On March 31st, I attended a seminar sponsored by Tasty Trade Inc. based in Chicago, Illinois. The seminar setting was in Pepperdine University in Malibu. Even though I mostly know the materials but I decided to go 'cause I believe I will always learn something new by associating myself with different trading perspectives and experiences. Most of my Wall Street Sweepers Trading Club members also go to this seminar. Besides, I haven't been to Pepperdine University in Malibu. I consider this is an excellent chance for me to see the university myself.


I left my Claremont house in the early morning. I don't want to be late for any stock seminar which is one of my favorite events. By the time I got to Pepperdine University, the register table was already set up. Coffee, tea, lunch and beverages were provided. I consider this is a very generous part from Tasty Trade Inc. since the seminar itself is free of charge.


Mr. Tom Sonnoff, the founder of Tasty Trade Inc. is a spectator in this event. He invites 5 geeks to speak on various subjects of stock, option and futures.


The first speaker was Dr. Michael Rechentin, aka Dr. Data, talked about the general concepts of option data science. He mentioned about option pricing calculators and some of his research breaks down. He has a website for us to explore just in case we want to know more about the subjects in his speech.


Mr. Jacob Perlman and Dr. James Schultz talked about option math and distribution statistics respectively. They went through various math models and calculus of option pricing formulas with some math symbols such as delta, sigma, derivative and  integral, to name a few. From the statistics presentation, bell shape, standard variation, binomial, poisson and normal distribution are also mentioned. Honestly speaking, I am not very interested in this subject 'cause I believe on a race track, the best drivers will win the race, not the best mechanics.


Mr. Thomas Preston mainly talked about the volatility of option and how it affects the option price. He mentioned about skew in volatility to explain why same probability of OTM call and put have different prices. From his speech, I realize he is an option seller just like me.


Dr. Pete Mulmat is a futures specialist. He mainly talked about futures, a product that I don't understand and don't trade but his speech got my most attention simply because we have similar trading strategy. He talked about simplicity and market neutralization using one long one short pair trading strategy. That is exactly the way I am trading my portfolio right now. Since I am not familiar with futures products, I don't know exactly how he makes money pair trading futures, but for me, I make money by selling OTM put, and occasionally selling vertical puts of the pairs to release pressure from capital requirements for my portfolio. When a stock is put to me, I sell ATM covered call. The one long one short pair trading will stabilize my stock value while I am collecting option premiums. My strategy doesn't guarantee profit, no strategy does. It guarantees only one stock, but not both, will be assigned to me if the stocks drop below my short put strike price. It also guarantees for every stock assigned to me, I collect two option premiums for it. When the stock is assigned to me, I have to figure out a way to stabilize my stock value. There is no perfect way to do it since we are not living in a perfect world but it is doable with common sense, simple math and search for suitable one long one short pairs. The ideal pairs are the ones with high volatility so we can collect the most option premium when selling it.


Mr. Tom Sonnoff is not a speaker in this event, but between formal speakers, he talked about his personal trading experiences. He never worries about market movement and his portfolio performance 'cause he has confidence in his trading strategies. He is basically a contrarian probability trader and will find a trade with more than 50% probability of profit (POP) in any given market condition. With over 50% POP in every trade, it is just a matter of time until his portfolio outperforms the general market. His main trading techniques are POP and mechanical adjustments for trades don't go his way. He also mentioned about time decay in his trading. Since time decay is calculated based on calendar day, not trading day, it will work for option sellers 365 days per year. That is a big plus if we know how to capitalize time decay in option trading.


After attending this seminar, I notice one common point in all Tasty Trade speakers: They make their trades based on POP and let time decay work hard for them. Stock traders simply have a 50/50 chance after they buy a stock and wait for it to go up for profit. Option traders can choose a strategy to improve their POP. On top of it, option traders have protection; stock traders don't.


Speaking of Pepperdine University, it situates on a nice piece of real estate in Malibu with excellent view from top of the hill. I truly enjoy my first visit of the university. I don't mind to go there again for my next seminar.








Dennis Phan   潘家墉

Khai Minh, UCLA and Investools Alumni

Los Angeles, 31 March 2018   












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