49:59of informed traders, you know,
1:50:01>> like more traders understanding this
1:50:03now.
1:50:04>> And I guess more is no more traders
1:50:06understanding the institutional traders.
1:50:08>> Mhm.
1:50:08>> They they they trade this.
1:50:10>> Yeah.
1:50:10>> Um
1:50:11>> Okay. So like the institutions using
1:50:14this knowledge and this formulas
1:50:15>> that that's the that's the guy who put
1:50:17you know this
1:50:19>> that's who's forming these in the first
1:50:20place. This guy did why this guy
1:50:22positioned himself here when the price
1:50:24was down because he knew this.
1:50:26>> Yeah.
1:50:27>> And actually I joke with the guys from
1:50:28Guess what I said like listen if I have
1:50:30millions of dollars I would trade this
1:50:32because he saw some strategies that are
1:50:35you know it's just look again and this
1:50:39is this is the what you told me before
1:50:41look this was something happened in the
1:50:43market I guess.
1:50:44>> Yeah
1:50:44>> fact reaction you know it's kind of
1:50:46physics
1:50:47>> went down very quick.
1:50:49>> Mhm. So you don't you don't buy you wait
1:50:51for the market to come back and then you
1:50:54know you put your stop loss below here
1:50:56in I put it in NQ.
1:50:58>> Yeah.
1:50:59>> Anyone trading options they can put it
1:51:01here S sp um they can look at spy QQQs
1:51:06whatever but they all will have the same
1:51:09structure.
1:51:09>> Mhm.
1:51:10>> It's just a matter of managing your risk
1:51:12um managing your risk. How many
1:51:14contracts are you going to pay it? But
1:51:15look what happened. and they just get to
1:51:17that level and then reject and
1:51:19everything comes down to the volatility
1:51:21surface and this what institutions are
1:51:24doing what the market makers need to do
1:51:26>> it's like the byproduct of that money
1:51:28flow understanding what decisions have
1:51:31to be made y once uh something is either
1:51:33closed out or opened
1:51:34>> y look another one so back to your
1:51:37question how many times you get this on
1:51:38the during the day at least you have
1:51:41once
1:51:42>> mhm
1:51:42>> yeah so I use this strategy to pass the
1:51:45this funded accounts for these funded
1:51:47companies because I can I can put 10 ENQ
1:51:51contracts so I can make $6,000 in one
1:51:54move and that's it.
1:51:56>> If the price come back and I'm stop out
1:51:58that's fine, you know, I got 75% win
1:52:01rate. So I know
1:52:02>> you move on to the next one.
1:52:05>> Exactly. So this is um this is an
1:52:08example of how I trade S&P in NQ.
1:52:12>> Yep. So, I I'm going to show you some of
1:52:14my trades. So, this trade is SPX, and I
1:52:17took $420 ticks with one contract, which
1:52:20is $2,000 just by knowing this level.
1:52:24And
1:52:26talking to what you told me before, you
1:52:28see, let me see. So, the the put wall
1:52:32was the put wall was at 5,550.
1:52:35I took my first trade. Um I didn't I
1:52:39mean the whole move is $2,100
1:52:41but because I was hedging I didn't take
1:52:43the whole it was like $1,800 but then
1:52:46the market come down right I just put
1:52:50this to see what's the move you know
1:52:52>> was what what that levels what moves
1:52:54create and look what happened they moved
1:52:57the level down to 7530
1:53:01>> Mhm. from sorry 5550
1:53:05to 5500
1:53:07uh sorry 5550
1:53:10to 5530
1:53:13so what did I do during that time
1:53:15nothing
1:53:17>> you know people get in this choppiness
1:53:20and they get a stop out so with gamma or
1:53:23with um options float what you do you
1:53:25just wait for the price to get here
1:53:27>> and then you buy it some people ask me
1:53:29oh why don't you take a short position
1:53:31And I was like because the winning
1:53:34strategy is here.
1:53:36>> Mhm.
1:53:36>> You know, I I like to be here. I like to
1:53:39I like to enter the market where I
1:53:41understand what the institutionals are
1:53:44going to do, what the market maker needs
1:53:46to do and that's it, you know, is is is
1:53:50is that knowledge that um so that was I
1:53:54took that one that was 592 ticks. That
1:53:57is almost $3,000.
1:53:59And with these you're risking between 30
1:54:0250 ticks
1:54:03>> which is $150
1:54:05>> or $120
1:54:07you know. So that's that's the power of
1:54:09this knowledge. Um now I going to give
1:54:12you some examples not based on SPX but
1:54:15directly on the volatility surface of
1:54:18the NDX.
1:54:19>> Okay.
1:54:19>> Okay. Um look
1:54:23do nothing. So these two are my main
1:54:27uh levels. Mhm.
1:54:29>> As I told you at the beginning,
1:54:30everything is going to come to a two
1:54:32lines.
1:54:32>> Yeah.
1:54:33>> Right. So, we trade the main biggest
1:54:35line. Why? Because we know on these
1:54:39levels there are big eyes with big money
1:54:42placing their bets in the market there.
1:54:44>> Is there anything you had to tweak on
1:54:46the platform to get these levels or it's
1:54:48just already
1:54:50>> you you select the currency which is NDX
1:54:53prices convert to ENQ prices.
1:54:55>> Okay. So you can see the ENQ prices, not
1:54:58the NTX.
1:54:59>> Okay.
1:55:00>> And that's it. So you this one is
1:55:03actually open interest, you know. I'm
1:55:05looking into the open interest. Um
1:55:08I'm looking into the 90-day open
1:55:10interest. Why? Because I want to see all
1:55:13the options that are actually how the
1:55:16whole market has been position for
1:55:18today's trading day. Mhm.
