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Every month I publish here the Fund Value. Weekly performance is available to email subscribers.
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Starting on Jan 3, 22 I will be starting my personal Investment Fund: the Volatility Income Hedge Fund. This will be somewhat different from the “Trading Account” approach where I had starting and ending points (Jan and Dec) each year to evaluate the final amount gained. The years 2019 and 2020 were highly rewarding. I achieved 2020, 150% return (lucky with stable market...), 68% in 2021 (it was good enough!) and 26% in 2020 (an excellent result under a challenging market!).
It was an impressive journey and my community members that follow the trades and, most important, are learning from me should have achieved similar returns. I will continue to post the trading performance on the website for full transparency. I think this is the first time, an Hedge Fund will reveal (and share) its trades...
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IMPORTANT: Access the trades of the Hedge Fund by subscribing to Memberships and becoming your own Fund Manager
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Why this approach?
With the "Investment Fund" approach, I have a starting point, Jan 2nd 22 but no end. I will seek to have a consistent appreciation of the trading account, minimizing its volatility. Like in previous years, at the end of the year, I will also compute the return of the funds in the account. But, most importantly, the Fund will have a set of trading rules which, until now, I did not have. I was totally free to add new trades to the account. Not real portfolio management in mind (trades were opened independently of each other). I want to put a more professional approach. Under clear Fund rules, stated below, I have a public commitment. And increase accountability that would support auditing under the fund rules.
Volatility Income Hedge Fund: Investment Strategy
The Fund seeks long-term appreciation of the trading account funds, minimizing trading costs. Its goal is to outperform SPX Index and, at least, achieve 50% annual return of the total account value. It will be actively managed according to a specific set of trading rules described below:
1. The account will start with a total of $20k on 2 Jan 2022;
2. At least 50% of funds should be invested at any given moment;
3. Implied Volatility levels should support the strategies used at their open;
4. "Pure” directional trades are NOT allowed, except in Volatility instruments (ex, VXX). Only income trades are allowed;
5. Trades should maintain their Delta neutrality as much as possible, given market conditions;
6. Vega hedge in-between trades should be considered and encouraged;
7. Usage of different expirations at the same time to diversify risk should also be considered;
8. Only tested trading strategies allowed in liquid underlyings (Indexes or Stocks);
9. Investment only in Options Spreads (no direct underlying investments).