This Entrepreneur Credits His “Checklist” For 45% Returns

0:00 so what do you trade to get 45% annual insurance so I I've developed the checklist sure I was like okay that worked okay I need to add more money to my account how long that take around 6 months running your old business how active are you last year i' I made a around 2800 trades and I get the impression you're not just short puts anymore no no I'd [Music] say hello everybody we're back back looking forward to another amazing rising star today Chris welcome to the show from Dallas yes thank you for having me you're a successful entrepreneur you work all the time but yet you figured

0:46 out how to integrate trading into your business schedule your life schedule you know your social schedule and you started this all relatively later in life can I say your age sure of course you're 52 right and you started trading about actively trading 47 okay did did you trade stocks or things before that I did I did you know um I I did the typical you know thought you know um uh I could pick the the right stock and so I went down the path of hey this stock I feel is undervalued and sure and so you buy it and then there's a 50% chance it goes up and 50% chance it goes down I I played that game for a while

1:31 and and just wasn't satisfied with that and especially the returns um and I did other Investments well as well commercial real estate and you know the lack of liquidity on with commercial real estate of my mind I give all the credit in the world to people that make money commercial real estate because I'm like I know how you do it yeah yeah I mean you're you're tying up the capital for two years and how many opportunities within those two years have passed you by and uh not to say I didn't do well with those made some good ones and and not so good ones but there was something about active investing active trading that really caught my attention once I saw tasty live let's do this let's fast forward a little bit in your in your life we'll go we'll skip the military

2:18 we'll skip some other things we'll we'll Skip and go right to kind of you know you running your own business and did you did you actively seek to learn about active trading or did you stumble into tasty uh it was more of stumbling into it uh like I said you know I I went down the road of picking equities and buying stock and and then progressed to more of okay well I I wasn't getting a return on that uh to other types of forms of investing commercial real estate and other things uh the lack of you know liquidity and they be able to actively invest and then of course you know I I I did did run across you know so I was like options I've heard about options I know that they you know have leverage

3:05 they give you the flexibility uh a lot of good things but I didn't know the mechanics and so I went down the learning curve like everyone else does Biden natenberg options volatility McMillan's book you know um you went for the heavy stuff I did I have a stack This Tall but I was frustrated because you know good material good knowledge but you sit in front of screen and you don't know how to trade yeah um and then I ran across Mike and his whiteboard oh that was your first con Mike White that was the first connection um and it just made sense you know you know you sell a 30 Delta put and has the The Profit curve and you know I you know have using probabilities and statistics and on the opening Trade

3:52 It resonated and so I went down a rabbit hole and watched uh Market measure and options Jive and uh um and I was really intrigued by the quantitative approach uh of it using probabilities and statistics and not just not just buying a stock and and and and crossing your fingers that it goes up or down if we go to when you started watching Mike originally and other tasty shows how long did it take you before you could um before you actually you know started placing trades uh it was pretty quick um you know once I understood okay um and I started with a 30 Delta put um and that was you

4:38 remember your first trade one um I don't remember the exact underlying I just know it was a 30 Delta put my first option trade was buying a put in a oil and gas company called mcder and and I bought put at $3 and I sold it for $450 now this is 1980 so this 45 years ago and uh so I made $150 100 and it was on a two lot so I made $300 so I went home that day and told all the guys we were living in this giant house outside of New York City and I told him I figur it out like I have it all figured out none of us need to you bother working again I lost all of our money all my money all my friends money

5:24 all of everything they hated me we it was I'll never forget that whole like sequence of events make one winning trade figure out I think I had figured out the basically the keys to the universe yeah and then lost all my buddies buddies you know what's interesting is I'm a little more risk averse um in that sense um you know when I placed my first trade I've been trading for five years yeah and not one trade on an opening trade as have I bought options I have never bought by way is is is a sign of a true tasty Trader you know it's amazing when I say that you know I knew nothing about options before I started watching tasty live that's not an exaggeration no I

6:11 believe it and uh so I you know my first thing is as being risk averse I I just said I want to go really small and I want to make sure that test the mechanics test you know these probabilities and so again selling a put you know was the first TR a one lot it was a well absolutely a one lot it was a one lot it was a highly liquid trade it was it was probably a trade Tesla you know uh that Apple whatever three or four star liquidity trade um but uh but yeah and then as as I was like okay that worked then I sold you know two or three more puts and then I was like okay the next progression was well let's sell the 20 Delta call let's move the 30 Delta

6:59 put to let strangle it and um and start using but yes I traded one lot for the first year and a half so you're trading one Lots everything's kind of working and you're saying to yourself why didn't anybody tell me about this or where have I been like what was goinging through your head cuz you're still 47 48 got a couple of kids you know you're you got all this stuff going on you're like how did I not know about this yeah yeah well the first thing I said is yeah I wish I would have been a market maker in at the Chicago Board of tradeing I wish I'd have known this when I was 24 um but then I I I started you know thinking wow okay I need to add more money to my account because if if if the