1:55:20>> So if this is 9:30 in the morning, New
1:55:24York time, Eastern time, um I would know
1:55:27that anyone with positions in the market
1:55:30today, this is the biggest guy. And this
1:55:33is another two big guys. Yeah. Sorry, I
1:55:36should use this one. What? Tell me what
1:55:38do I do? Nothing. I do nothing. I just
1:55:41wait the market to get here and I buy.
1:55:44That's it.
1:55:44>> Yeah.
1:55:45>> So I'm actually changed my anxiety. You
1:55:47know when people start, oh market is
1:55:48going to open, 1 minute to open, 1
1:55:50minute to open. So I was like, oh my
1:55:51god, just wait.
1:55:53>> Sometimes I got levels right where the
1:55:55market opens. I have to be there
1:55:57>> or when when it's on the level.
1:55:58>> Yeah. But most of the time I just wait
1:56:00for the level.
1:56:01>> Yeah.
1:56:01>> So this is the market open there where
1:56:03the candles start.
1:56:04>> Yeah. The market opens here
1:56:06>> minute candles. Right.
1:56:07>> And and that's the other thing that
1:56:09reduce your anxiety to oh I didn't take
1:56:12the long. Oh, I didn't take the short.
1:56:14Mhm.
1:56:14>> You know, people and that creates
1:56:15anxiety on people and people start to,
1:56:18you know, make um bad decisions because
1:56:22they miss the rally, they miss the down.
1:56:25>> All you have to do when you trade uh
1:56:27these options flows is just wait for the
1:56:30level. Wait, wait for the price to get
1:56:32there. And that that's that one is 478
1:56:36ticks. That's $2,300.
1:56:39I think if you do that every day, you're
1:56:40going to be fine.
1:56:41>> Yeah.
1:56:43This is another one. So the market, this
1:56:46is telling me the market is heavily
1:56:48positioning here because there is a lot
1:56:50of big positions.
1:56:51>> Yeah.
1:56:52>> But the one that we trade is the maximum
1:56:54one, the big one.
1:56:55>> So what do you in that scenario? What
1:56:57does the take profit then mindset you
1:57:00know as price is moving towards these
1:57:02other big positions.
1:57:02>> Uh my take profits are these big guys.
1:57:04>> These extra levels. Okay. Yeah.
1:57:06>> Because what's going to happen? This is
1:57:08going to happen on those levels. Big
1:57:10guys position there. I don't I I know
1:57:14these guys are going to do something
1:57:15here.
1:57:16>> Yeah,
1:57:16>> I know the market maker has to do
1:57:18something and most likely because the
1:57:20market is going down, they're going to
1:57:23buy it.
1:57:23>> Mhm.
1:57:24>> They're going to profit. Everything is
1:57:26because these big guys profit and then
1:57:28the market maker needs to buy.
1:57:31The one who is positioning here might
1:57:34going to do the same. So the market
1:57:35might go to this level and then reverse.
1:57:38>> So I don't want to lose. I most likely
1:57:40this is going to be my first target. So
1:57:42this is May 12th
1:57:44>> and actually um this market went up to
1:57:48the biggest gamma which is this one here
1:57:51>> and make 6363 ticks which is more than
1:57:55$3,000
1:57:57you know just by waiting the level. Um,
1:58:01imagine this remind me of Favio the
1:58:04trade he was short because of his
1:58:05strategy and then
1:58:07>> you know take profits.
1:58:09>> Don't don't don't don't stop lossing
1:58:11profit because you're going to lose. You
1:58:14already called the market on the way
1:58:15down. Fantastic. But you know what? This
1:58:17is a wall here. Market is going to
1:58:20reverse. Okay. Uh this is another
1:58:23example which is quite interesting
1:58:25because market opens really quick.
1:58:29We got this massive level which is the
1:58:31biggest one. Yeah. As as the dash.
1:58:34>> So the market cross it and then rally
1:58:37>> then you sell it.
1:58:39>> Why? You see you sell the market because
1:58:42this friction here is is this is just
1:58:44open the market and and this is a
1:58:46candidate for sell you know and most
1:58:50people doing technical analysis we say
1:58:52oh this is the retest you know whatever.
1:58:55But if you got this level, you want to
1:58:57say, "Oh, I going to go the short
1:58:59because that's the level."
1:59:00>> So the level in itself doesn't say to
1:59:03buy or sell. It's more so if you're
1:59:05below the level,
1:59:06>> you want to Yeah. It's is it's um the
1:59:09study
1:59:09>> showing the size.
1:59:10>> The study that we have done is most of
1:59:12these levels because of these are
1:59:14reversals.
1:59:16>> Yeah. So so the
1:59:18>> So if you're below, you if it if you
1:59:20were looking to sell, you would want to
1:59:21do so when it reaches back. If you're
1:59:23above when price hits it, you want to be
1:59:25able to buy.
1:59:25>> Yeah, it it obviously it will take some
1:59:27times to
1:59:28>> Yeah, of course everything to get um you
1:59:31know to get some knowledge and practice
1:59:33and and see it. Um but once you have it
1:59:37is is once you have it is fantastic. So
1:59:39look look this trade 800 ticks
1:59:44>> where it goes to the next big level. So
1:59:47>> which is which is this one here, right?
1:59:49They actually change it to here and that
1:59:52that's it. That's enough. You know that
1:59:55my birthday for April. So I miss it
1:59:57because I took the days off. Where is my
2:00:00birthday? Um
2:00:03there is another concept called
2:00:04convexity which we already study here.
2:00:07>> Yeah.
