Simple DIY Investing at its Best | Rising Stars

tell us back my friend rising star ridin house I love when Rising Stars come to Chicago because they're always from outside Chicago rod how are you I'm doing great and welcome to taste thank you very much and we were just talking Greek food because rods staying out tastytrade is just a couple of basically a block course comes through a stone's throw from greek town right we're in a place called the West Loop here in Chicago and um it's kind of a crazy restaurant I mean it's it's like the Meatpacking District in New York I was like there's parts of every major city now that look kind of like this area where there's you know where there's where there's build where there's the wholesalers and and five-star restaurants side by side but you're staying right outside of Greektown we were just talking about all the different Greek crafts Tony worked in a Greek restaurant when he was growing up the Floridian diner and Avenue you remind me a little of an East Coaster and Wow no no you were born I was actually born in Oklahoma no my father was a military so that's where he was stationed when I was born but my family was from the west coast my mom and dad from California well and you know until I went to high school my dad was dragging us around in the army yeah so you replace an army kid yeah yeah army brat no lived in Germany in California Alaska and you were in the Army for the and then I went in the Navy I may be in for a few years then went to college and became an you know went in the Army Army National Guard Army Reserves and and did deployments to Iraq Germany and when I was the Navy the Indian Ocean Pacific her labor yeah 35 years and military right but but in if you grew up on the East Coast its life revolves around diners right we basically go from one Greek diner to the other ones no I'm not unfamiliar with the East Coast because you know my travels have taken me out there you are you now live in Washington we have all your stats up on the board you started you told me you've been trading for on and off for for basically since the early 80s right right but started getting into it more actively as a full-time gig kind of in 2005 and then after you retired or I don't know do you actually retire from the military yeah I have a reserve retirement so in 2010 I retired from the Army Reserves Tom what's in the reserve known as the great area retirement which means I don't get my benefits until I turn 60 got it got it Rodney are the same age so I love to talk to people that you know been through just taking different routes in their lives and and things like that and I think it's super cool and you've got kids in the Midwest now well yes one in st. Louis and one in Green Bay and my son is kind of count those as semi Superbowl cities yes my son is is in the middle of his college years in Spokane Washington the one my daughter in Green Bay Kimberly he should be listening to us live but you know she just graduated from college it's a and she's now working in Green Bay that's so cool and okay so now we're gonna get into the so we got a little background and what what appealed to us about your story was you said was one year consistency because when we when we vet potential rising stars and we sit there we talk through some of the you know what what excites us about your story was that essentially you've been this is your this is how you support yourself that's correct and you've been generating approximately three percent per month fifty percent per year which is amazing and then and then obviously it before 1k and you've been doing you have limitations in your 401 K correct I assume that your trading style involves a lot of based on some of the discussions we had prior to this your trading style is it Bob's a lot of undefined risk maturity yes the majority of it but you started getting interested in markets some 30 years ago right what was that yeah where was the kind of the defining moment like in was it in 2005 when you did like what happened when did you decide okay I love this stuff first of all when decide you love this stuff well I remember many years ago probably in the early or late 90s around 2000 I I was working different jobs for different people and while I was some of those jobs I was like looking the sp500 and says you know this is something I can kind of understand and so I started trading the SPX back you know during my lunch hour you know and stuff like that so I figured that you know and I kept thinking over the time you know I could probably make a living at this I see other people are so you know I got to figure out how to do it and it's something that I just figured out I could I can figure out so then I found out about investools somehow I don't really know how I don't remember but I went through all of their stuff and that's where I really first got introduced to options and and to the the option all the different option stuff and so I started looking at that and said in and what I would do is I would just I'd start trying all these strategies and back-testing stuff and try this and try that and I got to the point where I thought that I could make a living at you know I jumped in with both feet right about the time of 2007-2008 which was I was getting ready to deploy with the military and and I would or do some training and in at the same time I was trying to figure out how to apply my strategies in this market that wasn't making any sense at the time thing like being deployed to Iraq and then trying to figure out how to trade SP exercises at the same time so all the time so I was actually very successful the nine months I was in Iraq I actually made more money trading undefined risks on the SPX that I was that I made by the by the military when I was over there so that's so just--just--just or think you were crazy just just working really but you know I would just of course the time difference you know just like before I went to bed at night I'd go in and place a couple trades and but anyway my strategies for the most part simplicity is I learned a key as is the more I more diverse you get into looking at different things and you lose focus and that's the second key I have keep things simple stay on focus and minimize expenses those