Sep 29, 2022
Allen: All right, everybody, welcome passive traders. I have one of my good friends with me today, Denny is going to be here. He's going to be talking about trading life in general, and everything that he's learned along the way. Denny, you know, we've, you've been in our programs for a little bit now we've seen your success. And I'm, we're friends on Facebook. So I see you with your posts from Hawaii, sitting on a beach house and all that and we're on the coaching calls, you're always you know, you're always making me jealous. You're always like, "well, I'm going to Hawaii next week, or I'm going on vacation. I'm going golfing". I'm like, Come on, man.
So I'm glad that we finally got to talk, you know, thank you for thank you for taking the time to be out here and talk with us. And I can't wait to learn from you.
Denny: Okay. Well, the way I you know, the way I originally got hooked up with you is I saw one of your marketing deals on the internet. And I thought, you know, well, you know, let's give this a look. And so I talked with Cory and and I said to her, hey, look, you know, I've got I said, I'd like an honest answer that if I come in and buy the program and everything, and I've got $10,000. Is it possible for me to make $2,000 a month on the $10,000? And she said, Well, we've got people doing it. She was very honest. You know, and then so so I got in on the oil deal. One. I think it's blank check trading is that was the oil is. And boy, I learned a whole lot. The first year, I was just sailing along making money hand over fist. And that was when oil was not very volatile. And it was just making, you know, moving sideways, which is perfect for if you want to trade oil futures, you know, it's perfect.
Allen: Yeah. Yeah. All markets are our friend.
Denny: And, and then all of a sudden, oil shot up. And I think it was November two years ago might have been three. Now I know I've been doing it quite a while. All of a sudden, I went in. And I looked and the market had dropped. And I and I was in a position where I was going to end up getting a margin call. So I liquidated my position was $4,700 that day, and I'll be damned the next day, boom, it pops right back up. And that was the day after Thanksgiving. And then on the next call, you talked about the Friday after Thanksgiving is not a very high volume deal. And so one big guy in there can make the market he can make it drop, you can make it rise, and I fell prey to that because I didn't know but you know, you can learn from your mistakes. And I made made plenty of them. But now I make money every month.
Allen: That 4700, did that wipe you out?
Denny: Out? No, no, I had 10 Okay. Okay, so I started all back over. And it took me it took me damn near a year to get it to get it back. And in the meantime, you had your program on stocks. Okay, so I signed up for that. And I fooled around with the stocks for a while and I went back to oil because to me, it's a little more passive where I can put a trade on and I will look at it once a week you know, and I feel comfortable with it. But then what happened is we got get them the next chapter Benny Alan COVID here. And my advertising agency that I own I do direct mail advertising for automotive industry. And I don't know if you've been reading but the car dealers don't have any new cars.
Allen: Yeah, they don't need advertising.
Denny: So, I my business the first year of COVID was down 2,000,400 and some $1,000 Right now, the second year is about 2.8 million and now we're into the third year of the car shortage and so far this year I'm down $1,976,000 From where my normal years would be so I went from a mid six figure income guaranteed down I collected my Social Security check with my wife, okay. And so I go okay, let's start fooling around with your knowledge with oil and with stock options and get yourself a little income so I took $25,000 out of our savings account and put it into my tasty works account and I make on an average trading two ETFs and oil and I just started doing spreads on weekly options in oil and that I've been doing okay on it but you got to watch that a little quicker because you'll, you can get caught up in a margin call on everything pretty quick on that. But since I have no other job, okay, I can watch it. You know, I just make sure that that when I go to the golf course on my daily trip I've got my phone with me. And I can hop in on the tasty works phone app and protect myself if I need to. But what I learned most from you was paid..
Allen: So how are you doing there? So you're like, Okay, so you Alright, so I'm following the story. Right? So you were you were learning like, you've been in our program, I think two years. So three, three, okay, three. So you learn how to do the oil you were doing great. And then you had one bad day where it crashed and you basically went back to zero and you had to start over? Right so that at least you didn't lose it you had you know you get back your gains then you know COVID hit so you had to basically all hands on deck for the business trying to figure that out. Now you're at the point where like, okay, you know what, I got this stuff that I know how to do let me see if I can make some money on the side. So you've been trading oil you've been doing you said you doing 2 ETFs. So what are you doing on? Yeah, what type I do? I do SPX and (inaudible).