2:00:07>> Now guess what these guys are very good
2:00:10what because what they do is they
2:00:11translate everything into this
2:00:14actionable you know levels. So have a
2:00:17look everything market start very choppy
2:00:20many people have losses here market goes
2:00:24down and reverse to where to that
2:00:27convexity level the ones that we were
2:00:29looking before were open interest levels
2:00:32these are convexity levels and this is
2:00:35more close related to that volatility
2:00:37surface so if I translate this level on
2:00:41what we learned before is someone bought
2:00:44options here they make that volatility
2:00:47pay.
2:00:47>> Okay. Yeah.
2:00:48>> Once the price get there is nothing else
2:00:51for the market maker to buy
2:00:54>> and the price reverse
2:00:56>> which on the classical technical
2:00:59analysis is oh this is my wave A this is
2:01:02my wave B and I going to make my way C.
2:01:05>> Okay. But how it seems a little bit
2:01:07harder to read the convexity level in
2:01:10comparison to the previous one.
2:01:11>> Yeah. Yeah. But this one works once you
2:01:14learn it is is
2:01:16>> so what were you looking for there in
2:01:17that in that
2:01:18>> sorry you're totally right
2:01:19>> the last one's obviously much larger
2:01:21easy to yeah
2:01:22>> to identify while this one's quite
2:01:24>> so this this this actually the other one
2:01:27classifies open interest which the
2:01:29biggest concentration of order um
2:01:31options by contract
2:01:34that works well for the first two hours
2:01:37and and there is a reason for that okay
2:01:39>> but but and it's a mathematical
2:01:43But convexity this is this this is
2:01:46actually taking that volatility surface
2:01:48and look that picss
2:01:50>> in the surface and that pocket.
2:01:53>> So the picss on the on the on the
2:01:54surface are going to be rejections.
2:01:57>> Okay. And those are the scan bars.
2:02:00>> The scan bars are rejections. So if the
2:02:02price are coming from below to above
2:02:05most likely this is going to be a
2:02:06rejection.
2:02:07>> Okay. The probability of this being a
2:02:09rejection is bigger that continuation.
2:02:13>> So if let's say in this example here if
2:02:16price reach down here
2:02:17>> it will be a rejection.
2:02:18>> Okay. How large do you need a specific
2:02:21size of that bar or cuz this one here
2:02:24for example is quite small.
2:02:25>> Uh what would the
2:02:26>> it looks small but there are billions of
2:02:29dollars there.
2:02:31>> Obviously I didn't have the I didn't
2:02:33have the
2:02:33>> what's the flip side the the purple side
2:02:35on like this one really here. This is
2:02:37huge.
2:02:37>> So what happened? The purple one the
2:02:39scion are buying this volatility. The
2:02:42purple ones is selling volatility. So
2:02:44basically this is a map of liquidity.
2:02:46>> Okay.
2:02:46>> This tell this is telling me where
2:02:49people institutions are taking liquidity
2:02:52from the market. The scion bars and
2:02:55where are they providing liquidity to
2:02:57the market.
2:02:57>> Mhm.
2:02:58>> So if
2:03:00if if you allow me to put it somewhere
2:03:02here. So the cyan bars, these cyan bars,
2:03:07imagine they're a mountain,
2:03:10right? So imagine you have a ball,
2:03:12right? I like I like this kind of
2:03:14physics example.
2:03:16>> Mhm.
2:03:16>> And you try to put the ball up. Yeah.
2:03:20What's going to happen? The ball is
2:03:23going to come down.
2:03:24>> Mhm.
2:03:25>> Why? So it's going to go up. Yep.
2:03:26>> Down. Right. Even if it passes, it's
2:03:28going to go down.
2:03:29>> Okay. Yeah.
2:03:30>> So it's going to have that up and down.
2:03:32Right. So this is the same desion bars
2:03:34is is is where the price because of that
2:03:37volatility peak
2:03:39>> by price is going to get there. There's
2:03:40nothing else to hedge and then come back
2:03:43down.
2:03:43>> Mhm.
2:03:44>> And the cyan ones which are going to do
2:03:46in red uh this is a mountain. Imagine
2:03:48their bies.
2:03:51So the scan bars is selling volatility
2:03:53where the price easily
2:03:56>> falls down
2:03:57>> goes
2:03:58>> through it you know. So we don't trade
2:04:01on those because we don't have a clear
2:04:04understanding
2:04:05>> in comparison
2:04:06>> in comparison to that one.
2:04:07>> Understood.
2:04:07>> Yep.
2:04:08>> Okay. Cool. Nice.
2:04:09>> So
2:04:12and look this one we trade we call it
2:04:15positive convexity the bars.
2:04:18>> Mhm.
2:04:18>> Negative convexity the red the purple
2:04:20ones.
2:04:21>> So when I when I trade this convexity I
2:04:23got from positive to positive.
2:04:25>> Yeah.
2:04:26>> Yeah. Positive convexity to positive
2:04:28convexity. So that trade 384 ticks
2:04:31almost $2,000.
2:04:33Um this is another one right price came
2:04:37down maximum positive convexity the
2:04:40mountain
2:04:41and then goes to the next one and that's
2:04:43it. I I tend not to look these ones
2:04:47sometimes they go to those ones.
2:04:49>> That one seems like quite a small trade
2:04:52right in I say small in the sense of uh
2:04:55like how long are those minute candles
2:04:57still? Uh, this is five minute scandal,
2:04:59so it's 15 minutes.
2:05:01>> Okay. Yeah. Yeah.
2:05:01>> So, we're talking about 420 ticks, which
2:05:04is $2,000 in 15 minutes.
