White Indian: Surviving turmoil
Good thing Robb Ross has a sense of humor because if he couldn’t laugh, he surely would have been crying for much of the last 14 months. Not that his unique trading strategies struggled; in fact, they thrived despite a challenging environment that had nothing to do with market activity.
Ross, who is a part-time stand-up comedian, lost half of his customer base in the twin debacles of MF Global and Peregrine Financial Group. It also meant taking a hit to the proprietary capital, including money of family members, he places in all his programs.
“Anything that I put out to the public, I have prop money in. I don’t just have skin in the game, I have blood in the game,” Ross says.
Despite these problems, Ross’s Stairs program thrived. He also rolled out his Scantily Clad Straddle (SCS) program in 2011, which he introduced in 2010 (see “Options naked straddles: A more modest approach,” Jan. 2011). That program earned 17.94% in 2012 with White Indian’s Stairs program earning 28.72%. He also introduced a strangle version of the SCS and offers numerous versions in the various sectors he applies it to.
The Stairs program (see “White Indian and rubber chickens,” Aug. 2010) is a countertrend program that trades exclusively S&P 500 futures and options.
“Basically my system is unique in that it looks for trend decay, period,” Ross says. “Once it spots trend decay, say I take a short position in futures or buy a put; win, lose or draw my next position will be long, buying futures or buying a call.”
The program earned double-digits in June, July and October 2012 when the S&P 500 experienced extremely choppy markets, allowing customers to earn strong returns when other investments were most likely under stress.
“Choppy markets are my friend; very strong trending markets are not my friend,” Ross says. “You look back at 2008-09, I hit four out of five winning trades and I had several trades that were 60-point winners in the S&Ps. Those choppy markets that seem to be taking a trend for a couple of days and then reverse, those are usually the times that I make money. “
The SCS program sells straddles and then will buy or sell the underlying futures depending on where the market moves. It collects premium similar to a naked option writer but protects itself with futures when one end of the straddles gets close, hence the scantily clad moniker.
Both strategies are unique and offer non-correlation to not only traditional asset classes but also to the CTA universe. “I want to offer products that you are not going to find at other CTAs or CPOs,” Ross says. “In the trend-following space there are a lot of very successful traders. Why would I go into that space?
Ross now has $3.4 million under management but he has faced some big headwinds not related to performance and has proven that he is a survivor.
“I feel like I am in a space with a great potential for growth because I am filling a need,” he adds. And that is no joke.
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