Jul 31, 2023
Marty runs a boutique options market-making business, trading on various venues around the clock. He is also the owner of an unprofitable hat business.
What attracted you to trading?
The interest came from originally buying and holding BTC spot, and trying to capitalise more on its movements.
How long have you been trading and what markets have you traded over your career?
We first bought BTC around $100, and our first 10x was run from 100 to 1000 and then held all the way back down. After going from spot to futures, we settled on options. We used to be a top 10 market-maker on the FTX spot products, now we focus on options.
What is it about options that appeals? Do you think traders overlook options?
Options are the best financial instrument to make monies in any market condition. There is also wider spreads to make more monies than in Delta1 products currently. Traders overlook options because they view options as a black box… some sort of black magic. If they spent an hour or so to understand options, they could deploy some basic strategies to make more money in this low muted vol regime.
Options are the best financial instrument to make monies in any market condition. Traders overlook options because they view options as a black box… some sort of black magic.
How long did it take you to become profitable? Were there any major milestones where things just started to click?
After winning on spot holdings, we probably lost a good 50+% of the profits on "trading". It wasn't until we started to get into market-making and stop trading on high-lever directional bets that we started to make money.
Seems like quite a jump from directional trading to market-making?
We were using options as hedging our spot bags before making markets. Post FTX crash, there was more money to be made in the options space for us, we saw the opportunity and pivoted our fund. Options are a forever learning experience, it is the deepest rabbit hole that you could go down in terms of anything financial.
Options are a forever learning experience, it is the deepest rabbit hole that you could go down in terms of anything financial.
What does a typical day look like for you?
Wake up around 7 am, coffee, stretch, check the vol markets, rebalance anything if we must, lunch, back to the desk to rebalance anything at US close. Depending on the day, we can get a morning surf in or a jog on the beach.
Who did you look up to when you first started trading?
Original idols were any of the guys in the Market Wizard Series books. Not any in particular. It was interesting to read about all the Hedge Fund Guys at the time and the various types of funds they ran. The book is essentially interviews with market experts at the time. No particular trader sticks out, they are all great.
Tell us about your most memorable trade
Was probably when we broke 1mm USD account size before raising a fund. Balls to the wall long directional options bet that cashed big. Not recommended, this was still when we used options as directional bets, but now we try to stay as neutral as possible.
Balls to the wall long directional options bet that cashed big. Not recommended.
What’s the best trading advice you’ve been given?
Essentially it was being told not to be overleveraged, but we think you can only learn this by being over-leveraged and losing… then you learn.
What drives you to keep trading?
There is always more money to be made, but more than that, it is always a new challenge. We would be quite bored if we weren't working, and nothing else is interesting enough for us to pursue.
Would you say you’ve ‘made it’? If not, what does ‘making it’ look like to you?
For sure, we have "made" it. All financials are covered for decades, house, apartment, car, food in the fridge, vacation when we want. Life is treating us well. I don't think buying a lambo is making it… oh wow… a 20k down, 3k a month lease… thats making it? Maybe to some, sure… but we have already done all of that when we first got into some money, it's not really worth it in the end. You're better off buying some land, building your home, additional homes where you want hubs, and living a little.
What’s Marty’s idea of living a little? What do you value?
Marty just spent 4 months in Europe with his wife. Seeing the world is much more beneficial than buying items. You can only buy so many things.
Seeing the world is much more beneficial than buying items. You can only buy so many things.
What's the most important quality in a trader and why?
Not sure, we have met traders from retail, pro tail, and institutional players… everyone is different and has various edges. They are all hard-working, interested in the space.
How would you describe the way you trade?
Non-directional, theta collecting, non-bias.
To an options noob, this sounds quite passive. Is that true?
Running a short vol fund when volatility and catching the right vol regime is easier, sure… but it comes with its challenges. You need to be in the markets, you have to hedge, and you have to rebalance your book at various times to prevent from getting blown out. Options market-making is much harder and more intense than running a Delta1 market-making strat.
Options market-making is much harder and more intense than running a Delta1 market-making strat.
Has the way you trade changed over time?
We started holding spot, from drawing meme TA lines, to getting some automation into the flow, to market-making delta1 products, and now market-making options.
Why do you consider TA a meme?
Think that there are a lot of people doing it, and maybe they are all looking at all the same levels, most of which are just psychological levels for example $30k BTC. We think that the options data is more interesting and accurate than lines on a chart.
Why do you think you have success trading?
It all came down to timing. Bitcoin was $100, it was pure timing to find it at that time. Not sure how I would trade BTC now at 30k with a small stack of money like we had back then.
If you did have to go back to a small stack, would you still play options, or would you go back to directional or even hold?
With a small stack, say 1-10 ETH? We would still favor options to grow the stack over time. Of course, you could hit a 100x on a meme coin, but that's more lotto and chances are low. If starting with less than that… would probably get a job, stack cash, learn, and then play markets in spare time.
Of course, you could hit a 100x on a meme coin, but that's more lotto and chances are low.
What's the worst thing about trading and why?
Especially crypto is that it never sleeps. It's 24 hours a day, moves may happen in the middle of the night that ruins your sleep cycle. Stocks are a little lighter as you have nights off and weekends off.
What's something you've learned in the last 6 months that has made you a better trader?
Have risk and security tight! Spread out your funds, don’t keep any extra collateral on exchanges if you don’t have to. There are always new hacks or exploits or businesses shutting down.
What's the mistake you find hardest to avoid when trading? Any tips to avoid it?
If you could give someone starting trading tomorrow one piece of advice, what would it be and why?
Learn how money and markets work first. My pinned tweet is a great starting point. From stories to the holy grail of derivatives books. Think a lot of players could benefit from reading a few books and gaining some knowledge on some strategies. For example, a lot of people could benefit from using dated futures instead of perps and not paying funding. Or using limit orders instead of market orders to save on fees. Fees are the killer of profits.
Think a lot of players could benefit from reading a few books and gaining some knowledge on some strategies.
In the simplest terms, how do you perceive ‘money works’?
The one liner is that Bitcoin follows USD liquidity.
How would you describe your relationship with risk?
A love-hate relationship. Sometimes you want to risk a little more, and it doesn't always work out, and you get burned.
What goals do you set for your trading?
There is not a daily amount of money goal. The only goal is to grow the fund size over time.
What kind of time horizons are you thinking?
1-10 years for the fund. Think after 10 years of running the fund, that will be enough for us. Never know, life changes
Do you really think that you will be trading support and resistance forever?
Fill in the blanks
Most traders would be better off sitting on their hands.
What separates the pros from the rest is access to data
A good trader should never risk it all on one trade.
The biggest misconception about trading is it's easy money or it's that easy pimps. It's a complicated task or job, and you are competing with the best. Do you really think that you will be trading support and resistance forever? You must get more educated in your craft.