7:44 probabilities are working in the fa in my favor on these trades um and I've had this amount of return instead of uh investing it in other other investment deals why not put it in into this and and and sure have a better return where I can control the outcome learn more the one thing I love about active trading is that it doesn't take very long to realize oh this is kind of on me you know and and when you're successful it's I own that success like that's me how long that take cuz that's a key turning point yeah it it it took around six around six months good uh around six months of of of of trading watch ing the markets you know uh analyzing the

8:32 results of each trade you took like a let's call a mid6 figure account and turned it in to with 45% returns over the last four years so um that's average 45% returns over the last four years that's really amazing and because it's not no not a little account but it's it's decent size it's real money and and that's hard to do in the last four years you know you're talking about kind of starting just post pandemic po yeah it was right after Co yeah right after Co um and and so you've had you know you had that little rally in 20 to 21 through 21 and then the sell off in 22 and then ride

9:20 back in 23 24 you know like and see you've had some decent two-sided action hasn't been the easiest four years ever that's for for sure and I get the impression you're not just uh straight you know short puts anymore no no I'd say 80% of my trades are strangles that's that's the opening position that I use um you know selling 20 Delta strangle you know a typical day for me is um I start watching the Futures markets around 7715 okay that's if I haven't looked at it on my phone you know at night which I try not to got to sleep TR somewh exactly and then so um you know 8:30 open uh there's a lot of activity

10:06 between 8:30 to 9:30 and so a lot of the trading happens between that time frame sure um and then I've got a job to run a business to run so you know from 9:30 until around 2:15 I really switched years and and really focus on the business and around 2:15 the market starts to pick back up in until the end of the close and so uh heavy Trading between you know 8:30 to 9:30 2:15 to around 3:15 when it slows down are you trading all products are you indiffer to product absolutely you know when I first started it was Equity Z right you know once I kind of understood it was the same mechanics you just have through Market awareness you got to understand how Futures move with equities and how

10:53 volatility is different in the Futures Market once you kind of understand that uh you know selling a 20 Delta strangle is the exact same in crude oil is as it is in the S&P and so um that really broadened my horizons and gave more opportunity uh especially with volatility um you know in depressed times you're looking for currencies you're looking for drawn you're looking for uh you know metals and so I I trade all products okay so let's talk about your Mechanics for a second uh so since you were since you've been born and raised basically hand-fed inside of the tasty ecosystem yeah everybody will be pretty familiar with your you know a lot of the

11:40 mechanics but I guess my question is like would be first of all how active are you because you you are the CEO of another of a company that you have to run and all that stuff so how active are you on a daily basis very active I mean so last year i' I made around 2800 trades that's great uh the year before that around 1,500 so it's a pretty active day yeah 2,800 trades just to give people an idea is is about 10 to 12 trades a day correct how many positions in total do you carry just on average on any typical day I'd say my average is around 30 positions 30 positions now you know if volatility is

12:27 above 20 yeah I could have up to 50 55 positions on you know today I looked at the the vix and you know it's it's 16 yeah and I'm a little short but that by looking and being product IND different you can look more at so I'm really heavy into uh currencies right now uh short the dollar I mean bonds yields so selling my positions and you're talking my book right now yeah well that that's where the volatility is right now right ivr is high above above 35 uh and I'm I'm really strict on on the on the mechanics yeah and have you been when you say you're strict on the mechanics are you talking about like the the kind of are you talking about when

13:12 you adjust and roll or are we talking about when you kind of close out and things like that all of it so I I've developed checklist um oh nice you know from the opening U from the opening okay let's look at I have a watch list of 250 you know underly sure you know all all very liquid underlyings usually really tight bit ass spread so I look at uh okay what is the ivr it's the first thing I look at is the ivr above 35 what's the five day change on the ivr is that positive yep um um and then if that if that's the case then I I will glance at the chart and kind of see where it is if it's trading at extremes a high or low a subjective

14:00 higher low and then uh and then you know if it's in the mid-range I'll strangle it if it's like bonds right now that's that a really low I will just sell the 30 Delta put and and then you know take off the call um but but to answer your question about you know managing it you know if the if the call side gets breached I will roll up I'm not as aggressive as as you are on managing the the call but uh that's sort of the the way because I don't like to get whipsawed yeah um and then closing I'm closing 50 to 60% a profit um um in addition to that you know I follow the mechanics on the the size I think size is by far the most important thing that

