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Dan Harvey and Tom Nunamaker's
Road Trip Trade Alerts

The Road Trip Trade is easy to manage with few adjustments and a good expectancy. Suitable for traders with a full-time job or who like to travel.

The Road Trip Trade was published in
Technical Analysis of Stocks and Commodities magazine in the Feb 2017 issue!

Download the PDF article

Road Trip image

What is the Road Trip Trade?

A Bearish Broken Wing Butterfly that starts 70-80 days to expiration that's easy to monitor and adjust.

Dan Harvey image The Road Trip Trade was created by Dan Harvey. Dan Harvey has traded for many years and was well know for his Iron Condor trading. Dan wanted a trade that was slower pace and needed less adjustments than the Iron Condor. He wanted to spend less time at the computer during market hours and take more road trips without worrying about his positions.

The Road Trip trade has a very flat Profit/Loss line initially, which is why it can handle large market moves with relative ease. The trade starts out 70 to 75-days to expiration and is normally exited 10 to 15 days before expiration. A new Road Trip Trade is initiated every two weeks. Up to five trades will be open at once. This provides time diversification and helps creates a smooth equity growth chart.

The Road Trip Trade has several objectives:

Dan Harvey and Tom Nunamaker trade the SPX and RUT index options. You'll receive trade alerts via email and SMS text message in real time so you can follow along. Trade messages, screen shots, current open positions and open orders, weekly trade reviews, trade history and more are on the Road Trip Trade member web page.

You can ask Dan Harvey and Tom Nunamaker questions about the trade on the member web page or in the live trade review webinar held once per month.

"This is a good trade for someone who doesn't want to monitor their trades a lot, make many adjustments and are looking for a reasonably consistent return on their investments. I believe this would fall under the "Couch Potato" category of trading strategies."
Mike A. - Richmond, VA

What's Included in a Subscription

"I would say it's a great trade if you are risk-averse and don't want to be too active. I think it's the trade I've been searching for and I'm grateful to Dan Harvey for sharing it."
Preston G. - Lawrence, KS

SPX Performance

SPX Road Trip Trade Live Trading Results

Trade
Expiration
Yield on
Total Account
Yield without
20% Cash Reserve
Mar 2016 0.63% 0.79%
Apr 2016 1.08% 1.35%
May 2016 2.09% 2.61%
Jun 2016 3.53% 4.41%
Jul 2016 0.58% 0.73%
Aug 2016 -0.46% -0.58%
Sep 2016 2.27% 2.84%
Oct 2016 1.27% 1.59%
Nov 2016 2.46% 3.08%
Dec 2016 0.86% 1.08%
Jan 2017 1.39% 1.74%
Feb 2017 1.09% 1.36%
Total for 12 Months 16.79% 20.99%
Average 1.40% 1.75%

NOTE: Yields are calculated on the entire account using a 20% cash reserve and show returns as our live account is growing. Yields are also shown if you did not use the 20% cash reserve.

Road Trip's Equity Growth Chart Image Road Trip's Gross Monthly Returns Image Road Trip's Trade PerformanceImage

ES Performance

ES Road Trip Trade Live Trading Results

Trade
Expiration
Yield on
Total Account
Jun 2016 2.55%
Jul 2016 -1.87%
Nov 2016 0.42%
Dec 2016 0.15%
Jan 2017 0.89%
Feb 2017 1.14%
Total for 6 Trades 3.28%
Average 0.55%
Road Trip's Equity Growth Chart Image Road Trip's Gross Monthly Returns Image Road Trip's Trade PerformanceImage

What is My Investment?

The Road Trip Trade Alerts are $1 for 15-days, then $119 per month, $339 per quarter (saves 5%), $639 every six months (saves 10%) or $1189 per year (saves 16%).

