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Kevlar Trade Alerts

The Kevlar is an exceptional performing trade with high yields and relatively low-risk. The Kevlar is a resilient trade, which can handle most large market moves, with simple adjustments.

Learn Jim Riggio’s options trading methodology, which he has developed over his twenty-year trading career. Jim has engineered the Kevlar Trade to have a high probability of profit and a robust risk management process. The Kevlar Trade Alert Service enables subscribers to follow Jim’s trades, in real time, with SMS text message alerts and emails. Subscribers will learn Jim’s trading philosophy, methodologies, and risk management processes with emails, video updates, weekly WebEx’s and online Q&A’s. Kevlar Trade Alert Service can even help experienced options traders to learn how to generate a higher percentage of profitable trades while becoming a better risk manager.

What is the Kevlar Trade?

Doesn’t using just one trading strategy, for all market environments, seem unreasonable to you? How can an options trading strategy that works well in high volatility markets also work well in low volatility markets?

The Kevlar trade is two trades in one. The Kevlar has two trade entry modes (bi-modal) to initiate new trades: The first Kevlar trade mode is engineered to take advantage of low implied volatility environments and the second to take advantage of high implied volatility environments.

The Kevlar uses tax advantaged, S&P 500 options to collect options premium (positive Theta) and manage risk (low Gamma). The Kevlar trade has a flat Profit/Loss profile (P&L risk line), which is why it can handle large market, moves with relative ease. The Kevlar trade starts out approximately two months before expiration and is exited with a little less than one month before expiration. By closing trades early and not using options in their last several weeks before expiration, the Kevlar trade reduces the wild P&L swings that often occur as expiration nears.

The Kevlar trade has several objectives:

The Kevlar is traded on the SPX index. Trade alerts are sent via email and SMS text message in real time so you can follow along. Trade messages, screen shots, weekly trade reviews, trade history and more are on the Kevlar member web page. You can ask Jim Riggio questions about the trade on the member web page or in the live trade review webinar Jim holds after closing each trade.

History and Performance

The Capital Discussions trade alert Kevlar service started in October 2015. Jim Riggio designed the Kevlar in 2010 and enhanced it in 2013. Jim has presented the Kevlar trades at several investment conferences, including the CBOE. He has traded the Kevlar in a hedge fund and in separately managed accounts. The performance numbers below are only since the Kevlar service has been available on Capital Discussions. Compliance rules prevent us from sharing earlier performance.

SPX Kevlar Live Trading Results

Trade
Expiration
Yield on
Planned Capital
Dec-2015 7.58%
Jan-2016 9.07%
Feb-2016 5.68%
Mar-2016 7.53%
Apr-2016 1.19%
May-2016 5.89%
Jun-2016 11.00%
Jul-2016 10.10%
Aug-2016 1.11%
Sep-2016 5.15%
Oct-2016 11.20%
Nov-2016 10.49%
Dec-2016 -2.52%
Jan-2017 1.63%
Feb-2017 1.91%
Total for 15 Trades 87.01%
Average 5.80%
Kevlar Equity Growth Chart Image Kevlar Gross Monthly Returns Image Kevlar Trade PerformanceImage

Ready to Subscribe?

  •  

  • $119

    per month

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 5%

  • $339

    every three months

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 10%

  • $639

    every six months

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 16%

  • $1189

    every year

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
 

With the Kevlar’s high mathematical expectancy, you should easily be able to recover the cost of subscribing. The educational piece of the Kevlar Alerts is worth the subscription alone. It's like getting on-going, real-time mentoring.