are my three things when did you first discover tasty truth to be quite honest with you I'm not really sure I remember when it was okay but I rediscovered tasty well of course I was familiar with with through investools became familiar with thinkorswim in you and and and things like that and then I think I was aware of tasty trade but then after August where I got myself a little bit in trouble I said every time I get myself in trouble I go and reevaluate and I said okay what can I do to make sure this doesn't happen again and that's when I started getting read rien volved with tasty trade and the concepts and the in the the studies that you've done and I tweaked my plan based on a lot of things that I'd learned since August from tastytrade let's go back to that for a second so so cuz I don't want to talk too far ahead here we got plenty of time so so from 2005 when you kind of let's let's just say maybe reinvent a little bit of the trading stuff or so and you start to get and you start more like a full engagement you know and go through programs you start learning about options and you figure out what strategies work for you what strategies don't what's real what's not real enough so if you got to cut through a lot of bullcrap right with time right and then you had a meltdown to deal with yeah several of them several meltdowns right in several meltdowns a tour of duty in Iraq I mean there's a lot of you you're dealing with life yes at some point you figure out that what works for me is is I like index strangles let's just say as an example that's where I met okay and everything's going along swimmingly until you know a few of these you know maybe it's a fiscal cliff maybe it's a flash crash and then in then you mentioned August you turn about August 24th 2015 correct okay August 24th 2015 if you remember Tony we opened down 150 SP points we actually we actually did say how we remember that day we actually had a rising star in the studio that morning we just came back to visit us last week Tom from Houston and he was and he was here he goes I guess I picked a bad day to be a rising star because we came you know we were our focus was you know it was very difficult to have that conversation and he's still doing amazing but I remember the day like it was a 150 point town move and that will scare the children no matter who you are right when you're naked short options right so first of all how much damage did you sustain that day a lot okay when you say a lot does that like what percentage well I would just say that that those that week was my my that month you know I basically do my accounting on a monthly basis that was my worst month ever okay and I had some bad times back in 2007-2008 that was my worst buy dollar-wise probably not percentage wise but dollar wise dollar wise it was pretty it was my highest dollar wise and then percentage wise I can't remember but maybe 30 40 percent or something but I've had worse percentages okay so you've been building up your equity and this is kind of obviously a setback and it makes you mad more than anything else just mad just deal with it okay how to deal with it we get mad you yeah you dealt with it that's good and what did you learn from that I learned that I need to make sure that I don't get too extended on my margin and I think that that was one of the big things is that the market was you were too big I was too big right and so that was one of the things that I and I'm still too big today so what happens that the market was getting kind of flat then like it is right now and what happens I got a little bit too far extended on on the on the margin and my Delta was too high right now I have a really good negative Delta so I could probably do better if something like that happened now but I think I need to do is just basic reasons you keep my size in check and that's that's the biggest thing do you think that do you travel a lot still are you in front of the computer most of the time I mean I'm just curious about your daily so one of the things that that I've done the reason I've done this is that I I go on bright when the market opens and I trade the futures in the trade the SPX and then I go hiking and then I go volunteer with the City Parks and Rec and take people on tours and stuff like that and I do take care of my family so this has given me that the money to pay my mortgage and it's given me the time to do things that I want to do that's it's phenomenal and I love your whole story because it's so you know it's so real it's low-key it's real but it's and you're doing in a way that 99% of the world would say you know that's way too much risk and yet you know you know that your success rate is probably up you know is somewhere in the mid 80s is my guess I mean you've been able to kind of plan around it how long have you been in that consistent you know 3% a month type of range well the 3% is an average since 2007 since white but basically on it that's great when I started keeping very detailed records in 2007 November 2007 and the average during that time has been around 3% a month of course there has been some huge moves during that time so that's the average now are you drawing from that and like you're paying expenses oh yes and so so you know I probably would have a much better account if I would have been had other income and just let that build but yeah I'm taking distributions from it and do you feel like do you feel like you have do you feel like what you've accomplished to date and what you've learned today and say accomplish but what you've learned today do you feel comfortable in this ability to sustain that you know into perpetuity like I mean I I do okay I do and I feel that what I put together right now is a good way to consistently have profits and there are some of the tips that you would give us that work for you on a consistent basis now obviously if you had I'm not gonna ask you how much cap because I think that's personal and that kind of stuff but you know understanding that it's not linear and as you build up your count build up more and more capitals harder to make you know 3% but but it's clearly doable be right at risk you're taking what have you what changes have you made other than the size changes since since August