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

Frequently Asked Questions

What's the difference between the SPX and RUT trades?
SPX has weekly options going ten weeks in the future. We can put an average of two trades per month on using SPX options.
RUT options don't go out as far as SPX so we limit the RUT trades to one trade per month using the regular monthly expiration.
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 margin required for one trade?
Each butterfly typically requires approximately $1100 in margin. We recommend having a buffer and using approximately $1500 per butterfly so you have cash available for adjustments if needed. Because we can have five simultaneous trades on, a rule of thumb some traders use is one butterfly every two weeks for every $10,000 in your account. So a $30,000 account would put on a three lot every two weeks. Alternatively, you could use twice as many contracts every four weeks.
How much should I expect to make?
The Road Trip Trade (RTT) (and other butterflies) are Forest Gump "Life is like a box of chocolates" trades. Your yields will normally vary from 5% to 15% on the maximum margin used during a trade's like with occasional small losses. Dan's highest was 22%, and it is theoretically possible to make even more if the trade finishes in the "sweet spot". Because we have multiple trades open at the same time, the yield on the entire account is lower than the yield on any individual trade.
Should position deltas be long or short? What about the negative vega. What about the risk?
The position deltas and gamma will always be OK at trade launch; otherwise, we would not have selected the trade. The actual option Greeks will vary according to your platform. Vega will always be negative and manageable. Trade risk is inevitable. The RTT behaves very well in nearly all markets and is very resilient to downside moves. Before he joined Capital Discussions, Dan Harvey received many emails from traders who were very pleased (some said "Amazed") with the performance of the RTT. They were especially impressed how it handles a moderate downside move with minimal damage and good recovery potential. However, a huge downside move may cause us to exit the trade to avoid a large loss. Any income trade is subject to being hurt by three or four standard deviation moves, and the RTT is no exception. We are very risk-averse, and we do our best to manage impending risk.
Can I get filled at your trade alert filled prices?

Some traders will get the same fills we do. Others may not.

Here is our sequence for selecting the trade. First, we experiment with two to four combinations of strikes which we think would have excellent returns with manageable risk. Then, we watch the mid prices of these possible trades and how the prices move with the market. Then, we select the one we think is the best (and with a reasonable price) and send a "working order" alert. If the order is filled, we copy and paste the fill and send it as an alert as soon as we can. This is usually within 5 minutes of the fill.

The key point: GET FILLED.

The only scenario in which you might want to pass is one in which you can't get filled even at a dime or 15 cents above our fill. Yes, you will give a little to the market maker, but these trades have a high win rate, excellent expectancy, and some of the best yields we have experienced when taken in context with the simplicity of the strategy, its low draw downs, and its relatively few adjustments.

"RTT is low maintenance, suitable for those with a busy schedule or in a non-US time zone (I am based in the south of Spain), you don't have to spend your life in front of the screens (although I do keep an eye on the markets throughout the US session). Thanks for showing this strategy and for your efficient service!"
Rod S. - Gibraltar
I'd like to know more about how you approach the position sizing and risk relative to allocated capital for this strategy. For example, how are you determining the realistic worst case scenario. Are you looking at an expected worst case based vs. theoretical worst case?
Both Dan and Tom are very risk-averse. Between them, they have more than 35 years of option trading experience, and they have certainly seen some scary markets. They routinely look at two standard deviations (SD) as a move with a "reasonable" likelihood, and they adjust and hedge accordingly. If you haven't watched some of their videos, please do so to get a feel of how they approach risk. If the market moves more than two standard deviations, then we consider that we are in a new "data set". Basically, we don't like to make more than one hedging adjustment (usually a long put), and if that doesn't work, we are out at either a small gain or small loss, depending on how much time has elapsed and whether any profit has accrued.
I am interested in suggestions for starting out with a smaller allocation, maybe between 25k-50K.
One of the many advantages of the RTT is its scalability. While we generally trade 10 or 12 lots (ex. 10/-20/10), it is possible to generate healthy profits with 3 to 6 lots, as several of our subscribers do. So, if you are concerned about using lower margin requirements, then you might simply try smaller lots and scale all adjustments accordingly.
What is the reasoning behind opening with even a small debit? Is that the sacrifice made to get the margin where you want or is there some other advantage? Is there a down side to opening with a negative debit? Is is going to bite me some day?
The rationale for the trade structure of the usual RTT (entered for a debit instead of a credit) is the relative flatness of the T+0, T+7, and T+14 curves. I have certainly done BWBs for a credit in the past, but I found I was hit too often when the market headed south. Also, since the curves slope downward very quickly when the volatility kicks up, it is easy to get underwater quickly. Then, it's harder to "make it back" if the market rallies or stabilizes. Launching the trade for a small debit gives me a little edge at the beginning, and it's really easy later on in the life of the trade to raise up the right side of the curve to lock in the profit. Then, "bringing in the wing" on the opposite (credit spread side) of the butter will maintain a close approximation of the starting margin while yielding a net credit. - Dan Harvey
"I have had more success with the RTT than any other income trade, so I would highly recommend it and your service! Thanks very much, Dan and Tom!!"
Joe C. - Haslet, TX
When Dan says a profit target of 10-20%, what's the percentage based on--Reg T risk or portfolio margin?