2:05:06>> So, this one went from here to there.
2:05:10>> Yeah.
2:05:10>> Got you.
2:05:11>> Yeah. Um, and that's it. What it goes,
2:05:16Remember, gamma are magnets and
2:05:18rejections.
2:05:19>> Mhm.
2:05:20>> This could go higher, but because I know
2:05:22this is a rejection, so I do prefer to
2:05:25get out of here, you know. And if you go
2:05:27with two contracts,
2:05:29I I guess most of people would be happy
2:05:32with $4,000 in 15 minutes. I'm I'm happy
2:05:35with 2,000 in 15 minutes, honestly.
2:05:37>> What are your mindsets? So, like cuz
2:05:39obviously you know the data so in depth
2:05:42um you know the statistics of your edge
2:05:44like what is your mindset personally in
2:05:46terms of sizing you know is that just
2:05:48something regardless of knowledge it's a
2:05:50tolerance a personal tolerance that you
2:05:52have to to build and find yourself? Um
2:05:56yes.
2:05:57>> Mhm.
2:05:57>> But funny things when I was an
2:05:59institutional trader um I I always say
2:06:02this to people we kind of never they can
2:06:05never spend money on us on trading you
2:06:09know learning to trade.
2:06:10>> Mhm.
2:06:10>> They say listen do whatever course you
2:06:13do you want to do but focus on your
2:06:15mind. So I actually took a very good
2:06:17course the last one on mindfulness for
2:06:20traders
2:06:21>> which was kind of hot topic when I left
2:06:23because uh it was an article of George
2:06:26Soros and Ray Dalio in Reuters where
2:06:29they mention listen meditation and
2:06:31mindfulness or mindfulness is what the
2:06:35best thing we've done the best thing
2:06:36that we actually help us to get through.
2:06:39So in the city I start to kind of get
2:06:42this kind of mindfulness mindfulness. I
2:06:44went to a course of mindfulness and
2:06:47I told you before I met these guys from
2:06:49Goldman's from city from these
2:06:51institutions they were like um um top
2:06:54guys but they were doing the course and
2:06:56they say listen we're humans and
2:06:59obviously I I think um what was the name
2:07:02um Ran Hotwall he came here to talk
2:07:05>> yeah yeah he came to talk about the
2:07:07migdala and and and how to calm that
2:07:10migdala and and that's what we learn I I
2:07:13one day I lost a half a million dollars
2:07:15in my job.
2:07:17>> Um the first day they put me into trade
2:07:19I lost $30,000 even though they told me
2:07:22your raise is 15,000.
2:07:25>> So actually I start to think why why you
2:07:28know what's happening in my mind why why
2:07:29is that happening? Obvious everything
2:07:32comes down to the amygdala
2:07:34>> right to to how that's actually a
2:07:36survival
2:07:36>> a fight and flight
2:07:37>> a survival. Yeah. and and and in this
2:07:40course I understood that
2:07:43what's happening is in your body is um
2:07:47your prefrontal
2:07:49cortex kind of shut down
2:07:51>> um so you don't think you don't need
2:07:54blood in your brain or stomach you need
2:07:56blood in your legs and arms because it
2:07:59comes down to the caveman where listen
2:08:02you need to live so you're gonna fight
2:08:04or fly
2:08:05>> so you don't need blood in your brain or
2:08:07stomach and that's why When you people
2:08:09are getting happen to us, it happens to
2:08:12everyone. You know, we're getting close
2:08:14to our stop loss. You get that sensation
2:08:17in your body, but it's actually cortisol
2:08:20>> spike
2:08:20>> spy telling your body you need to fight
2:08:22even though you're sitting in front of a
2:08:24computer,
2:08:25>> right? But that's the nature of of um of
2:08:29the
2:08:29>> our mind doesn't know the difference,
2:08:31right? Danger or or uh safety.
2:08:34>> Yeah. And that's when people take
2:08:36revenge trades, you know,
2:08:38>> they move the stop loss because they
2:08:41they is this fight.
2:08:42>> So you say mindfulness is really the
2:08:44practice of being aware and present
2:08:47enough to know what
2:08:49>> when you're getting to those edges.
2:08:51>> So basically
2:08:53the good thing about gamma is
2:08:56my stop losses are 3050 tick. which is
2:08:59I'm risking $150, sometimes $200 to make
2:09:04$2,000.
2:09:05>> Yeah.
2:09:05>> So that's that's kind of one to 10. But
2:09:07I also have a stop losses. Of course,
2:09:09this is, you know, I made mistakes.
2:09:12>> So I I I've been practicing mindfulness
2:09:15since then. It's been I don't know more
2:09:17than eight years. And that helped me to
2:09:20understand that when I have a stop-loss,
2:09:22it's very hard on me because to be
2:09:24honest, I have a stop-loss every two or
2:09:27three weeks.
2:09:28>> I have one stop loss, which is not good
2:09:31because I'm I'm I'm used to winning.
2:09:33>> So when if one happens slightly more
2:09:35frequently,
2:09:36>> yeah, if one happens because it doesn't
2:09:39happen quite often, it's really bad. I I
2:09:41feel terrible
2:09:43>> and I know myself and I know I need to
2:09:45shut down the platform and I just need
2:09:47to leave
2:09:48>> because I know nothing I can do.
2:09:51Amigdala is there. Cortisol is there.
2:09:54The revenge need is there.
2:09:57>> If I stay in my desk, that's it. That's
2:09:59the end of my account.
2:10:00>> So would you say even having such depth
2:10:03of knowledge of the markets but and your
2:10:04stats and the statistics regardless our
2:10:07human nature you need to tap into that
2:10:09and understand yourself? Yeah.
