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Hedge Fusion Strategy

Overview

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The Hedge Fusion Strategy is designed for active options traders who looking to trade high volume, liquid options on the indexes, often with a delta-neutral or a hedged approach. Dependent on market conditions and signal strength, the strategy will take exposure and look to capitalize on definitive directional movement on the Index ETFs, or market neutral trades on both Index ETF options - all with a risk-defined approach.
 

Features
 

  • Signals delivered via auto trade available through Global Auto Trading

  • No set or subscription fees.  Fees variable based on value provided and invoiced to client

  • Opportunity to profit regardless of market direction.  

  • Designed for clients to scale account with captured profits

     

What it Trades

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  • Straddles and Strangles on Index ETF and Stock Options (2-4 day hold time typical)

  • Directional option trades on Index ETFs (with fractional hedging possible)

  • Overnight and 0DTE delta-neutral and delta-skew trades on Index ETFs 

  • Macro themed trades when warranted 

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How It Works

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  1.  Submit New Client Agreement Form here

  2.  Determine Risk Budget (see below)

  3.  Set up auto trading through Global Auto Trading

  4.  Periodically review performance and make trade size/scaling adjustments as needed

  5.  When applicable pay any invoiced fees 

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Trade Size & Allocations

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The strategy is designed for clients that are willing to start with up to $1,000 of risk per trade, with $500 or less per leg being more typical. 

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We specify the number of contracts when we send the signals for auto trade at 1x scale.  The strategy is designed for clients to 'mirror' this sizing in order to properly execute the strategy.  This is a crucial aspect that a client is comfortable with this sizing at the minimum, as this maintains the integrity of combined trade and risk structures and ratios.  However. this a not a recommendation for how to size, as each client must determine their own risk.

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This is a feature of auto trading that allows a new client to onboard at anytime, start at 1x the size we are trading per trade, and then scale as their account grows.  Clients that can start at a higher scaling level than 1x if they choose to do so. 

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Risk Budgets & Scaling

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​Each client should consider defining a Risk Budget prior to trading.  This is simply the amount of total capital they are willing to risk in order to achieve their individual goals.  Basically this is the maximum drawdown a client is willing to take, as well as the initial amount they may consider funding their brokerage account with. 

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Below are several examples of starting risk budgets that clients commonly use starting at 1x scale.

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Standard Risk Budget:    $20,000 

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Minimum Risk Budget: $10,000 

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This is for illustrative purposes only and not a recommendation or advice, but may be suitable to participate in the strategy considering the position sizes taken.  

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With risk and all factors combined in the strategy design, this strategy is designed for clients to scale and add an additional unit of risk/increase position sizing with every $10,000 to $20,000 in net profits after fees, or generally each time capture in profits the amount of their starting risk budget.  

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An example of this would be:

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  • Client starts with a $15,000 Risk Budget (1x Scale)

  • Client captures $15,000 in net gains, scales to 2x, now has a $30,000 total Risk Budget

  • Client captures another $15,000 in net gains, scales to 3x, now has a $45,000 total Risk Budget

  • Etc....

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