Networking Call (Part 3)

Today I conclude summary of my recent networking call with GP: a self-proclaimed delta-neutral trader.

I asked GP why he is not trading full-time. He said he has an excellent job.

Wondering if this was a deflection I asked, “would you rather be trading full-time?”

“Yes, but I am building up my account for now. I’ve had an excellent last year and I continue on with a very delta- and vega-neutral butterfly position.”

I was not intending to discuss trading strategy, but since he volunteered I felt compelled to comment. I have seen greek-neutral strategies presented over the years and I am repeatedly unconvinced because they get sufficiently neutral to have little profit potential. Something with little gamma is going to have little theta. Something delta neutral will have to rely on theta or vega but with theta comes gamma, which will soon turn into delta—and it all falls apart.

In other words, “no risk, no reward” conundrum. He uh-huh’d me all the way to the bank on this point that he couldn’t be making much bank doing it. How ironic.

I explained that while I fall shy of MSFE in terms of academic skill, I have 12 years of extensive trading experience that few in the MSFE program are likely to match. I think I could be dangerous with an MSFE. Even without it, though, I do analysis all day long with strategy development, investigative writing, dissection of trade presentations and webinars, etc. I wouldn’t mind getting some gig as a consultant or junior financial analyst. The trading-related expertise I have accrued to date must be of some use for some clients somewhere.

Again, GP uh-huh’d a lot but really had nothing to add. He mumbled something about just having to call around to different firms, which seems like an obvious step I have begun to take.

I talked about spending thousands of hours doing manual backtesting over my first several years as a full-time trader and how I exhausted myself doing that.

I then discussed how I have interest in building an automated option backtester because those I have seen on the market lack the functionality I seek (more uh-huh’s as I went on). OptionStack looked promising but I think $200/month is far overpriced for an individual, retail trader. I said I am a green, newbie Python programmer thinking he might take the bait and suggest something about building software together. That was not forthcoming.

In fact, he said absolutely nothing about any sort of collaboration and asked nothing that might possibly help better even his situation. It was a very one-sided, closed conversation: closed in terms of opportunity.

When traders come together—even on a phone call like this—some effort should be made to see if we can help each other. No holy grail exists and what works one year may certainly not work the next. Even if we are performing well at the moment, our heads should always be on a swivel and we should constantly be on the prowl for something better and/or uncorrelated.

GP seemed outmatched when it wasn’t even a competition.

GP seemed quiet when I was looking for an exchange.

GP seemed humiliated, maybe, when I wasn’t posing any threat.

It’s almost hard to believe the person I saw represented on the website is the GP I spoke to over the phone. Maybe the website is stale and hardly used. The consulting services, now, seem quite hollow and bogus to me.

Onwards and upwards!