2:10:11>> Um because equally there could be
2:10:12another trader, same knowledge, same
2:10:14strategy, everything, but maybe their
2:10:17risk tolerance is slightly higher or
2:10:19they're able to handle the losses
2:10:20better. So therefore, they can make
2:10:22their rules around them.
2:10:23>> Yep.
2:10:23>> Yeah.
2:10:24>> So I think there's a misconception that
2:10:25people assume once you have say data or
2:10:28strategy or edge,
2:10:29>> you know, it becomes easy. But in
2:10:32reality, the human nature element is
2:10:33very different to every trader.
2:10:35>> Yeah. On the other hand, we all are the
2:10:37same. We have the amigdala, which is the
2:10:40the only function of the amigdala is to
2:10:41keep us alive.
2:10:42>> Yeah.
2:10:43>> And survive as a human especially. Yeah.
2:10:46>> Trading, you know, that's why 95 97% of
2:10:50the traders the first year they blow up
2:10:52their accounts and they do why?
2:10:54>> Because we're humans and there this the
2:10:57my own philosophy and analysis is
2:11:01>> we are not built to be traders.
2:11:02>> Yeah.
2:11:03>> Humans are not built to be traders and
2:11:05that's why so many people lose. Some
2:11:08people you know talking about statistics
2:11:10are on the normal distribution on that
2:11:13tail that they are being so good like
2:11:16for instance the most of the successful
2:11:18traders you have interview they have
2:11:20something in common and I guess is the
2:11:21fact that they are very good risk
2:11:24managers
2:11:24>> yeah exactly
2:11:25>> they know when the stop loss come that's
2:11:28it tomorrow is another day I remember
2:11:30one guy do interview he say when a guy
2:11:32when when he has a stop loss he stopped
2:11:34for two days and that's very sensible
2:11:37cuz you need your body to dec, you know,
2:11:39to clean.
2:11:40>> Mhm.
2:11:41>> And your mind
2:11:41>> trying to get back to neutral. Yeah.
2:11:42>> You probably have a very good a very bad
2:11:45stop loss
2:11:47that at the time was really hurting, you
2:11:49know, got your feelings, your emotion
2:11:51probably you don't remember now,
2:11:54>> you know.
2:11:54>> Exactly.
2:11:54>> And that's why you need time to to
2:11:56clean. So I do practice mindfulness. I
2:11:58do practice my I like Ray Dalia when he
2:12:01said I like to think myself outside my
2:12:03body and look what I'm doing.
2:12:05>> Yeah. So I try to do that because when
2:12:07you trade you're like kind of in this
2:12:09universe be
2:12:10>> that's why Randy says to record
2:12:12yourself.
2:12:12>> Yeah.
2:12:13>> You know so you can see yourself tensing
2:12:14up or the heart rate.
2:12:16>> I'm actually use a heart rate.
2:12:17>> Yeah. He said the same.
2:12:18>> So I got my monitor and I know when it
2:12:20when it goes higher my heart is you
2:12:23don't see it unless you have something
2:12:24to monitor. So I think it's it's quite
2:12:27important and and actually the people
2:12:29who actually take my the people I have
2:12:32coached in South America I I like to
2:12:35bring this to the Spanish community
2:12:37because it's very difficult to find this
2:12:39information let alone in Spanish.
2:12:42>> Yeah. Exactly. Yeah.
2:12:42>> So I give to them my eight weeks uh
2:12:45which I learn here my eight weeks
2:12:47training
2:12:48>> of the mindfulness. Yeah.
2:12:49>> Yeah. I try to do that for them. But
2:12:51anyway back to this. This is a 420 tick
2:12:55trade
2:12:56and I put this because I use I use this
2:12:59platform to trade ATS to trade order
2:13:01flow which because I think I wanted to
2:13:04see when the market maker comes into the
2:13:06futures
2:13:07what do I see in the futures you know
2:13:10>> what what footprint can I get so I I was
2:13:13learning this platform
2:13:15>> unfortunately I paid a lot of money I
2:13:17get into the hands of these guys who
2:13:19charge a lot of money to teach you you
2:13:21know things that don't really explain
2:13:23the market. But anyway, the good thing
2:13:25is I use the platform and I can see when
2:13:28this market maker comes into the market
2:13:30for instance um probably you have heard
2:13:33from Fabia as well the big trades.
2:13:35>> Mhm.
2:13:36>> Yeah.
2:13:36>> Yeah. So have a look. This is what a
2:13:38traditional trader see. So you see big
2:13:40trades here, big trades here, big trades
2:13:42here.
2:13:43>> Yeah.
2:13:43>> You know big trades everywhere. So how
2:13:46how you know I found it difficult people
2:13:47who trade big trades but um this is
2:13:50actually a trade I took and I and I
2:13:52bring it here on May 15 did nothing
2:13:55until the price went to major level and
2:13:58then I took the long right but on the
2:14:02platform on this big trades what I saw
2:14:05look the difference between these big
2:14:07trades trying to take a long position
2:14:09because you might think they are what is
2:14:12called trap sellers
2:14:13>> yeah actually has a higher probability
2:14:17of success when you have this major
2:14:20major level given by the options. Mhm.
2:14:23>> This is this is like an easy trade and
2:14:25and I'm sorry to say this. I don't want
2:14:27to sound echocentric, but it really is
2:14:30an easy trade. You know, you go you go
2:14:32here
2:14:33>> have that alignment.
2:14:34>> Yeah. And then you go your level. Just
2:14:35go long and put your stop loss here.
2:14:37>> Mhm.