So what strategy are you doing on those? Okay, well,
Denny: Let's go back to my educational background. Okay. Okay. I have a master's degree in Environmental Engineering. My master's thesis was the statistical modeling of dam failures due to excess runoff. Okay, so I'm a numbers guy, a numbers game, I understand standard deviations, regression lines, Bayesian coordinates, you know, all of this fancy mathematics that all of these indicators that when they write them, you know, I know how they get there. So I started looking at the stuff and I started looking for patterns, because standard deviation and stuff like that is nothing other than patterns, okay, that create a probability statement of the same thing occurring, okay. So, I started looking and I found the correlation between the VIX that, you know, on the CMOE, right, the VIX, right? And what happens with it? And so, I take the VIX and say it was it traded at 2588 and open this morning at 2588. I can't I can't remember exactly what it is. I go in, and I divide the VIX by 16. Now, why do I divide by 16?
Allen: I have no idea.
Denny: There are 256 trading days in the market. Right? The square root of 256 is 16. Okay. So I take the 68 divided by 16. And that gives me a percentage that's 87% accurate as to the upward or downward movement of SPX or rut on a daily basis. From what it opens that not what it closed that yesterday. But when the opening bell dings like, this morning, yesterday, right? Close to 1806. Okay. But this morning, when the bell rang, it was 1843 just for a short period of time until the CPI stuff caught up in the rear end dropped out of it. Okay, right. But so what I do is I go in and take what it opens at, and take the percentage and what it opens at, say it's one point it was 1.61 today, so you take 1.61% of the opening bell, and you subtract that from what it opened that and you add it to what it opened that and you gives you a high and a low rate. Okay?
Allen: Say that again, do make doing so. Okay. The VIX divided by 16. Okay, then what do you do that?
Denny: Okay, you multiply that the 1.61% Okay? Times when it opened that, okay, and that comes out to roughly what, close to 30 bucks. I don't have my calculator here. Okay. So you would take, you would take it and if it opened at 1843, you take the 30 off of that, that would be 1813. And then you take the 1843 and add the 32, which would be 1873. So that means that you've got an 87 point something percent chance that the right is going to close somewhere between the 1813 and 1873. Okay, okay, so now, we wait until the Between 1030 and 11 o'clock central time, okay. And the reason that I wait until then, is if you look, the market goes in and opens it bounces up and down. And if it's on the way up between 1030 and 11 o'clock you have what what usually happens and happens most days is a mid morning reversal of some sort where people are in taking profits or, or getting rid of losses. So okay. And at that point, it gives you a direction of the momentum of the market for the rest of the day. And the rest of the day barring no news or anything, it pretty much goes sideways or slightly up or slightly down. And I go in and sell a put put spread or a call spread at the bottom or the top that was ranges away from the way the momentum of the markets going. And I do that on a daily basis.
Allen: So if you think is going down you sell calls if you think it's going up you sell puts at the end of that range. So is that like you said 87% So what is that like as like one and a half standard deviation?
Denny: One and a half standard deviations?
Allen: Okay. All right. But but why do you do the VIX because what does the VIX have to do with the rut? The VIX is based on the VIX, SPX the VIX
Denny: Gives you the volatility, the market as a whole.
Allen: Right. But it has to do with the volatility of the SPX, the RUT has its own..
Denny: Okay, okay. But the RUT is based on 2000 stocks, okay. And vix takes into account the volatility of what's happening in the 2000 stocks, the Dow Jones and the standards and poors. The way they calculate the bets,
Allen: Okay, because I thought the VIX was just only on the SPX the 500. The large ones.
Denny: Yeah, yeah. Well, but it is, but they just weren't right. There's yeah, there's a there's a correlation between what's happening in SPX and what happens in RUT. Okay.
Allen: Yeah, they're, yeah, okay. Right. They are correlated. So it just it just happened correlated workout, right?
Denny: And it's just and it's just like if you want to see what's going on with gonna happen for disaster time, with the SPX. Go in and look at what's going on with QQQ. If QQQ is dropping, you better watch yourself on the SPX, with about, I forget what percentage of the SPX is Fang stocks now? Right? Yeah. Okay.
