The E, in the H.E.A.T. Formula is for Edges. I’ve been watching Captain Condor for a while. Mostly interested to see if he found an Edge in a strategy that I assumed didn’t have one. He didn’t………

Edges exist in the marketplace. They can be structural, for example I’m a fan of buying puts on VIX exchange traded products because of the contango plus the fact that VIX needs a reason to be elevated. They can be behavioral, for example dip buying strategies like RSI have worked for decades. They can be strategies that have moats, like surveying the world’s top money managers on what stocks they like best…..

What are not edges are the strategies that Wall Street often pitches as such—-value investing, low volatility stocks, small cap, etc. If there ever was an edge in strategies like this there is no moat so they get arbed out pretty quickly.

What is also not an edge is an options strategy that anyone can do, like an iron condor. If you do find an edge and you have a higher tolerance for risk, you can use leverage. If you think you have an edge, and don’t, and you apply leverage, that’s a recipe for massive losses. That’s what happened to Captain Condor. He took a strategy with no edge, and applied a Martingale system to it. Meaning, after every loss he doubled down, thinking that a loss yesterday increased his chances of a win today. If I flip heads on a coin 4 times in a row what’s the chance that flip 5 will be heads again? 50%.

Can you take something with little or no edge and create one? I think you can, here’s an example……

We run a couple of 0DTE (selling an option and covering it the same day, zero days to expiration) ETFs, one on IBIT and one on MSTK, we also have a bunch in the hopper. I think selling options gives you a slight edge, you are the casino instead of the gambler. However, that edge gets dwarfed by the fact that selling options is not an asymmetric trade, you have unlimited downside and limited upside. I think you improve on the asymmetry by selling an option intraday and covering same day, 0DTE. You still have unlimited downside, but you are only exposed for a few hours vs. being exposed for days or months. So is selling an option at 9:30 and buying it back at 4pm an edge? Nope. Backtesting options is a pain in the ass, but I’m guessing if I did backtest a strategy like this I would find that is loses money over time. Can you turn it into an edge? I think you can, one way is by learning how to reach intraday charts.

Here is a 5 minute intraday chart of Strategy (MSTR) on Friday (The white part is regular market hours)…..

This is called a 6/20 chart and I got this idea from Gil Morales who is the most skilled intraday trader I’ve ever seen. It combines a 6 period and 20 period moving average with a 6 period and 20 period MACD. If you are using a chart like this for intraday trading you would buy when one of the 6 period indicators crosses over the 20 and sell when it crosses below. The details aren’t that important as the idea, applying something else to a strategy to try to create an edge.

Here’s how you would use it for deciding when to sell options. First off, MSTR is bitcoin related. Anyone watching bitcoin lately has seen it often has a strong move off the open, which is also often a head fake. If you were blindly selling a call at 9:30AM you would be immediately profitable, then you would get your face ripped off by 11AM. You would cover at 4 and take a pretty good loss.

Instead you could have ignored the opening move and waited. At 11:45ish the 6 period MACD crossed below the 20, and at 12:40ish the 6 period moving average crossed below the 20. Either could have been used as a signal to sell an option, which you could have covered anytime in the late afternoon for a profit.

I’m not suggesting you go out and learn how to read 6/20 charts. However, if you are a day trader I do think this is a powerful tool. What I am saying is that a strategy that anyone can do is highly unlikely to be an edge, but you can turn it into one.

From a market perspective (I will leave the politics to others) a number of things hit me watching the news conference on Saturday. The first is that this could lower oil prices, which would in turn lower inflation, which would allow Trump to potentially cut interest rates as much as he wants without jacking up inflation. Second, at least short term, this could be massive for oil services companies that have to rebuild Venezuelan infrastructure. Third, this is awful for Canada which loses all of their bargaining power. Fourth, be careful if this makes a Chinese invasion of Taiwan more likely (it could also make it less likely).

News: The Maduro removal + Washington openly talking about U.S. oil companies going into Venezuela to “fix the infrastructure” and get oil flowing creates a very clean macro story if it actually becomes policy and barrels — more supply → lower crude/gasoline → lower headline CPI → political cover for aggressive rate cuts. Trump is essentially signaling a “deflation offset”: if tariffs and rate cuts are inflationary forces, then cheaper imported goods (via tariff rollbacks if they happen) + incremental heavy-crude supply (Venezuela) are the counterweights that let you push rates down without lighting inflation on fire. And near-term, even the attempt to restart Venezuela is service-intensive — broken fields, broken pipes, broken facilities. That’s why the first trade can be bullish for oil services and infrastructure names (the guys who get paid to rebuild the machine), even if you’re bearish long-term oil prices.

Noise (the part markets will learn the hard way): People will trade this like “new barrels are arriving next quarter.” That’s fantasy. Reuters is already flagging the obvious constraint: Venezuela’s oil system is decayed, investment needs are measured in tens of billions and timelines in years, not weeks — and Trump also said the U.S. embargo remains in effect, which tells you this is still a sanctions/geopolitics chessboard, not a clean “open for business” restart. So the realistic path is messy: legal uncertainty, security risk, operational bottlenecks, and a long ramp even under best-case execution. And that’s where you need to look at the short-term vs long-term. Short-term the rebuild is a tailwind for services; longer-term, if this actually succeeds and contributes to structurally lower oil prices, the same services names can get hit as global upstream budgets reset lower.

I think you are going to see a lot of people piling into the same stocks today: XOM, CVX, FLR, HAL, BKR, VLO, etc. Would probably wait for that to settle down if you want to go there.

On Canada: the “headline risk” is real — Venezuelan heavy crude is the closest substitute for the type of barrels Gulf Coast refineries want, so a credible Venezuelan ramp gives the U.S. more leverage and makes Canada less uniquely indispensable at the margin. But “we don’t need Canada” is the overreach; the more plausible outcome is pricing power shifts and differentials/margins get pressured rather than Canada getting cleanly replaced.

As far as China and Taiwan go, that’s why I constantly tell you to always have hedges in place.

Then there’s also this trade….

Today’s stock is Dominos (DPZ)……

Domino’s (DPZ) is one of the cleaner “old economy + AI = margin leverage” setups because the business is essentially a giant real-time logistics and conversion engine: small improvements in order flow, staffing, and inventory waste compound across thousands of stores. The key tell was DPZ’s generative-AI partnership with Microsoft, where they explicitly outlined using the Microsoft Cloud and Azure OpenAI Service to (1) enhance the ordering process via personalization/simplification and (2) make store operations “smarter” with tooling that streamlines logistics like inventory/ingredient ordering and labor scheduling.

The profit pathway is straightforward: higher conversion/attach rates on digital orders + better throughput at peak times + fewer out-of-stocks and less waste + tighter labor minutes per order—none of which require heroic same-store sales assumptions, just operational lift at scale.

The H.E.A.T. (Hedge, Edge, Asymmetry and Theme) Formula is designed to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth.

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