Unlocking the Power of Dealer Greeks Dashboard and Positioning Strategy
The Dealer Greeks dashboard on Tradeix has long been a valuable tool for correlation analysis, and recent changes have taken its performance to the next level. Located under the "Ticker Dashboards" option in the left menu, the dashboard is accessible by selecting "Dealer's Greeks Build-Up" under the "Options" page. This powerful tool provides expected price distributions based on Delta structure, allowing users to identify potential price movements with high accuracy.
The author has successfully used the dashboard to identify high-probability moves, such as a 1.5% move over the next five days, which has been proven accurate in the past. Recent enhancements to the dashboard include improved correlation analysis, enhanced price distribution modeling, increased precision in Delta structure analysis, and the ability to select specific future price changes.
Dealer Positioning Strategy for Stocks
The dealer positioning strategy involves using dealer positioning to make trading decisions, focusing on the top 200 assets with the most options participation. The top 15 assets would be a good starting point for this strategy, which can be applied to stocks such as Tesla, Apple, and Microsoft. Dealer positioning can be particularly powerful alone, especially for assets with high options participation.
Momentum and Backtesting Performance
The "Momentum" button in the Trade Addicts system allows users to subtract the current date deltas from the deltas 15 days ago, providing a valuable metric for trading decisions. A negative value indicates that dealers are short on momentum, which suggests that large institutions are likely long. Conversely, a positive value indicates that dealers are long on momentum, suggesting that long institutions are likely short.
The strategy can be structured to take into account different time frames, such as 5-day, 10-day, and 20-day momentum. Backtesting has shown impressive results, with the strategy yielding 100% profit on long positions and 100% profit on short positions, with an average return of 2% on both.
Strategy Structure and Additional Strategies
The dealer positioning strategy can be structured to recommend buying shares when dealers are short and selling shares when dealers are long. Holding shares for the entire time can be beneficial for long-term portfolios. The strategy can also be applied using options, but it's essential to buy options contracts with plenty of time (minimum 28 days, but 60-90 days is recommended).
Additionally, selling puts and calls can be an effective way to collect premiums, involving buying shares if one is long and selling shares if one is short. However, it's crucial to be okay with buying or selling shares at a sub-optimal price and be willing to build in a buffer in case of mistakes.
Conclusion and Backtesting Results
The dealer positioning strategy has proven to be a powerful tool for making trading decisions, and it can be used in conjunction with other strategies to create a comprehensive approach. The strategy can be applied to various assets, including stocks and options.
Backtesting results have shown that the strategy yields impressive returns, with a total return of 151.7% and an average return of 2% on long positions and short positions. Comparing momentum to raw deltas, the results show that momentum outperforms raw deltas, with a total return of 151.7% compared to 145.2%.
Flipping the Strategy and Additional Insights
Flipping the strategy by going long when dealers are long and short when dealers are short yields a total return of -%, highlighting the importance of backtesting and comparing different approaches to determine which one works best for each specific stock and market conditions.
It's essential to combine this strategy with other techniques, such as gamma, Banna, and charm, to maximize returns and minimize losses. Dealers have to hedge based on Deltas fluctuating, using things like gamma and Banna, to avoid losses. The strategy of following dealer positioning can be used to outperform large institutions, but it's crucial to be aware of the potential risks and limitations.
Using the Dashboard to Identify Opportunities
The dashboard can be used to identify opportunities by selling when dealers are long and using 15-day momentum to identify opportunities. Backtesting using the opposite of the dealer's position has yielded impressive results, with 52% returns and 100% profit.
Using the Dashboard with Underlying Assets and Backtesting with Different Greeks
The strategy works fantastically when using underlying assets (not indices), and correlations with Greeks (Delta, Gamma, Vega, Theta) are weak but can be improved by adding more Greeks. Backtesting with different Greeks, such as Gamma, can provide valuable insights and improve returns.
Conclusion
In conclusion, the dealer positioning strategy and the enhanced Dealer Greeks dashboard are powerful tools for making informed trading decisions. By combining these tools with other strategies and techniques, traders can maximize their returns and minimize their losses. We highly recommend trying out this approach and sharing any amazing correlations or backtests you may discover.