Allen: So how long? How long have you been doing this?
Denny: I've been doing for about four months.
Allen: Four months. Okay. And you back tested it?
Denny: Yeah. Oh, yeah. I spent a couple, couple $100 and got some good back testing software and back tested it. And if you go through the thing and wins about 80 some percent of the time, okay.
Allen: And how much are you trying to make on each trade?
Denny: Okay, I'm trying to make 4% Three and a half to 4% on a trade, okay.
Allen: And these are weekly trades or daily trades daily. So you want the SPX,
Denny: The SPX, the SPX has a closing every day. Okay,
Allen: So these are at the close. Yes. Okay.
Denny: And the rut has Monday, Wednesday and Friday. So I only trade the rut on Monday, Wednesday and Friday.
Allen: Cool. So now your results been so far?
Denny: That I'm doubling my money every month.
Allen: Wow. 100% every
Denny: When Putin cut the pipeline off, okay. And the market and the rear end fell out of the market that day. I was at my computer when it started happening. And I closed everything out. If if I hadn't closed it out, I probably would have lost about three or 4000 that day, but I don't you know, what I do, Allen is I take a future value calculator, okay. And if this month, I want to make $10,000. I plug in $10,000. And I put three and a half percent of $10,000 times 21 or 22 trading days. And I print it out. And it tells me how much I need to make each day in order for that to occur. And then I keep a spreadsheet that I'm plus or minus off of the predicted number that I was supposed to be asked. And I adjust my trading from there now like right now for this month. So far. I'm up 900 bucks as a closing day. So I'm actually today is the 13th. Yeah, and I'm actually to where the tweet where I should be on the 20th of them. month. Okay, so if I think the markets going to be a little volatile or, or there might be some bad news coming, I can lay off, okay, and skip a day and see what's happening. Okay. That's where what you taught me is the patience. Is that it? You don't have to do it every day.
Allen: Right? Right. So okay, so you're saying that you're doubling to 25? Every every month or no,
Denny: Not doubling how much I want to make God, I got 25 in there, but you're trying to make you want to make if I want to make 10 This month, I put 10 up. And with the whole idea that I'm could lose all 10,000 of it.
Allen: Okay so you're only using 10.
Denny: Yeah, but I'm only using 10. If I lose, I lose the 10 then, you know, I'm a big boy. You know, we try again next month.
Allen: So like, today's the 13th, you're only up 900. So you still got a ways to go before you get to the goal.
Denny: No, no, I'm up 900 over how much I should be up.
Allen: So you've already made the 10. And you made another 900?
Denny: No, no, no, no. Oh, hold on a second. Okay. Okay, I started out, okay, with 10,000 in the account, okay. And I go to a future value calculator and I plug in, say three and a half percent. Okay. And I plug in 21 days, okay. Yeah. Well, that'll, at the end of the month, if I do that I shouldn't have around $21,000. Okay. And what the future value calculator says is that on day two, I should have 10,300 and some dollars on it. Okay, and then day three, I should have close to 10 Seven. Okay. So I go down what the day is what it says where I should be to achieve the deal. And I'm up 900 Okay, over that.
Allen: I say okay, okay. Okay, so you're on pace. You're better you're better than doing on pace to double
Denny: Yeah, right. I'm, yeah, I do what's called a phase and betting deal. Okay. Yeah. And so..
Allen: So that's what you're doing on the SPX on the RUT, and you're also doing oil. So how do you put in oil?
Denny: I don't know oil, I buy maybe two to three contracts okay of the weeklies now, okay, and do a credit spread on them and try to make, you know, 4 or 500 bucks on the credit spreads and let them expire worthless. Okay. And, and then and the only and I'm only trying that because I know how to make money doing the monthlies and, and getting in at 45 days and, and monitoring it. So I'm a natural born tanker. Okay. Right. And, and, and it can cost me money at times. Okay. But, you know, I guess I'm fortunate that I'm not looking where my next meal is coming from.
Allen: Right. Cool. So like today, you know, we have SPX is down 4.3% Today, big moves, they move down. So I'm assuming based on what you said, when you got in on SPX had already started moving down, so you sold calls today?
Denny: Yeah, I sold calls I sold about 4090 and 4095.
Allen: Okay, and then basically, you didn't have any trouble today?
