The Road Trip Trade was published in
Technical Analysis of Stocks and Commodities magazine in the Feb 2017 issue!
The Road Trip Trade was created by Dan Harvey. Dan and Tom Nunamaker have evolved the trade to where it is today. Dan Harvey has traded for many years and was well known for his Iron Condor trading. Tom trades for a Commodity Trading Advisor in New York City. Dan wanted a trade that was slower paced and needed fewer adjustments than the Iron Condor. He wanted to spend less time at the computer during market hours and take more road trips without worrying about his positions.
The Road Trip trade has a very flat Profit/Loss line initially, which is why it can handle large market moves with relative ease. The trade starts out 70 to 85-days to expiration and is normally exited 10 to 15 days before expiration. If the market has rallied significantly, trades are taken into expiration. A new Road Trip Trade is initiated twice per month. Up to five trades will be open at once. This provides time diversification and helps creates a smooth equity growth chart.
The Road Trip Trade has several objectives:
Dan Harvey and Tom Nunamaker trade the SPX index options and ES futures options. You'll receive trade alerts via email, SMS text message and in our private Slack channel in real time so you can follow along. Trade messages, screen shots, current open positions and open orders, weekly trade reviews, trade history and more are on the Road Trip Trade member web page.
You can ask Dan Harvey and Tom Nunamaker questions about the trade on the member web page or in the live trade review webinar held once per month.
Gary Whitlock has worked closely with Dan to develop a programmatic replacement to the Online Trade Entry Tool. Each day after the market opens, Gary examines hundreds of potential Road Trip Trade entries, add on trades and Baby Butterflies.
This is the tool Dan and Tom use now to find new trades and adjustments.
The G-Tool is a $15/month paid add on to the Road Trip Trade subscription. Trial and G-Tool subscribers have access to the current G-Tool reports that are published about 90-minutes after the markets open. Others can see last week's reports and add the G-Tool to their subscription at any time.
This is an extract from a recent G-Tool entry report:
The Road Trip Trade Alerts are $15 for the first two weeks then $150 per month
With the Road Trip Trade's high mathematical expectancy, you should easily be able to recover the cost of subscribing. The educational piece of the Road Trip Trade Alerts is worth the subscription alone. It's like getting on-going mentoring.
Dan trades SPX with a planned capital of $25,000 per trade. Dan may occasionally exceed this but the total for five open trades will be $125,000 or less.
Tom trades ES futures options and uses $20,000 of maximum defined risk per trade, similar to RegT margin. Tom keeps the total maximum risk for five open positions to $100,000 or less. Because Tom uses the maximum defined risk, the trades are suitable for retirement accoutns, which normally have higher SPAN margin requirements. Tom trades his ES trades slightly more aggressively than Dan trades the SPX positions.
The open positions show the current positions, Dan's optional hedges in the notes, and the adjustment history so you can see when Dan did each adjustment and what he did.
Each SPX butterfly typically requires approximately $1100 in margin. We recommend having a buffer and using approximately $1500 per butterfly so you have cash available for adjustments if needed. Because we can have five simultaneous trades on, a rule of thumb some traders use is one butterfly every two weeks for every $10,000 in your account. So a $30,000 account would put on a three lot every two weeks. Alternatively, you could use twice as many contracts every four weeks.
ES futures options use approximately $1000 or maximum defined risk per butterfly. SPAN margin is typically about 1/3rd of the RegT margin, or maximum risk for a position. If the market moves against the position, SPAN margin will increase. This is why Tom uses the maximum defined risk to setup his trades so the margin required will never exceed the margin available if the market drops.
The Road Trip Trade (RTT) (and other butterflies) are Forest Gump "Life is like a box of chocolates" trades. Your yields will normally vary from 2% to 15% on the maximum margin used during a trade's like with occasional small losses. Dan's highest was 22%, and it is theoretically possible to make even more if the trade finishes in the "sweet spot". Because we have multiple trades open at the same time, the yield on the entire account is lower than the yield on any individual trade. In grinding up bull markets, yields are the lowest, but still positive. Tom uses long calls in a bull market to enhance returns on the ES positions.
Our performance shows returns on the entire account. Other services show returns per trade and some assume you are using 100% of your capital in each trade which we don't do. Our Compounded Annual Growth Rate (CAGR) is generally around +15% to +20% per year on the entire account. This is also the return we have seen for client accounts Tom is trading but there is no guarantee of future returns.
Some traders will get the same fills we do or even better. Others may not.
Here is our sequence for selecting the trade. First, we experiment with two to four combinations of strikes which we think would have excellent returns with manageable risk. Then, we watch the mid prices of these possible trades and how the prices move with the market. Then, we select the one we think is the best (and with a reasonable price) and send a "working order" alert. If the order is filled, we copy and paste the fill and send it as an alert as soon as we can. This is usually within 5 minutes of the fill.
The key point: GET FILLED.
The only scenario in which you might want to pass is one in which you can't get filled even at a dime or 15 cents above our fill. Yes, you will give a little to the market maker, but these trades have a high win rate, excellent expectancy, and some of the best yields we have experienced when taken in context with the simplicity of the strategy, its low draw downs, and its relatively few adjustments.
Some trade alerts send alerts out at the end of the day so it's nearly impossible for you to follow and get the same fills.
Dan and Tom don't do that.
Dan is normally done trading for the day within 2 to 2-1/2 hours after the market opens. The only exception is if the markets have a major move down.
Tom trades ES futures options which are traded nearly around the clock during the week. Occasionally Tom will send a message before or after normal U.S. market hours; however, most of the time his trades are during the first half of the U.S. market hours.
It's not unusual to make 10% on Reg T margin in a normal market, even after using additional capital to "Reverse Harvey" the upper side of the expiration curve in order to lock in profit. Yields of 6% to 8% are very common. However, if the trade finishes near the "sweet spot", even higher yields can be attained. Portfolio margin yields will be even higher, of course. Generally, my PM margin is a little less than two thirds of my Reg T margin.
During grinding up markets, volatility and yields are lower. Dan and Tom's approach is to be consistently profitable, even in sustained bull markets. Any profit is better than a loss. We expect to make 2% to 5% profit per trade in this market environment. Tom is more aggressive and adds long calls while we are in a bull market, which can enhance returns significantly.
Margin requirements can be controlled by "bringing in the wing" on the opposite side (credit side) of the butter. The cost to bring in the wing on the credit side of the butter is relatively cheap, particularly with only 30 days or fewer DTE.
Trade alerts in this service are made in real time in a ThinkOrSwim live account (SPX) and in Interactive Brokers account (ES futures options) with Reg-T margin. The normal entry size is a 10-lot for SPX and approximately a 20-lot for ES futures options. Planned capital per trade is $25,000 (SPX) and $20,000 (ES). The purpose of the service is for you to watch professional traders trade a live account so you can learn how to do it yourself by following along and asking questions.
Capital Discussions, Dan Harvey and Tom Nunamaker are not broker dealers or investment advisors. Tom Nunamaker trades for a Commodity Trading Advisor in New York City. The Road Trip Trade Alerts are NOT trade recommendations. We don't know you or your situation and have no way of knowing what level of risk is appropriate for you. You have to make your own trading decisions.
The risk of loss in trading options can be substantial so please be aware of all of your risks prior to placing any live trades.
Delivery: All products and subscriptions are delivered electronically on our member's website. Your account will be created for you if you do not have one already within 15-minutes of submitting your order. Access for most subscriptions is immediate but forums logins are created manually, normally within 24-hours.
Refund Policy: Fees for subscriptions and online classes from Aeromir Corporation are nonrefundable. No exceptions.