Proprietary Trading Playbook

The Osonwanne Group deploys a range of proven option and stock strategies tuned to specific market conditions. The core playbook includes high‐leverage directional trades (targeting ~20× upside), option arbitrage (e.g. reverse conversions), event‐driven hedges (short stock + long call for anticipated bad news), trend‐following signals (Turtle breakouts, “3 green arrows”/“3 red arrows” momentum indicators), and a systematic wheel of cash‐secured puts and covered calls on high‐quality names. Each strategy has clear entry/exit rules and risk controls. Below we outline when to use each strategy and give past examples of their application.

High‑Leverage Directional Trades (20× Risk/Reward)

Setup: Use deep out‐of‐the‐money long call or put spreads to cap max loss and allow a very large gain if the stock moves strongly. For example, a bull call spread (buy low strike call, sell higher strike call) limits upside but can yield a very high reward‑to‑risk when the stock rises.
When to apply: After a fundamental catalyst (e.g. biotech trial, FDA news, macro data release) is identified, with no other major events imminent. Ensure the target stock is one you’d be comfortable owning at the strike (to align with wheel/put‐selling discipline). Avoid buying expensive options right before earnings or binary events (gaps often occur around earnings).
Risk profile: The maximum loss is the small premium paid; the max profit (spread width minus premium) can be many times larger. For instance, a 20× reward‐to‐risk means a $1 premium could target $20 profit if both legs move favorably. This fits “one happy scenario, limited loss” trades.
Example: In late 2025, Terns Pharmaceuticals (TERN) jumped ~165% in one month after positive clinical data. A well-timed deep‐OTM call spread in early November could have turned a small debit into a many‑fold gain (approaching our 20× target). Even if the trade went wrong, the loss was capped at the premium. (Terns’s rise shows how biotech catalysts can fuel explosive moves.)

Option Arbitrage & Reverse Conversions

Setup: Exploit pricing inefficiencies by creating delta‑neutral spreads. A classic example is reverse conversion arbitrage: short the underlying stock and offset it by buying a call and selling a put (all same strike/expiration). This positions a synthetic long vs an actual short, locking in a tiny arbitrage profit if put‑call parity is broken.
When to apply: Very rarely, and only in highly liquid names or indexes. Requires virtually zero borrow cost on the short (ETB stocks, 0% fee) and low transaction costs. Also monitor interest/dividend assumptions. Because true arbitrage opportunities vanish fast, this is mainly done by quant funds.
Mechanics: In theory, you profit if the call is slightly overpriced or the put underpriced. The position is delta neutral (short stock = –100 delta; long call + short put = +100 delta). Over time you collect the discrepancy.
Example: Hedge funds historically have found tiny put-call parity gaps in index futures. For instance, if S&P options are mispriced, one could short the index future and buy a call + sell a put to lock in a risk-free differential. Such trades rarely show up in daily retail trading but are conceptually part of our toolkit.

Gap‑Event Hedging (Short Stock + Long Call)

Setup: When deep research or catalysts suggest a likely downside gap (e.g. failing to meet guidance, negative announcement), enter a short stock position hedged with a long call. This “covered short” caps upside risk. Buying a call on a short sale guarantees a maximum repurchase price.
When to apply: Just ahead of a high‑probability negative event on an easily shortable stock (low borrow fee or ETB). Combine this with bearish technical signals (e.g. a 3‑red‑arrows trigger). Only short stocks with weak fundamentals or overextended charts that you wouldn’t mind buying at the strike price. Ensure you have margin capacity to hold the short if it works, and enough cash to buy the call.
Mechanics: Short the stock at current price and simultaneously buy an out‑of‑the‑money or at‑the‑money call. If the stock crashes, the short profit dominates (minus the call cost). If instead the stock rallies unexpectedly, the long call limits the loss, turning an unbounded short loss into a capped one.
Risk profile: Example (from Investopedia): short at $76, buy a $75 call for $4. If the stock rockets to $100, the raw short loss is $2,400, but the call gains $2,100, netting only a $300 loss. Thus, even extreme moves hurt only minimally. If the stock falls as predicted, profits can be large (short gain minus small call premium).
Example: Suppose a stock is expected to miss earnings severely. We might short it at $50 and buy a $50 call for $2. If it gaps down to $30, the short gains $20 (per share) minus $2 = $18 profit. If it unexpectedly gaps up to $70, the worst-case net loss is ~$2 (the call premium), as in the Investopedia example.