Denny: No and yesterday, yesterday went up. Okay. But when I went when I entered it, it was going sideways. And it was more advantageous on the calls yesterday. So I sold 4185 and 4190 yesterday, okay. And, you know, they they expired worthless okay.
Allen: And is there any time you do both puts and calls?
Denny: Yes. Yep. It looks like it's going absolutely sideways. Like I say, enter my trade between 1030 and 11. And I usually go to the golf course about one o'clock. But before I go to the golf course, I pull my account up and I look at it and the pit looks like it's going sideways. Then I create an iron condor and I go in and sell puts.
Allen: And then what about a stoploss you have any?
Denny: Yeah, I put stop losses in on everything.
Allen: What percent? Like how do you know when to get out?
Denny: I put 40% Okay.
Allen: So 40% loss.
Allen: Okay. Cool. And so you're pretty happy with that?
Denny: Yeah, you know, until it burns me I guess I will you know, I'm waiting. I'm waiting for it. I'm you know, I've done this long enough now that I know that nothing is failsafe.
Allen: No, but you're doing this in a time that it is pretty volatile. You know? I mean vix today was at 27. But yeah, even so the VIX is kind of low for what's going on and all the stuff that's happening with the Fed. And, you know, we're still in a bear market. So we're still getting these wild bull market, not not a bull market rally, but a, like a whipsaw rally to go up, and then we, we hit back down on a dime. And so it still it has been very up in Downy and so well, having a you know, the strategy that you're just like, hey, I'm not gonna, I'm just gonna play day by day and not worry about at night. I think that makes a lot of sense.
Denny: Yeah. You know, and, you know, I am a very, very avid reader. Okay, so I read Barron's, I read the bestsellers, Business Daily, and stuff like that, not because I think that they are going to enlighten me on anything. But what I have read is, there's a lot of guys in there that tell us about the history of the market. Okay. And for every bear market, you know, usually lasts nine to 18 months. And there's usually four to five mini rallies in there that everyone is calling the bottom of the bear market, and then it drops again, you know, and so, if we understand that, you don't get too overly enthused with the rising SPX or a Dow.
Allen: Yeah, yeah. It's, I mean, that comes with experience or like you said, you know, learning and education. Cool. So what do you see going forward? Like, what's, what's next for you?
Denny: Man? You know, I just enjoy doing this stuff. You know, I mean, you know, I'm in the twilight twilight of my life. You know, I'm 76 years old. Man. I'm a real young 76. I mean, I'm very mobile. I play, play golf every day. Right now, while we're speaking. I'm in Duncanville, Texas at my grandson's tennis match. He just, he just won his doubles match. And so about a half hour he'll start playing singles. So we'll watch that but..
Allen: Yeah it's a little how, I tell you that.
Denny: Yeah, 95 right now here but you know, my normal week is yesterday was Monday I was in junior high volleyball and Flower Mound, which is 30 miles away from where we live. But today I'm at varsity tennis in Duncanville. That's not bad. That's close to where I live. Tomorrow. I got off then Thursday. I got junior varsity tennis. That's a home meet. And then Friday night, I've got got varsity football and Flower Mound. Okay. That's almost every day of the week. I'm doing something with the grandkids.
Allen: You're going golfing every day and you're still trading every day?
Denny: Yeah, and I'm trading every day. No, and you know, thanks to you. You've shown me ways that I don't have to sit there and stare at a computer. To make money.
Allen: Yeah, yeah. Yeah. No, that's not the I really like what you're doing. I like your style. You know, it's like, okay, you know, put a trade on, let it work, and then go enjoy my life.
Denny: Yeah. Doesn't work. So what, you know, there's another day.
Allen: Yeah, but the return is good enough that, you know, you get compensated, even if there are losses, the you're, you're playing with bigger numbers. So it's like, hey, if I can make 100%, then yeah, I can lose 20, 30, 40%. That's okay. Yes. Because I can still make much more than that, you know, in the stock market. They're like, Oh, wait, you know, you shouldn't lose more than five or 10% of your account? Well, you're only making 10% a year. So obviously, you don't want to lose more than that. But if the numbers are bigger than you can take bigger, bigger, bigger bumps, so..
