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Mark Anderson's Buy-the-Dip Trade Was Up 23% the Year Stocks Fell 18%
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ticker lesson
Breakdown
0:00lesson
Introduction to Mark Anderson and his strategy
- Mark Anderson is CEO of MBH Capital Management
- Strategy involves buying the dip and volatility crush
- Backtest shows 15% return in SPY with 2% allocation
1:38lesson
Mechanics of volatility crush and Vanna rally
- Volatility crush creates feedback loop
- Market makers sell short futures when volatility drops
- VIX opens down signals news event
- Intraday VIX drop confirms volatility crush
3:24lesson
Backtest results and risk management
- 2% allocation yields 15% return in SPY
- Max drawdown 34% during COVID
- 2022 trade up 23% despite market down 18%
- Asymmetric risk to upside
5:09lesson
Volatility and P&L distribution
- Most P&L comes from low volatility environments
- 6% of trades above 30 VIX but 30% of P&L
- Higher volatility leads to higher returns
6:55lesson
Position sizing and trade management
- Recommend 1-2% allocation for this trade
- 2% allocation leads to 19% drawdown
- 5% allocation leads to 40% drawdown
- Need 25% gain to recover from 2% drawdown
8:23lesson
Frequency and trade allocation
- 2-3 trades per month
- 1,000 trades over 10 years
- 2% allocation matches market risk
10:06lesson
Put selling strategy and premium capture
- 20 delta put 45 days out
- Exit at 21 days or 75% profit
- Premium capture ratio retains 50 cents of $100 premium
11:46lesson
Risk management and market regimes
- IV rank above 100 indicates historical low
- Market regime changes like inflation or COVID lead to large gains
- 2020 trade break-even despite VIX spike
13:29lesson
Continuous management and psychological aspects
- Continuous trade with 12 months of activity
- Psychological stress from constant monitoring
- Automate to reduce psychological burden
15:01lesson
Combining strategies for higher returns
- Combine long S&P options with call trades
- Positive theta from put trades
- Asymmetric risk reward with delta position
17:01lesson
Portfolio diversification and capital allocation
- 30% margin for core strategy
- 70% for opportunistic trades
- Diversify across assets like gold and crude oil
19:00lesson
Volatility indicators for individual assets
- GVZ is VIX of gold
- OVZ is VIX of crude oil
- MOVE or TLT is VIX of TLT
20:52lesson
Volatility in zero DTE trades
- Zero DTE trades have increased volatility
- Profitability varies by month
- Need mix of trades and responsible sizing
22:30lesson
Conclusion and resources
- Mark's YouTube channel: Multi Strats Mark
- Resources on tastytrade
- Framework for thinking about zero DTE risk
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