Technical Signals & Entry/Exit Rules

Trend Indicators (“3 Green/Red Arrows”): Use proprietary momentum signals that combine multiple indicators (e.g. moving averages, MACD, RSI) into a bullish “3 Green Arrows” or bearish “3 Red Arrows” alert. A “3 Green Arrows” means all our momentum filters have turned positive, signaling a strong uptrend; “3 Red Arrows” signals a confirmed downtrend. For example, SeeItMarket notes a 3‑arrow signal occurs when major indices align momentum (often via MACD).
Turtle Channel Breakouts: Follow the classic Turtle rules: buy breakouts, sell breakdowns. Enter long when price exceeds the high of the last N days (e.g. 20‑day or 55‑day high), and exit (or go short) when price falls below the low of M days (e.g. 10‑day low). This captures big moves in trending markets. (Richard Dennis’s turtles famously bought 4‑week highs and sold 20‑day lows to make large profits.)
Sentiment (“Buy Opinion” trends): Incorporate market sentiment tools (e.g. aggregated analyst buy/sell ratings, sentiment surveys or proprietary “opinion” indexes). A rising bullish sentiment can confirm an entry; a sudden fall in sentiment can warn of a reversal.
When to apply: Use these signals to time entries and exits. For example, go long when a 3‑Green‑Arrows or Turtle breakout occurs, and exit if a 3‑Red‑Arrows appears or the Turtle trend breaks. This ensures we trade with the dominant trend. Avoid counter‑trend entries with these signals. In choppy markets, these signals will simply prevent trades.
Example: In a recent bull market, Tech stocks often gave Turtle breakouts above 20‑day highs, which we would have bought. If NVDA, for instance, makes a fresh 55‑day high on strong volume, our Turtle signal triggers a long entry. We then trail a 20‑day low stop to exit. (Historically, such breakouts have led to multi‑week rallies.) Also, if the S&P500, Nasdaq and Russel all flashed 3 Green Arrows, we’d increase position sizing; if they lose that signal, we’d be cautious.

Wheel Strategy (Cash‑Secured Puts + Covered Calls)

Setup: Combine put-selling and covered calls on fundamentally sound stocks in a rotating manner. Sell an out‑of‑the‑money cash‑secured put on a stock you’d like to own (put aside cash for assignment). If the stock stays above the strike, you keep the premium and repeat the put sale. If the stock falls below the strike, you are assigned and buy 100 shares at that strike. Immediately thereafter, sell a covered call (usually out‑of‑the‑money) on those shares to earn income or exit at a profit. This cycles repeatedly (hence “Wheel”).
When to apply: After we see a bullish signal on a high-quality stock (from the above technicals) and the stock is fundamentally strong. For example, within a few days of a confirmed uptrend (but before exhausting gains). Only use on names with no earnings or major catalysts in the next several weeks (we avoid entering puts just before earnings). Stocks should be in solid sectors where holding long-term is acceptable. The strike is chosen slightly below market (for puts) or above cost (for calls), so we’re happy either to collect premium or to have shares called away.
Risk profile: Puts: max loss occurs if stock goes to zero (but reduced by premium received). Covered calls: profit is capped at the strike (plus premium) but downside risk remains on the stock (mitigated by the premium collected). Because we only sell puts on stocks we want to own, the strategy effectively pays us to accumulate positions at a net discount or generate income on owned shares.
Example: Suppose our signals fire on MSFT. We sell a $300 strike MSFT put for $5 premium (cash‐secured). If MSFT stays above $300 by expiry, we net $5 ($500 per lot) with no stock purchased. If MSFT falls to $295, we buy 100 shares at $300 (net cost $295 after premium). Then we immediately sell a covered call, say a $310 call for $3. If MSFT rises above $310, we sell at $310 and keep all premium (locking in a nice gain). If not, we keep the $300 shares and can continue selling calls or hold. As Investopedia notes, cash‑secured puts generate income or a lower purchase price, and covered calls generate income in a sideways market. Over time, repeated selling of puts and calls on good stocks compounds gains.

Execution & Risk Management

Signal Confirmation: We only enter trades when multiple factors align: our proprietary trend signals + fundamental research. For instance, a high‑reward call spread is only opened if our technicals are bullish and no conflicting event is near.
Event Risk: We strictly avoid holding new positions through known gap catalysts. By rule, we will not sell puts or buy calls just before earnings or binary events. (Gaps often occur around earnings, making such trades too risky.)
Position Sizing: Each trade is sized by its max loss. For example, if a call spread costs $200, that is the absolute risk. We cap each position to a small percentage of capital so that even a string of losses doesn’t wreck the portfolio.
Trailing/Stops: Trend trades (Turtle/3‑arrow) use tight trailing stops (e.g. exit on 10‑day low after entry). We exit broken signals promptly. Wheel positions can be held longer, but we monitor for trend exhaustion.
Tools: We rely on our custom “green/red arrow” momentum indicators, Turtle channel overlays, and sentiment analytics. These are used in concert: e.g. we only sell puts in the wheel when our indicator says the stock is in a confirmed uptrend.

Sources: The above strategies draw on classic option and trend‐following concepts. For example, cash‑secured puts and covered calls are standard income strategies; the Wheel cycles these systematically. Reverse conversion arbitrage exploits put-call parity. Turtle breakouts have a long track record of capturing trends. These ideas are adapted to Osonwanne Group’s proprietary signals and risk rules, as illustrated by the cited examples.