Denny: And I'll tell you, I'll tell you what I use I still I still use your option trading Google Spreadsheet.
Allen: For the credit spreads, yeah.
Denny: Yeah, I use it every day.
Allen: Yep, makes it simple, right? Just calculate Yeah.
Denny: The only thing is I went in and change changed the 25% to 40%.
Allen: But I like it because it's like simple, you know, and I'm sure people listening to this. They're gonna be like, Okay, what do I do again? So it's like, just gonna recap. You know, you wake up in the morning, you see where the SPX and the RUT are opening, right? Yeah, take a look at the VIX. You divided by 16 and then you add that..
Denny: That's your that's your percentage movement in the ETL. Okay, that's
Allen: A percentage move of the SPS. Okay. So you multiply that percentage by the open. By the Open, and then that you find your range.
Denny: That will give you the that'll give you the movement, which, so say it's 1843 and say, say your your divide by say, say it's say VIX is 32. Okay, okay. Okay, you divide by 16. That's two to 2%. Okay, so say..
Allen: Okay that's percentage. Okay, yeah.
Denny: 2%. So say right, opened at 1800. Today, you take 2%, that's $36. So then you take 36 off of 1800. Okay. And, you know, that puts you down to 1764. And then you add 36 to the 1800. And that gives you 1836 yeah.
Allen: We have a 87% probability of this range working out for the day, it's not for the month, whatever it is for the day. And that works out to be about 1.5 standard deviations. So we've got the range, that's about one and a half standard deviations, that's 87% probability about that. And for you, it's been working pretty good. And you set it at a 40% stop loss. Oh, and then the other thing is that you get into the trade about an hour and a half an hour, hour and a half after the market opens. And so..
Denny: And the reason of the hour, hour and a half is it took me a while to realize this, the market tends to at times gap up or gap down. Okay. And then about an hour to an hour and a half later, it kind of self corrects itself.
Allen: Sometimes that Yeah, yeah. But they say, you know, the opening bell is usually amateur hour. And so yeah, I mean, I could have told you that I don't trade the first hour of the day, you know, markets open markets open about 8:30 here Central time, so I don't trade before 10 o'clock, which is exactly an hour and a half. So I do that..
Denny: Yeah, that's when I'm looking at the momentum indicators and everything.
Allen: And then you let your trades expire?
Allen: Okay. So you got that going on. And then..
Denny: Well the good thing about it is trades good, you can't get out of it anyway, because you've made all your money by about two o'clock and go in and try to close the trades. It says that say you get the message just some of the bid ask or zero.
Allen: So, okay, so you got that going on. And you got the oil, weeklies gone. So that keeps you busy. That keeps you diversified. You're making decent amount. You're happy. That's awesome. I love it. That's that's what this is all about, you know,
Denny: Keeps going to Hawaii. Yeah. You know,
Allen: Yeah life is good, right? You're hanging out with grandkids you got you still have the house in Hawaii, you go on vacations, everyone, wherever you feel like it. So I like it..
Denny: In two weeks. I'll be in New York City.
Allen: That's great. Cool.
Denny: Going to see Billy Joel at Madison Square Garden.
Allen: Very nice. So did you do any kind of trading before you came across us?
Denny: Yes. And I lost my rear end.
Allen: Oh, no, that's not good. Yeah.
Denny: I was way too aggressive. Okay, and not patient. And that's when I was gonna get out of the equity market completely. When I saw your oil deal, okay. And, you know, and I figured I had a better chance at oil, because it's something that we all need. And it's something that's not going out of style. Even if we go to all electric cars. What people don't understand is that two thirds of the pharmaceuticals and all of the plastic comes tomorrow. And that's none that's going away. Nope. There's going to be a demand.
Allen: Yeah. In fact, you know, even with everything with the more solar and the more wind power they bring on, the world is still using more oil now than we have, like 10 years ago, the demand continues to increase, just goes up and up and up every year. So yeah, it's not going anywhere, anytime soon. So we're going to continue to trade even if demand starts going down. It's such a big market that we'll be trading oil for, you know, for the next 20-30 years.
Allen: That's, I mean, it's a different so basically, the you are trading equities but then when you found out and you learn about how we sell options, that kind of really flipped the switch?