2:14:38>> Now, what people call trap sellers, this
2:14:41is just the market maker here. you know,
2:14:44does the market maker put in a bid
2:14:47because he know in advance that all
2:14:50these guys he knows in advance that the
2:14:52guys position there
2:14:53>> Yeah.
2:14:54>> they might going to take profits.
2:14:56>> Mhm.
2:14:56>> So I do truly believe hopefully I'm not
2:15:00going to get um revealing the mysteries
2:15:03of the market makers.
2:15:05>> But they're here. They're in the bit.
2:15:08>> Yeah.
2:15:08>> Right. They're waiting and and because
2:15:10they know now they have all the futures
2:15:12they sold on their way down, they need
2:15:14to buy it back.
2:15:15>> Yeah.
2:15:15>> And that creates the move. So this is
2:15:17this is going long here and put a target
2:15:19here. So this this is the trade when you
2:15:21combine with you know what people see in
2:15:25order flow or footprint.
2:15:27>> Um I got another one. Oh, so that was
2:15:29the same day I took this trade went for
2:15:32lunch. I was working on my course and
2:15:34and things. And when I came back to
2:15:36launch, I saw the price was really close
2:15:39now to the next level.
2:15:41>> Yeah.
2:15:42>> So I said, "Okay, now you know what was
2:15:45there taking the short based on what we
2:15:48saw the same logic. So I took the short
2:15:51and I went to the next level. Even
2:15:53though the market keep going lower,
2:15:55that's fine. I just took the short 300
2:15:57ticks is is enough for after lunch
2:16:00having a coffee and trade that."
2:16:02>> Mhm. Um
2:16:04I'm talking about NDX and there is a
2:16:07reason why I trade NDX
2:16:09because an NDX contract compared to so
2:16:12the two how can you trade or how can
2:16:14people trade options um following the
2:16:18NASDA is they can do it through NDX and
2:16:21QQQs.
2:16:23The difference is one contract on QQQ
2:16:28one standard deviation in in in at the
2:16:31money could be $60 to $70 one contract.
2:16:35>> Yes.
2:16:36>> And the S could be $10,000 or $12,000.
2:16:40So if you think about it, who is going
2:16:42to come to the market to trade
2:16:46$1,000, $10,000 a big guy?
2:16:49>> Yeah. And I've seen then they come and
2:16:51put 600 million,500 million, $900
2:16:54million in gum exposure.
2:16:56>> That's going to move the market
2:16:58>> of course
2:16:58>> guaranteed. But now recently with just
2:17:03which is the um the futures trader and
2:17:05guestbot um we are actually looking at
2:17:07QQQ because look look what QQQ does as
2:17:11well.
2:17:11>> Mhm. So our
2:17:14my theory and my hypothesis is
2:17:18very clever about traders in options um
2:17:21and what I mean traders I mean funds
2:17:25um you know CTA accounts these kind of
2:17:28mutual funds, hedge funds, pension funds
2:17:31which are not as big as the other ones.
2:17:34They analyze the market with the
2:17:36volatility surface as I show you and
2:17:39they take positions on on QQQs as well.
2:17:41Yeah,
2:17:42>> based on what they see in SPX or NDX and
2:17:46have a look at this. This is again this
2:17:48is the same you know what people call
2:17:50patterns I guess price get who is there
2:17:54the market maker is is is no sell uh
2:17:57trap sellers is the market maker in an
2:17:59important level going to the next level.
2:18:03So it went to the remember the pick
2:18:05pocket on the buying volatility.
2:18:07>> Yep. So imagine the surface we got to
2:18:10pick uh not pocket pick um pick a spike
2:18:14you know this spike that creates this
2:18:16cone. So the price go reverse to where
2:18:20where there is a pocket of volatility
2:18:22which is the purple line.
2:18:23>> Mhm.
2:18:24>> And that's funny because that day I did
2:18:26it twice and did it here. Profits here.
2:18:29I bought again and I put it here.
2:18:31>> And that's what normal
2:18:34uh or traditional traders say. Oh that's
2:18:36a double bottom. Yeah.
2:18:38>> Well, it's not a double bottom. It's
2:18:40actually positioning
2:18:41>> positioning, right?
2:18:43>> Um and I think um obviously didn't have
2:18:48time but um there is another two tools
2:18:51that we use which is called guessbot
2:18:54order flow and did you remember the
2:18:57volatility? Do you remember the ball
2:18:59skew? U if you cut it and you take a
2:19:03slice you get a volatility skew. So you
2:19:06get the volatility surface in 3D. You
2:19:09cut it, you get the volatility skew.
2:19:12That volatility skew which is this one
2:19:15here
2:19:17>> basically is telling you supply and
2:19:20demand in the options
2:19:22traded transacted and the other one is
2:19:27quoted. So what the market makers at
2:19:29quote
2:19:30this we go back a little bit to the
2:19:32fundamentals but analyzing this is also
2:19:35analyzing you know how can we trade this
2:19:39and guess got a very good they're
2:19:41working there they're going to launch it
2:19:43where we can actually going to trade
2:19:45this we're going to trade the volatility
2:19:47cube which is this this one is just a
2:19:49visual representation but we're going to
2:19:51trade it with high probability as we
2:19:53trade gamma levels we're going to trade
2:19:55this you know the same level, you know,
2:19:57saying we're done the whole day to come
2:19:59back to two levels. They do it with
2:20:02volatility.
2:20:03>> And this is
2:20:05um back to the call example when an
2:20:10institution came and buy a call, it's
2:20:13going to make an effect on market maker.
2:20:15So basically this order flow measured up
2:20:18>> and for instance
2:20:20you know you don't see this but I mean
2:20:22if if you're a traditional trader you
2:20:24don't see it but here someone with a 100
2:20:27million in gio the b volatility.