What's Included in Your Subscription

Frequently Asked Questions

What underlying(s) does the Kevlar Trade?
SPX. The SPX's deep liquidity and 1256 Tax treatment (60% long-term capital gain and 40% short-term capital gain) make it a favorite among professional options traders, like Jim.
How many trades should I see?
One trade per monthly expiration cycle.
What is the duration of each trade?
Trade duration is usually between four and seven weeks.
Does that mean that two trades can overlap?
Yes, that does happen sometimes, but the margin requirement will stay below both the account size and planned maximum capital amounts.
What about risk?
Downside risk is generally straightforward to manage due to its conservative trade initiation and through the use of robust risk management disciplines. However, Kevlar is not designed to handle October 1987 like market crashes where the market opens more than 22% down. Upside risk is minimal (usually less than 5%).
Are the Kevlar positions Deltas long or short?
The Kevlar position Deltas are normally flat to moderately negative (bearish).
Is the Kevlar a bearish trade?
No. It is simply easier to manage the downside risk if the Kevlar is leaning negative Delta. In the Kevlar, like most options trades, the downside is more dangerous than the upside. Hence, it is just smart risk management to protect the more dangerous side of the market. When Jim has been asked if he is a perma-bear? He responds: “No, I am just more afraid of the downside then of the upside.”
What about the rest of the Greeks?
Jim knows Greeks (After all, he was born and raised in Astoria, Queens, New York). The Kevlar is a positive Theta trade, meaning that it takes advantage of time decay. However, Theta is not free; positive Theta is accompanied by Gamma risk. Gamma is the Greek that Jim works to protect against the most. By keeping Gamma as close to zero as possible, and managing Deltas to be flat to moderately bearish, Jim has engineered the Kevlar to be profitable in most market conditions.
Does the Kevlar use Technical Analysis?
NO. The Kevlar relies solely on risk management disciplines and options (quantitative) analysis.
Does the Kevlar use Economic forecasts or Fundamental Analysis?
NO. The Kevlar relies solely on risk management disciplines and options (quantitative) analysis.
Why does the Kevlar have two modes when entering a new trade?
Many years ago, we learned that options trading is not a “one size fits all” type of endeavor. Trading options in a low implied volatility environment is extremely different than trading in a high implied volatility environment. So why would anyone have only one trade strategy for both environments? We don’t use any technical analysis, or attempt to guess at market direction. Since the level of implied volatility is easily measured before we enter any trade, we simply designed the Kevlar to have one mode to take advantage of low implied volatility environments and another mode to take advantage of high implied volatility environments.
What options trades are used for each of the Kevlar’s two modes?
The first mode has been designed for low implied volatility environments. The first mode of the Kevlar uses a negative Delta Butterfly, hedged with a long Call. The second mode of the Kevlar has been designed for high implied volatility environments. The second mode of the Kevlar also uses a negative Delta Butterfly, but is hedged with a short vertical spread, turning that regular Butterfly into a Broken-Wing Butterfly.
How do the VIX and Implied Volatility affect the Kevlar?
Implied Volatility affects every options trade. The VIX is a calculated, normalize average of Implied Volatility that may or may not represent the Implied Volatility for any given options trade. Each and every option (i.e., for each expiration at each strike) has its individual Implied Volatility. When you trade any type of options spread, you are trading one Option's Implied Volatility against the other option's. The difference between this options’ Implied Volatility is perhaps the single most important part of trading options. Yet, it is also one of the most overlooked, misunderstood, and mysterious parts of options trading. Jim will explain and demystify Implied Volatility, Skew, and Term Structure.
Do you provide trade details so we can follow along in our own option analysis software?
Yes. We have a tab with all open positions and open orders. Here's what it looks like:
What is the account size used for the Kevlar trade?
We use an account size of $50,000 for trading the SPX. The Kevlar usually trades lot size of 6 to 12. Butterflies have three different contracts, also referred to as strikes. So for example, Six Butterflies would have contract sizes of +6 / -12 / +6.
I am interested in suggestions for starting out with a smaller allocation, maybe between $5,000 to 20,000?
It is always a good idea to trade small until you master any trading strategy. While the Kevlar has been designed for a $50,000 trading account, Jim will often make his trade lot size divisible by three or four, reducing the minimum account size requirement to $13,000 to $17,000. Alternatively, SPY could be used instead of SPX, to reduce the required account size to $5,000.
What is the margin required for one trade?
Since only one Kevlar is traded for each monthly expiration cycle, the entire account size of $50,000 is planned for each Kevlar trade. Since the Kevlar trade is scaled into and out of each month, two monthly Kevlar trades may overlap. However, the combined margin requirements should not exceed $50,000. Please see "What is the account size used for the Kevlar trade?"
How much money should I expect to make?
Nothing. You are learning.
If you meant, how much should I expect to make after I master the Kevlar trade for myself; then the answer is…
The Kevlar, nor any other trading system, can definitively answer this question. In theory, the Kevlar has been designed with a +5 to +10% profit target for each trade and a 75+% probability of success. In practice, we have exceeded theory, thus far. (Yogi Berra would be proud of Jim.)
When Jim says a profit target of 5 to10%, what's the percentage based on? Trade size or account size?
Since maximum planned capital for each trade is $50,000 and the account size is also $50,000, the answer is both. All percentages are always discussed in terms of a percentage of the account size.
What's the percentage yield based on? Reg-T risk or portfolio margin?
Reg-T
However, Reg. T can vary by Broker. All percentages are based upon the maximum theoretical value possible loss. All options knowledgeable brokers, with a reasonable understanding of options risk and margin, define their Reg-T as the maximum theoretical potential loss.
Are the trades based on real trading or simulated trading?
Real trading. Real time trade alerts have been sent to subscribers for all Capital Discussion trade alert services since inception of this trade alert service.
Are the trades recorded?
Yes. All trades are fully documented and available to you as long as you are a subscriber. This includes the date and time stamped trade alerts (sent via SMS text messages), daily screen shot images, videos, webinars, and emails we send out. Trial members can only look back 30-days. Paid subscribers have no limitation and can view everything since the inception of this trade alert service.

