Trading Dominion – Portfolio Margin and SPAN Margin Trading Tactics
Learn trades which have been specifically designed to take advantage of portfolio and SPAN margin.
Increase your returns and have much more safety.
Why use portfolio or SPAN margin?
Most people think that portfolio margin (PM) or SPAN margin is just used by traders who want to get significant leverage, and therefore need to be comfortable taking larger risks.
There certainly is leverage with portfolio or SPAN margin, but what most people don’t realize is that, if used properly, you can use PM or SPAN margin in order to construct risk profiles which are much safer than what you could construct with RegT margin. There are even certain trade types which are completely not viable at all with RegT margin, and can only be done with PM or SPAN margin.
This course will teach you how PM and SPAN works, how to construct, and how to manage trades which are specific to PM and SPAN.
We primarily focus on creating trades which have much more safety than RegT trades, such that even in the event of a black swan your overall portfolio is protected.
Learn to manage an entire portfolio rather than a single trade
Most traders are on a constant and never ending hunt for the holy grail. They want to find the perfect trade which can make a fantastic return in every market condition as well as withstand a black swan event without taking a loss.
Allow me to save you time and money, and tell you that there’s a reason it’s called the “holy grail”, and that reason is that it doesn’t exist.
You need to start by creating two broad categories of trades: income trades versus hedges. Hedges are there to protect your portfolio, and you should therefore not expect to make money from them most of the time. The ideal situation with a hedge is that you can get creative with finance strategies such that you can end up with “free hedges”, while not compromising the power of the hedge too much.
What does a standard trade look like?
The following risk graph is from one of our “mechanical combos”, which combines an income STT trade together with a financed downside hedge.
You can see that we have a super flat T+0 line from around -8% down through to as high as the market wants to go.
Also notice the nice theta distribution and spacing, as represented by the various T+X lines.
On top of that, backtesting has shown that this trade can withstand a black swan event such as the Aug 2015 crash.
Automated backtest of the mechancial combo #1
Although many of our members prefer to trade using their own discretion, we have also created some trades which can be traded mechanically.
Here are the results of our “mechanical combo #1”:
Automated backtest of 1671 trades from 2014 to today
New trade initiated every 15 mins
Profit target: $600
Max loss: -$1500
Slap on/off trade; no adjustments
Initial PM: $2100
% winners: 89.47%
% losers: 10.53%
Avg DIT: 35.2
Avg winner: $600
Avg loser: -$1100
Avg P&L: $420
Advanced options analysis spreadsheets
Spread and option chain analysis
You’ll get access to advanced spreadsheets which allow you to get detailed information on various spreads (naked options, verticals, broken wing butterflies, black swan hedges, etc). These spreadsheets can be leveraged in order to try to find extra edge in a position prior to entry (eg seeing that the spread right next to the one you plan to purchase might be available a bit “cheap”), or to help you track your existing positions such that you can see both 1st order and 2nd order greeks.
While doing an option chain deep dive can be potentially useful, note that there is absolutely no need to use these spreadsheets for either setup or management of your trades. We have all of our trade plans fully documented, and entry and management is based on traditional things such as greeks, the dollar value of certain strikes, or expected moves. You can therefore fully trade all of our setups without ever opening any of these spreadsheets.
Learn a variety of trades
In the main course you’ll learn many important concepts which will allow you to take your trading knowledge to the next level. You’ll also learn a variety of initial “core trades” which will teach you to combine income trades together with partially or fully financed black swan hedges.
Apart from the above, our Mastermind group is always hard at work at coming up with creative new trades and trade variants.
Here are some examples (over 50 trades), all of which are fully documented in the private Mastermind forums.
Simple Trend Following System
Many delta neutral income traders tend to hate technical analysis. Yet, these same traders will complain that one of their income trades took a hit because of a grind down market which came out of nowhere, or a huge bull run which they wish they could have foreseen.
The Simple Trend Following System (STFS) is an extremely easy to understand technical analysis system which uses only two simple indicators and price action in order to keep you on the right side of the market. There is zero discretion involved, and is 100% mechanical in the definitions of the rules for entry and exit.
You’ll be able to learn this system in under 30 minutes and be able to use any trading platform to implement it.
The main intent is to use this system in order to keep your income trades on the right side of the market, help you time entry into new trades, and minimize the drawdowns you’ll see.
Exclusive discounts with futures brokers
If you are looking to leverage SPAN margin and therefore trade futures options, you will pay the following retail rates:
– TD Ameritrade: $2.25/contract + exchange fees
– Interactive Brokers: $0.85/contract + exchange fees
We have organized exclusive deals with some other futures brokers where you will be able to pay a blended fee (broker plus execution platform) of $0.65/contract + exchange fees.
Just by being a member of our Trading Dominion community, you’ll be able to leverage these very competitive rates.
Trade futures options in your IRA without any penalties
Some brokers, such as TD Ameritrade, will allow an IRA to to trade futures, but not futures options.
Other brokers, such as Interactive Brokers, will allow an IRA to trade both futures and futures options, but will apply a variety of penalties to these accounts, such as charging 3 times the normal amount of SPAN margin, or adding penalties for using long dated expirations.
We have exclusive arrangements with certain brokers, where you will not only get the very competitive commission of $0.65/contract, but you will also have no penalties applied to the IRA account. Your IRA will be treated exactly the same as any other account type.
Trade your IRA in a portfolio margin account
We have already mentioned that you’ll learn how to setup your IRA account with one of the brokers we have exclusive agreements with in order to be able to trade futures options, leverage SPAN margin, and not have any penalties applied.
If you are willing to spend a bit more money up front in order to set up a different type of business entity for your IRA, you will also learn a way to be able to setup a portfolio margin account for your IRA with almost any broker of your choosing, including TD Ameritrade (TDA).
Being able to trade portfolio margin with your IRA would allow you to trade SPX with TDA, and therefore save a significant amount of money in commission costs.