2:20:30>> Mhm.
2:20:30>> So it's the same concept you get the
2:20:32coin what's going to happen on this move
2:20:34is going to be reversal.
2:20:36>> Yeah.
2:20:36>> So we trade this we trade oh someone
2:20:39came $100 million that's a lot of money
2:20:42is going to reverse the market.
2:20:43>> Mhm. most likely. So, probably next
2:20:47time.
2:20:48>> Yeah, definitely. So, you know,
2:20:49>> and and just to finish up, um, every
2:20:53trader
2:20:54and I I wanted that's why I put this
2:20:57slide because I'm um in my Spanish
2:20:59course, I go options traders and they
2:21:02had no idea about this. I don't know.
2:21:04They they teach them how to trade with
2:21:05Ballinger bands and I'm like probably
2:21:08you get a grasp of what is options.
2:21:10>> Yeah. How can you trade moving areas and
2:21:12options and binger bands on options?
2:21:15This is very important to know the bull
2:21:17events which is the opex which is
2:21:19monthly.
2:21:20>> Yep.
2:21:21>> Why? Because all these options expire
2:21:23and the institutions they roll over or
2:21:26they let expire you know they let it to
2:21:28expire on that day.
2:21:29>> Mhm.
2:21:30>> But the market maker needs to do
2:21:31something. So these days I keep on on on
2:21:35my mind because as I told you before
2:21:37there are the days where traders, oh
2:21:39today the market was really hard. Oh my
2:21:41goodness, that was choppy. Yeah, it was
2:21:43OPEX.
2:21:43>> Mhm.
2:21:44>> You didn't know triple witching which is
2:21:46the third Friday of March, June,
2:21:49September and December. Why is that
2:21:51important? Because that's on that day
2:21:54options on indices, options on single
2:21:57stocks and on options on futures expire.
2:21:59Mhm.
2:22:00>> So you got three assets that three
2:22:02derivatives
2:22:03>> on the same day. What the market is
2:22:06going to do? Roll it over. Okay. Expire.
2:22:10Okay. But the market maker is there
2:22:12doing this buying and selling on the
2:22:14futures.
2:22:15>> So that day I don't work that day
2:22:17especially because that day we don't
2:22:18have zero dy options. I don't have an
2:22:20age. So I don't trade. I go with my wife
2:22:22to have an ice coffee.
2:22:24uh bispiration is very important because
2:22:27it's the Wednesday that um exactly 30
2:22:30days before the third Friday all
2:22:32connected and that's the spir the
2:22:35expiration of um bigs uh options on the
2:22:39big index.
2:22:40>> Mhm.
2:22:40>> Why so important? Because they spire at
2:22:439:30
2:22:45Eastern time. Yeah.
2:22:46>> So basically they spire when the market
2:22:48opens.
2:22:49>> Mhm. What I have noticed, I don't have
2:22:51data, but if the market goes down, it
2:22:54will continue. You know those days when
2:22:55the market start to go down down down
2:22:57and never reverse.
2:22:58>> Yeah.
2:22:59>> Most likely are those days or it start
2:23:00to go up up up. Why? Because there are
2:23:04millions of dollars on these contracts
2:23:07expiring the market maker is doing that
2:23:09>> and you know there is an inverse
2:23:11relationship between the bigs and the
2:23:12indices.
2:23:14>> So they have a negative relationship.
2:23:16>> Yeah. So look, we got these billions of
2:23:19dollars expiring on the bigs that's
2:23:21going to move the index
2:23:22>> of course
2:23:23>> and the last one that we talk everyone
2:23:25in everyone trading options in this way
2:23:29knows and are very aware of the JP
2:23:32Morgan the equity fund $22 billion they
2:23:36hedge it on the end of March June
2:23:38September and December
2:23:40>> end of the core yeah
2:23:41>> so that you have to this is the bull
2:23:43events that you need to be aware and
2:23:46they're in this um if you Google CBOE
2:23:492026 options calendar you will get it.
2:23:51>> Yeah.
2:23:52>> Uh so people need to be aware of that
2:23:54and well thank you and
2:23:56>> absolute pleasure. No Freddy this has
2:23:58been a in-depth true uh master class and
2:24:01a massive insight not only for me but
2:24:03I'm sure for the audience as well
2:24:05>> hopefully
2:24:05>> you know and this is I know as you
2:24:07mentioned like this is a fraction of
2:24:08what you could dive deep into and you
2:24:10know we're excited to get you on chart
2:24:12academy and have a more in-depth view
2:24:14over there. Uh, so make sure you check
2:24:16that out as well. Fabio's over there as
2:24:18mentioned earlier. Randy How's over
2:24:19there as well. All for free just like
2:24:22this. And again, a huge massive thanks
2:24:24to you Freddy and for all the work that
2:24:26you're doing not only in the Latam
2:24:27community but here as well with us and
2:24:29just generally sharing such in-depth
2:24:31knowledge from your experience. It's an
2:24:33absolute pleasure and no doubt helping
2:24:35the overall industry improve not only in
2:24:38their knowledge but also showcasing what
2:24:40real trading really is about and what to
2:24:42focus on. So
2:24:43>> fantastic. No, thank you so much. Thank
2:24:45you for your invitation. I'm really
2:24:46happy. You know, when when I left the
2:24:48institutional war and came to the
2:24:50retail, I is, you know, like like
2:24:54really, let's put it this way, I'm
2:24:56Colombian. What really breaks my heart,
2:24:58broke my heart is is is people trying to
2:25:01do a living on trading and and they get
2:25:04these, you know, gurus selling things
2:25:06that, you know, doesn't make sense, of
2:25:08course,
2:25:08>> and they spend thousands of dollars of
2:25:10this. So, I was trading. I went back to
2:25:13Colombia. Um I knew I could do this. I
2:25:15kind of knew with my heart. Um we didn't
2:25:18have information as you can believe. You
2:25:21can imagine which this kind of
2:25:22information is the war for three four
2:25:24years with the guys from Guess what
2:25:26amazing guys and and at that time I
2:25:29didn't have much information but I was
2:25:31trading in my in my apartment and then a
2:25:34friend of mine came and said what are
2:25:36you doing? And I was like, you want to
2:25:37learn? And he he did an Spanish
2:25:40interviewing in to me in his uh YouTube
2:25:43channel. And from that on all the
2:25:45Spanish people were starting like you
2:25:46know, Spanish speaking like like you
2:25:48know like get because when you when you
2:25:51see this actually makes sense.