About Jim Riggio

Jim Riggio pictureJim began trading options in 1995 while still on his way to becoming a Partner at PricewaterhouseCoopers (PwC). During the dot-com years (from 1997 to 1999), while living in Switzerland, Jim made more money trading than he did as a PwC Partner. Jim had made the mistake of confusing his own investing genius with a raging bull market. (You know what's coming next, right?) However, when the dot-com bubble burst in mid-2000 through 2001, Jim gave back nearly all of his profits. This was an extremely painful and very expensive lesson. It was then that Jim started working with some of the smartest options specialists he could find. In 2002, Jim became one of thinkorswim’s first 100 customers and began working with many CBOE floor traders and the original thinkorswim team.

After IBM bought PwC’s management consulting business in 2003, Jim spent a couple of years managing a US division of Unisys as a VP and General Manager. In 2005, Jim left the corporate world to focus full time on his options trading and founded Highland Financial Group, LLC (a Registered Investment Advisor) and Highland Multi-Strategy Fund, LP (Hedge Fund). At Highland, Jim developed options trading strategies for his own hedge fund and other institutional clients. Jim has consulted on a number of trading platforms for PricewaterhouseCoopers (1997 to 2001), thinkorswim and LiveVol Securities. Jim worked at and consulted to thinkorswim, Inc. from 2006 until 2008 when TD Ameritrade bought thinkorswim. Jim also worked at and consulted to LiveVol Securities, Inc. from 2013 to 2014. Jim has also work with and consulted on Options strategies with many other Investment Management companies including EAB Investment Group, James Alpha, Krasney Financial, Longboat Key Financial Group, Coastal Capital Management, Eventus Trading Partners, and several other investment management companies.

Jim has co-developed many option-based trading strategies and the launch of three option-based Hedge Funds and two Mutual Funds including: James Alpha Managed Risk Domestic Equity (symbol: JDIEX) and James Alpha Managed Risk Emerging Markets (symbol: JEIMX).

Start My Subscription!

  •  

  • $119

    per month

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 5%

  • $339

    every three months

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 10%

  • $639

    every six months

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications
  • SAVE 16%

  • $1189

    every year

  • Live Email/SMS updates
  • Message history available
  • Trade Images available
  • Weekly Update Recording
  • Trade Review Webinar
  • Webinar library available
  • Ask Jim questions
  • Custom notifications