It's not unusual to make 10% on Reg T margin, even after using additional capital to "Reverse Harvey" the upper side of the expiration curve in order to lock in profit. Yields of 6% to 8% are very common. However, if the trade finishes near the "sweet spot", even higher yields can be attained. Portfolio margin yields will be even higher, of course. Generally, my PM margin is a little less than two thirds of my Reg T margin.

Also, margin requirements can be controlled by "bringing in the wing" on the opposite side (credit side) of the butter. The cost to bring in the wing on the credit side of the butter is relatively cheap, particularly with only 30 days or fewer DTE.

Are the trades based on real trading or simulated trading?
Real trading. Dan and Tom both trade the RTT for their own accounts for for others. The trade alerts we post for the class are one of Dan's live account trades.
Are the trades recorded?
Yes. All trades are fully documented and available to you as long as you are a subscriber. This includes the daily screen shot images, trade messages, and emails we send out. Trial members can only look back 30-days. Paid subscribers have no limitation on how far back in time they can go.
"It is a very high probability, straightforward, flexible, low maintenance (relatively) trade that can generate a consistent cash flow. Excellent trade for someone who can't spend all day in front of their computer."
Chuck M. - Marietta, GA
Are the real time alerts sent out before or after you are filled?
Before. We send emails and/or SMS text messages to alert subscribers we are going to enter a trade. As soon as we put the trade on, we alert the subscribers that we have a working, or open, order. When the order fills or we cancel it, we send another message notifying subscribers of what we did.
Can this strategy be used on other underlying instruments besides SPX and RUT?
Yes. You could trade the Road Trip Trade on anything with a liquid option market including stocks, futures options or options on non-U.S. markets like the EUROSTOXX50 or DAX.

For Educational Purposes Only!

Trade alerts in this service are made in real time in a ThinkOrSwim live account with Reg-T margin. The normal entry size is a 10-lot which requires approximately $15,000 of planned capital. The purpose of the service is for you to watch professional traders trade a live account so you can learn how to do it yourself by following along and asking questions.

Capital Discussions, Dan Harvey and Tom Nunamaker are not broker dealers or investment advisors. The Road Trip Trade Alerts are NOT trade recommendations. We don't know you or your situation and have no way of knowing what level of risk is appropriate for you. You have to make your own trading decisions.

The risk of loss in trading options can be substantial so please be aware of all of your risks prior to placing any live trades.

"I like the strategy. It is simple and not a zillion adjustments. Great for those of us that work full time. Frequent communication from Tom and Dan. I like that Dan gives us a heads up for adjustments or starting new trade. The alert service helps me learn. I do think I could eventually do this myself but I like the support of experts. I see the service as a way to be mentored."
Marci L. - Highlands Ranch, CO

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  • Weekly Update Recording
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  • SAVE 5%

  • $339

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  • SAVE 10%

  • $639

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  • Weekly Update Recording
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  • Ask Your questions
  • Custom notifications
  • SAVE 16%

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  • Live Email/SMS updates
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  • Ask Your questions
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"I really like the 'stream of consciousness' on how the trades are being evaluated (entry, adjustment, exit). While the rules are fairly straight-forward, I do find it helpful to compare how I am thinking about the trade with how you are thinking about the trade. It helps keep me honest in terms of how/when to more aggressive risk management. From the perspective of the trades themselves, I like the diversification through time (entry every ~2 weeks), the fact that they don't need constant attention, and their ability to generate reliable income with manageable draw downs."
Stephen K. - Lithia, FL
 
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