2:25:53>> Yeah.
2:25:53>> You know,
2:25:54>> well it's backed by not only data but
2:25:55then the results are there as well. um
2:25:58and the experience and unfortunately not
2:26:00only in the Latam community but just
2:26:02generally within the trading community
2:26:04you know there's so much marketing and
2:26:06lifestyle and again them being promoted
2:26:09strategies that don't have any either
2:26:11verifiable results or data behind it
2:26:13even sometimes both which is even worse
2:26:16so I like to think that when people who
2:26:19really are passionate about trading even
2:26:20if they're not profitable yet uh but
2:26:22they really are passionate about trying
2:26:24when they come across someone like
2:26:26yourself someone like Fabio Valent Ini
2:26:27or Carmine Rosato or like people who are
2:26:30genuine and have that data and have the
2:26:32results as well. People then are drawn
2:26:36to them. They then start to get educated
2:26:38and have a stronger awareness of what
2:26:41real trading looks like
2:26:42>> which is great for the industry because
2:26:44then the more people who have that
2:26:45awareness and that almost awakening if
2:26:47you will the more hopefully we'll make a
2:26:49difference you know.
2:26:50>> Yeah. And this is just a start like like
2:26:52the guest like the
2:26:54>> I like I like Jim Carson words it's no
2:26:56gama it's just the options flows
2:26:58influence on the market
2:27:00>> and this is just starting the wave is
2:27:01just starting
2:27:03>> we are just starting to get this
2:27:04knowledge that institutions
2:27:06>> had and they don't share obviously
2:27:09>> but we just we just we just get into it
2:27:11and and honestly as I said to you before
2:27:14>> I'm lucky because I came into this not
2:27:17with the need of money with the need to
2:27:19soul you know solve the puzzle
2:27:22>> and when I think you know it it really
2:27:25like kind of I feel very happy because
2:27:27people send me test or send me message I
2:27:30remember two in particular one lady said
2:27:32I never made $5,000 in my life in a day
2:27:36and and she was like thank you thank you
2:27:38thank you thank you and and I told my
2:27:40wife I said this is you know bring me
2:27:42happiness and and the last one was a guy
2:27:45>> uh trading options with his wife they
2:27:48sent me a message
2:27:50We never had a green wig in a year. We
2:27:55never never and they say it's amazing
2:27:57that we have a green wig.
2:27:59>> It's they told me it's just amazing. And
2:28:01and one Italian guy he told me Freddy
2:28:04this he's in my course. He said that
2:28:06looks that looks illegal. [laughter]
2:28:09>> And I said well it's it's here for you.
2:28:11>> That's what we like. Freddy, I
2:28:12appreciate you. We'll be glad to have
2:28:14you back as well. We're going to shoot a
2:28:15Words of Risom right now. Everyone at
2:28:17home, drop a comment with your biggest
2:28:18takeaway from this episode. Any
2:28:20questions you might have, I'm sure
2:28:21there'll be many. Drop them in the
2:28:23comments cuz me and Freddy will take a
2:28:24look and maybe that will be part two or
2:28:26we'll form that into Char Academy, but
2:28:28we'll make sure to to cover that as
2:28:30well. Links for Freddy are in the
2:28:32description below. Go show him some
2:28:33love. Links also for Gexot by then will
2:28:35no doubt be in the description below
2:28:37also because we're going to connect with
2:28:38them guys.
2:28:39>> Oh yeah, actually actually I got a very
2:28:40good offer. Um, I'm going to put a link
2:28:43where they can test it for one month
2:28:46with 65% discount. You
2:28:48>> got it.
2:28:48>> So, they can actually don't need to
2:28:49trade it. They just put the levels what
2:28:50we show it here and then you can see
2:28:53>> keep track and and you see your strategy
2:28:56and see how it fits. So, these guys
2:28:59actually give me a 65% discount for
2:29:01everyone who want to have a look the and
2:29:03and and and the important thing is I
2:29:06don't work for Guess what. I I've been
2:29:08talking to these guys and I'm very very
2:29:10very
2:29:11um you know grateful because learn a lot
2:29:14from them. We you know we learn together
2:29:16as well. But um they they are in the
2:29:19move to they need to teach people. They
2:29:21are not in the move to to make profits.
2:29:23They just say we need to teach people.
2:29:24We need to make people more aware
2:29:26>> and and they give me you know what 65%
2:29:29so they can they can test it and they
2:29:30can have a look at and and I'm sure
2:29:32people will love it. Well, hopefully
2:29:34we'll see them on here as well or
2:29:36somewhere in the future as also.
2:29:37>> Yeah, definitely.
2:29:38>> Everyone, until next time, everyone.

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