Episode 168 ... Anand Sanghvi ... "Sang Lucci" (95:20)

Prop trading model doesn't make sense any more, commissions too low
Prop trading firms now sell education
Prop firms take the other side of their own (poor) traders' trades
Recently moved to Puerto Rico
Live there 183 days and get serious tax breaks
No federal income tax, no capital gains tax in Puerto Rico [really??]
Sales tax in Puerto Rico is 11.5%
Island living very expensive though... everything is imported
Ton of crypto guys in Puerto Rico, waiting to take gains tax-free [gains?]
Crypto guys are now all "distraught"
Electing to mark-to-market is important if you're an active trader
Trading under a business entity, you can deduct a lot of things
Pay the $500 to set up an LLC if you are seriously active
Had a hedge fund, had a couple of bad months, biggest investor pulled out, shut it down
95% long options strategy in the past
Looking to set up a new hedge fund in Puerto Rico, with less risky strategy, more automation
Trading strategy has changed completely in the last three years
Now he's 60% short options, 40% long options
Knows immediately if he's wrong when there's momentum
No momentum then you are in la-la land, no idea if you're right or wrong
Theta -- time component to options pricing
Trades NFLX, AMZN, NVDA (etc.) options
Used to be up a million in a month, then down 500K the next month, returns were too volatile
Holds things for one, two, three days max
Has traded options on the same stocks, the Usual Suspects, since 2010
AAPL options are so thick you can put 250K position on and take it off in minutes
You need portfolio margin to get more creative
Right now he's swing long TSLA ... long March 2019 400 strike calls
Sells short-dated TSLA calls against his core position to collect income
Follows his instincts ... has been trading for over a decade
If your trades are too short-term, you're going to get shaken out
There's a fine line between following your instincts and being stubborn
Instinct tells you to get out, but you're too stubborn to get out
Where are you trying to go with your $5,000 account?
Hedging allows you to stay alive until volatility returns
Find what strategy works for you and when it works for you
BTFD "buy the dip" worked for six years in a row
Trying to make your losses back -- that's how people go to zero
Your instinct will try to save you but you'll be stubborn and ignore it
Find ways to hedge your life and who you are as a person -- guard against depression
Figure out how to protect yourself from yourself
If you hold options till expiration, "the shit's going to zero"
There's a fine line between conviction and recklessness
If you're too attached to a position, you won't be able to cut it
After 2007, high frequency trading changed everything
All markets are emotional ... all auction markets are the same
Retail traders can't make any money because they're too emotional
Retail traders know they suck but they have no solution
With automation, you're only as good as your code
[He sounds like a profane Jim Cramer, not just the voice, but the pacing ... it's fascinating]
Interesting idea about using facial recognition technology to save you from yourself
You have an app on your phone that saves you from yourself
[Segment from 1:16:50 to 1:17:20 made me fall off chair laughing … “your daughter’s mother”]
Script stops you from trading the same ticker repeatedly within X amount of time
You need to create a behavioral profile of yourself as a trader, like Facebook has of you as a human
Multi-level marketing thrives in places where people have no opportunity and they're ignorant
Most people can't stick it out until they make it trading, it's too difficult, they quit (and who can blame them?)
Website: www.sanglucci.com
Twitter: @sanglucci