of 2015 or just in general because this has been a tough year and you've been able to sustain that this year yes yeah what have you done this year that's like did you think you can so some of the key things I did one was I used to sell out all the expirations you know as far out as they had expiration you mean ladder them all the way out yes okay and then I used the things I got from tastytrade and now only self 30 to 60 days okay and I focus on those and it has helped you and that has helped good and the second thing that's helped is I used to also try to hold things till expiration and of course now you imagine winters that causes me causes me a lot of problems because the the you know I gamma risk at the end so I've incorporated buying back closing out the options when they get to a certain percentage of profit and then of course if I need to another thing that I incorporated that I never really did before was rolling you know nice and so basically managing the the margin only selling 30 to 60 days out taking my profits and and and rolling options that get in the money see a lot of people to understand what you just mentioned that those those five those three four or five different items that's the difference between just saying oh here I'll sell a strangle you know verse really understanding how to trade mm-hmm because anybody can do it when it works sure I you know and what percentage of your portfolio would you say that you're using at any one time like for the month okay using all of your SAP at all fifty percent thirty percent eighty percent well my target mmm my net lick / my buying powers 50% that's good that's that's my target unfortunately I'm a little bit under that right now it's fine no no no I'm too risky yeah yeah yeah that that we've learned especially in periods of low volatility that's probably the one adjustment that you that you want to make rice to get that number back under that 50% level right but um but in general I mean the changes you've made obviously you know we kind of laugh about we joke about on the show but it's like two people can do the exact same strangle have the exact same approach by the same underlying and one person is successful and one person isn't care and and you don't realize that a lot of it's just the little things like managing winners like maintaining the right size to you right you know give yourself enough learning how to roll the positions forward how often can you tell us your steps like when do you roll you know when you have a position okay so this is my strategy for rolling perfect first the first thing I do is if it goes in the money yeah that's sort of like there's a signal on the on the platform oh I've got something in the money so okay if it's in the money then I look at it and I say okay can I roll it out 30 days and roll it to a better strike price and collect some additional premium and normally I can it's a rule for credit yes sir roll for credit better strike price more time yep and and sometimes if the market keeps moving against me I may have to roll several times but I think that right now you know that's helped me out quite a bit it seems so much there's so much common sense to that what's your background do you have are you a technologist like in your skill sets like what was yours what was your military skill set well like I said I I was a naval aviator operated does sensor equipments on a patrol plane in the Navy I became an artillery officer and the Army Reserve on the National Guard okay I was a training officer and the Army Reserves then so the mechanics a part of it then you pretend then I got my undergraduate degree in international business I have a mat an MBA with emphases and information systems I have another master's in finance I worked for Boeing as an industrial engineer work as a systems engineer for several different telecommunication companies those are the types of things that I've done it's wild and I bet you never thought that any of that would include trading for a living to support yourself at some point in your life right well I remember many years ago 2006 I think just before the the housing bubble burst I was in California with a friend of mine I was asking him sister do you think maybe somebody can make a living at this and I think he said no but I said I'm gonna figure out how to do it so I figured out how people lost money and I just figured out how to turn that around it's a great it's a great story rod and we love it here because because it's it's so real and it just you know so many people you know both meet your demographic I mean that's our buer you know smart multiple degrees you know trying to figure this stuff out no there's no stay engage willing to put some time into - there's no magic formula right no magic formula just hey these are draw downs I mean they're all there it's a liquid market place's when I take white somebody has to make some money right right okay there are plenty people to lose we all know that but but with one tick wide market somebody has to win right right right and and so it's not you know it's just it just fascinates me and blows my mind because you read all the stuff and you like it and you think oh man nobody wins and so cool to hear the story congratulations on your successes well thank you thank you so much for coming to taste you I know it goes it goes so fast yeah you look at this you're like well I up there for 20 minutes yeah and the answer is yeah yeah yeah that's awesome it's really great and it was really nice to meet you I appreciate it to hear the story it's appreciate you guys having me on thank you good job to you we take a quick 92nd break when I come back get a market measure next just a straight life hey everyone thanks for watching if you liked this video give it a thumbs up or share with a friend click below to watch more videos subscribe to our channel or check out our website

Channel: tastytrade

Views: 14,711

Rating: 4.9233718 out of 5

Keywords: trading, trader, stock, market, finance, learn to trade, beginner trader, options, options trading, tastytrade, profit, trading tutorial, investing, how to trade, interview, success, engineer, portfolio management

Id: IP1QKPuH_Tk

Length: 20min 24sec (1224 seconds)

Published: Thu Aug 04 2016