Denny: Yeah that intrigued me. Okay. First of all well, my background before I got into the advertising thing was I owned a car dealership. Okay, I owned a Ford dealership. If you know anything about car, guys, we're super aggressive and we love leverage. And when I saw options, and I saw the leverage available, I said, this is my ticket.
Allen: So then, why are we still at 25,000? Why don't we go more?
Denny: You know, I've got a, I've got a wife. Okay, that funny story, okay? All donations came in and bought me out. I guess it's 28 years ago now. And I got a very sizable check. And the day I got that check, my wife reached over and she grabbed that check. And she said, seed money only comes once in a lifetime. And this is going for our old age and for fun. I go, Okay. Well, one of the ways that I've stayed married 52 years, is that I always get the last word. "Yes, dear".
So, she, in the money, she basically watches it, okay. And, and she thinks that, you know, a lot of what I'm doing, although I'm making money and stuff like that, on on a basis is a little bit too risky for her, her deal. And so that, you know, that's what she has given me to play with. Okay. Consequently, I have pointed out to her recently, that because of that money, she's not had to buy any groceries out of her retirement account. For her Social Security check. I played for all the plane tickets wherever we go. This trip to New York. I've got $1,000 in Hamilton tickets invested. And she didn't have to pay for any of that. So don't you think it's about time that we started looking at adding more to that, you know, so that I think by the end of the year, she might, you know, lead me forward a little bit more.
Allen: Do you have other investments and stuff elsewhere? Yeah, yeah, money's coming in. So it's not like you need this to live off of
Denny: No, no, no, no. Man, like, it's like I said that when my COVID that stopped an annual mid six figure income. I mean, on a normal week, before COVID. I was, well, on a normal month, I was doing 800,000 to 1 million pieces of direct mail a month. But that so you know, it's a good sized business, okay. With annual revenues, anywhere from two and a half to three $3 million. And, and I'm a one man show. I have no employees in that business. You know.
Allen: So it's still running, you still run that business? Yeah.
Denny: Yeah. In fact, I just got a job today. I mean, you know, they're, they're doing infrequent, you know, I mean, you know, I might have made 30,000 bucks for the whole year doing that, you know, which, you know, that used to be a week sometimes, you know,
Allen: You know, so let me ask you this. Are we going to see below MSRP prices anytime soon?
Denny: No, no, no.
Allen: How about MSRC? Like, I'm seeing prices that are like way above like, double MSRP. Yeah, I'm not paying.
Denny: As soon as the chip shortage is alleviated, and they start to get inventory sometime in the next 18 to 24 months. They'll have inventory again. Oh, wow. But I don't know if you've seen what's happened to the used car market?
Allen: No, it's taken off like crazy.
Denny: Yeah, I mean, you know, my wife has macular degeneration now. And so, leasing a car is unless you have a business purpose. leasing a car is a bad investment. Okay. My wife had macular degeneration, we didn't know if she was going to, they were going to be able to get it stopped and whether she was going to be able to continue to drive. So the car that I'm sitting in right now is her car. Okay. And we leased it, and it had a $21,000 residual on it at the end of the lease period. And we were, you know, we were gonna turn it in. And then I pulled up what the value on it was, the retail value on this car was 31,000. So I went down to the Ford dealership, and broken but check for the car. And they can't want me to lease another one. I know. Thank you, you know, and so and that's happened all throughout the industry. And it's consequently forced the US car prices way up. And so what's going to happen two fold things going to happen. Matt, real quick, I know that you know, either way saw your day on this, but this is interesting. Once the inventory, get levels get up, all these car dealers that have these massive use car inventories are going to have so much water in their inventory. And water is excess pricing to what the current market book value on the vehicles is. In other words, if you can't sell it for what you own it for, you're gonna lose money. Right? And, and a lot of these big-- you live in Houston, I live in Dallas, a lot of these big dealerships that have two and 300 guards in the ground, are going to have a million and a half to $2 million in water in their inventory. And they're going to have to get rid of them. Okay. And so the rear end will fall out of the used car market. And you know, so right now consumers are getting screwed on automobiles. But the dealer has his day of reckoning coming due.
Allen: Yeah, but if you need a car now, you're screwed.
Denny: You need a car now you're in trouble. A buddy of mine went looked at a Subaru Outback with 19,000 miles on it, that it was a year and a half old. And they wanted $35,000 for it.