14:48 new Traders need to think about how have you kept your size in check with because your account has grown let's say four-fold or five-fold how is your size is kept in check so I think it's really important that you think of uh percentages not numbers okay um so um each opening position that I have um is no the opening position doesn't take more than one to 2% of net lick so I'm you know I and and I I I'm very disciplined about that I think you know you've kind of taught me size kills yeah um and um and and I I agree with that you know in addition that by having that you know that in place it also opens me

15:35 up to have free up other Capital look to look for other uncorrelated trades as well um so yeah when you think about investing do you still do traditional investing at all are you still doing you know any commercial real estate or like passive uh Equity Investments no I I don't obviously I I have got a a company sponsored 401k plan for my employees and I actively you know contribute to that uh sure I think that makes sense um but other than that um since I've started doing this four years ago yeah um I can't see doing anything else to be honest with you um you'll do this until

16:23 for the rest of your life you know this absolutely you know um again the flexibility the Capital efficiency you know having control control of opening trades and what trades to place um again I can't see doing anything else I'm going to bet I don't know if I didn't never asked I haven't asked you this in advance but I'm going to bet that the last four years your success in trading has made your business more successful absolutely um there there's a lot of similarities you know between trading and running a business I mean in a business you you're making decisions every day uh some of those are big decisions some of those are small but um every decision you make

17:10 you got to think about okay what is the the probabilities on this what is the risk sure of of making this decision one way or the other and what's the upside and the possible return of that um you know do you go into a new market segment do you uh expand head count and and bring on a new employee all those decisions I think of in probabilities of it's the same way in trading every every trade that you place you've got to think about okay what is what is the risk uh of this trade what's the return that you're going to to get for that risk that you carry um so I think there's a lot of similarities in in thinking in in probabilities and risk um and then also making quick decisions as well um it's

17:56 definitely helped you know um because in trading you may have an opportunity that exists in the morning and by the afternoon if you don't make that trade it could be gone um same thing in business you got to make quick decisions every day that affect the the health of the business well I think the quick decision- making piece is totally underrated because it you can't make 2800 trades in a year and not be a quicker decision maker than you were the year before it's not mathematically possible it's like you know it's just just it's just a it's just a numers scape so it has to be better you know you know what I'm saying so that's that's great let's talk about because I think this is so

18:42 interesting because there are so many people that are similar to you um you know with full-time gigs whether it's running your own business working somewhere else and then you know complimenting that and I I I just think that's so valuable let's talk about about some of the things that have gone wrong in the in like some of the mistakes where you're like you know I wish I didn't do this the Nvidia trade from last year was was was what does that what does that mean so uh you know nvidia's had an explosive run oh I know um and because I knew that it was overpriced you know I started out selling a 30 Delta call you were smart like I was we both knew that it was over

19:27 for us we should know exactly when that was going to take place right and um I I got I broke my rule of two you know think one thinking I know something also adding to losing positions um and so I was uh really short uh Nvidia um uh it was more of an ego thing I I I you know I failed to close it and take the loss um but it taught me a valuable lesson you know of of not every trade's going to be a winning trade um yeah follow the mechanics sometimes the stock wins yeah sometimes it wins but and sometimes we do stupid stuff yeah yeah but there's a good lesson to be learned in that is but other than the

20:12 short Delta you know in Nvidia and the and kind of sometimes our eos's getting away we lose our discipline whatever it is what else you know what other kind of like you know what other mistakes have you discovered uh turn the quarter on whatever you want to say you know the biggest mistakes that I've made is one thinking that that something is overpriced or underpriced and picking Direction uh that's that's the first thing and number two adding two losers and to add to that uh some of my biggest wins were the fact that you know I did add to my losers they'll mess up and and then that plays the psychology so there's a it's a it's it's a psychological game as well fear in greed

20:59 are real components of psychology and uh and in trading and um but I think the mechanics definitely give you a tool to um to keep you in the in the guidelines uh and and and protect you from from that psychology you know of greed and fear what scares you I don't think anything really scares me about the the market um and the reason why I've traded through you know in the four years lots of nasty stuff lot lots of nasty stuff I mean in August we had a 1,700 uh Point drop in the uh NASDAQ in two days yeah you know that scared a lot of people um and you that

21:44 uh when I was short the &ps that did really well but there were positions that absolutely blew PR past my put strike and uh and and I felt some pain on that but you know if you manage it and if you size appropriately at the the opening of the trade then you can live through it um and again those type of positions that creates more opportunity if you have Capital available um and and you're in a position to take advantage of that Chris that was awesome oh thank you calling all Traders are you using tasty Live Mechanics and enjoying awesome results are you an upand cominging options Sant we're looking for you for over a decade tasty live has shared the most inspiring

22:31 stories of Traders teaching themselves a new skill using probabilities and experiencing new levels of success if you think your trading Journey should be shared with tasty Nation we'd love to hear from you we are always on the lookout for the next class of rising stars email us at risingstars tasty.com if you'd like a chance to share your trading journey and Inspire others