The Outlier Trading Podcast 0DTE Options & Sports Betting w/ Euan Sinclair | The Outlier Podcast Ep62
Mar 20, 2024
Euan Sinclair, a quantitative trader and author, dives into a fascinating conversation about options trading and risk management strategies. He breaks down the HTUS tactical ETF, revealing its systematic approach to beating passive returns. Euan discusses the implications of zero DTE options, critiquing their costs and risks for retail traders. Drawing parallels with sports betting, he emphasizes Bayesian thinking and methodical decision-making in trading. He also offers insights into flash crashes, urging caution and strategic thinking in the trading landscape.
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Systematic Anomalies Can Replace Passive SPY
- HTUS combines ~20 equity anomalies and volatility overlays to aimably outperform SPY over time.
- Euan Sinclair says systematic portfolio construction can beat passive index exposure when combined carefully.
Use Rules For Volatility Overlays
- Use risk reversals and short-dated volatility selling as disciplined overlays rather than blind bets.
- Follow rules and active sizing so volatility allocations adapt and occasionally go long vega if justified.
Check Total Return, Not Price Only
- Active ETFs must pay out short-term trading profits as dividends, so price-only charts can mislead performance views.
- Sinclair warns to check total return, not just price appreciation on sites like Yahoo Finance.