Allen: Yeah, yeah, don't get in a wreck. I mean, my car I've been thinking about my wife is like, can you just get a new car, please? I'm like, No, I like it. You know, I'm trying to get it up to 200,000. You know, miles on it. Yeah, trying to get there. I mean, it's fine. It works. You know? It's comfortable. It looks fine. From the outside. Everything is comfortable. It works. You know, it's nice Toyota keeps running. But she's like, can you get some bigger? I'm like, Alright, so we looked around, and I'm like, Man, I don't want to pay this stuff. You know, it's not even. It's not like we can't afford the payment or anything. It's just from where it used to be to where it is. Now. There's no difference. The car is the same. You just charged me a whole lot more for no reason. Just because yeah, there's a you can. So yeah, yeah, no, I don't want to play that.
Denny: Yeah, their day of reckoning is coming.
Allen: We'll be alright. Well, do you have any advice for our listeners, people that are learning and trying to figure out like you found your way, right, you found your niche in trading, and it took you I don't know how many years you were trading for two years. But how many years? Were you looking before? Before that?
Denny: Oh five years, I probably probably five years before I found you. Okay. And two years, two years of..
Allen: Learning and testing
Denny: Not doing what you told me to do. And getting and getting burned, to realize, to realize that the things that you teach patients, you know, just the little thing and Think or Swim your standard deviation deal, you know, saying, Oh, you've got a red line there. That's not good. You know, just those little things, you know. So the biggest advice, the best advice I could give to an individual, be patient. Don't try to hit homeruns. You know, the age old adage, pigs get fat, hogs get slaughtered, is so true. It's like one of my rules on the SPX. You know, a $5 spread. Okay, a $5 spreads on the SPX is 500 bucks. Okay. So if I'm trying to make 4% to 5% a day, that means I'm looking to get 20 cents. On my credit spread. That's it 20 cents. Okay. And if you look at what the delta is on that, it's usually 12 to 13, which puts me in a real advantageous position. You know, so don't get greedy. Just let time be. let time be your friend.
Allen: Right? Yep. And that actually might be a shortcut for you. So you don't even have to worry about the VIX. You just go in to get the 12 Delta.
Denny: I'm in the process of doing about a year study on this, okay. Because I back tested it using the Delta. Okay. And some wild market swings, it comes out that it doesn't work out. Right. Okay. Yeah.
Allen: But the thing is, it's hard to back test it because you're saying that you go in after looking at it visually and being like, Okay, I want to be on this side or I want to be on that side. You can't do that. Unless you do it manually yourself with a like a software that I like the one I use where you got to go in day by day by day. If you're one of those programs where you just put in the numbers and you Just let it run, it doesn't work.
Denny: You've got to plug them in yourself. Yeah. And it's time consuming. Especially if you're doing dailies. Yeah. Because you got you got 256 for every year.
Allen: Yeah. And I mean, like, you know, when we when we back test a new strategy, it's like I want to I want you know, a good 10 years of data, you know, I want to see the the ups and the downs and the flats and the recessions and the bulls market and everything. I want to know that it's going to work long term, not just for a couple because I've been burned on that too. You know, I, I back tested different strategies like the butterfly on McDonald's and a butterfly on a Walmart and they worked great for five years. For five years, they made money. I went in there with guns blazing. You know, I took like every money out of money I had at the time at $25,000 on one trade, just want Dre put it all and boom, blew up. And I'm like, what happened? Oh, my God, man. It was a fluke. I'm gonna do it again. Next month, next month, boom, blew up again. You know..
Denny: Those butterflies and iron condors look great. You sit there and you look at the leverage you've got on that you go, Whoa, you know, but you know, you got to think, why isn't everyone doing it? There's a reason.
Allen: So, there's lots of little tweaks behind it. Yeah, yeah. This has been fun. Denny, I'm gonna let you go. I appreciate you. And if there's anything you need, please reach out to us. We're always here for you. And thank you for sharing your wisdom.
Denny: Okay, well, you know, I mean, I just want to tell you and your listeners that your program has definitely taught me a lot and made me a lot successful. Faster than I ever would have been.
Allen: That's awesome. That's good to hear. Make my day. I love it. I love it.
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