Systematic options income, engineered in Python.
SkyQuant Capital Management LLC is a single-member quantitative trading company. It runs five intraday SPY and QQQ option books — each a deterministic rule set with a fixed maximum loss, a measured cost model, and a 9,251-trade replay behind it. This page is the plan, the numbers, and the reasons those numbers might not hold.
What is proven, what is modelled, and what is not claimed.
A projection is only worth the assumptions under it. This page separates the three — deliberately, before any number is presented. Everything below is reproducible from the repository; nothing here is a live result.
Proven Built & tested
9,251 trades replayed against OPRA contract prints. Deterministic entry and exit rules, no discretionary override. 24–56 offline unit tests per book. Full commission, regulatory and slippage model. No language model sits anywhere in the order path.
Modelled Not yet live
The options replay covers 12.8 months and one volatility regime. Exits assume resting limit orders fill at the underlying's level. No live fill, no paper fill, and no broker statement yet exists. Every dollar figure on this page is hypothetical.
Not claimed No crisis record
No 2008 options track record exists — the historical options archive begins in October 2025. Only one book's underlying signal has been tested through the financial crisis, and only on shares. There are no audited returns and no client capital.
The entire edge depends on resting limit exits. When the same 9,251 signals are instead exited at the printed close of the touch minute — a pessimistic but entirely realistic fill assumption — all five books lose money: SkyQ WICK −$4,477, SkyQ LEVEL −$26,358, SkyQ RANGE −$16,274, SkyQ SIGMA-S −$11,944, SkyQ SIGMA-Q −$11,664.
That is not a caveat at the bottom of the page. It is the central engineering risk: the profit is the difference between a passive fill and an aggressive one, and the first live quarter exists to measure exactly that gap.
Five books, one tape, 722.8 trades a month.
Each book is a separate Python process with its own account allocation, its own rule set, and its own kill switch. All five are long premium only: a call on a long signal, a put on a short signal, at the money, held for minutes. The maximum loss on every trade is the debit paid, known before entry.
| Book | Underlying | DTE | Trades | Trades/mo | Win | PF | Net $ | Net/mo | Max DD | Cash floor |
|---|---|---|---|---|---|---|---|---|---|---|
| SkyQ WICK | SPY | 1 | 651 | 50.9 | 83.3% | 2.05 | 10,184 | 850 | 736 | 1,863 |
| SkyQ LEVEL | QQQ | 1 | 1,782 | 139.2 | 76.4% | 1.49 | 29,993 | 2,493 | 3,297 | 5,904 |
| SkyQ RANGE | SPY | 2 | 2,998 | 234.2 | 84.5% | 1.37 | 11,542 | 1,154 | 607 | 2,467 |
| SkyQ SIGMA-S | SPY | 3 | 2,018 | 157.7 | 86.4% | 1.65 | 16,433 | 1,454 | 896 | 1,746 |
| SkyQ SIGMA-Q | QQQ | 2 | 1,802 | 140.8 | 86.0% | 1.55 | 16,931 | 1,475 | 946 | 2,121 |
| Portfolio | 5 books | — | 9,251 | 722.8 | 83.6% | — | 95,038 | 7,426 | 6,482 | 14,101 |
Basis: Options_Edge replay, 2025-10-06 → 2026-10-31 (12.8 months), one contract per signal, long premium only. Every net figure is after Tradier Pro's full bill — $0.00 equity-option commission, ≈$0.21 all-in per round trip, and the $10 monthly platform fee — replacing the $1.30 per round trip the replay was originally charged. Cash floor = maximum concurrent premium + maximum drawdown for that book. Figures are gross of tax and of the founder's time.
Naming. SkyQ is the house framework — one order path, one fee model, one fill assumption, one risk governor. Each book takes its code from the mechanism it trades: WICK rejection-wick continuation, LEVEL reclaim of a rolling level, RANGE channel mean reversion, SIGMA VWAP band reversion. Lineage: WICK and RANGE are ports of published Pine studies, LEVEL ports HPotter's Iron Support Resistance Automat, and SIGMA ports NQ Phantom Scalper Pro. Each was re-derived on 1-minute OPRA prints and re-parameterised for a one-contract debit book; where the full-history test failed, the book was rejected rather than tuned. None of them runs as published.
SkyQ WICK — 1 DTE
At 5-minute resolution, a bar whose wicks dominate its body (upper wick ≥ 2× lower, combined wicks greater than ATR-14) marks exhaustion. The book buys the next open and targets 3.00 with a 0.90 stop.
SkyQ SIGMA-S & QQQ — 3 / 2 DTE
A session-VWAP 1σ band. Price stretched one standard deviation from VWAP is faded back toward the mean, with a 5.5-ATR stop and a target at 30% of the distance to the opposite 2σ band.
SkyQ LEVEL & SkyQ RANGE — 1 / 2 DTE
SkyQ LEVEL fades a 10-bar high or low that has held for ten bars without being reclaimed. SkyQ RANGE buys the bottom 20% of a normalized-volatility channel and sells the top 20%, with a 120-bar time stop.
SPY and QQQ carry the longest, deepest and most stable backtests in the research stack. They are the two most liquid ETF option chains in the world, with one-cent spreads and enough volume that a one- to ten-lot order is invisible. The same signal logic has been applied to futures (micro Nasdaq and S&P), single stocks, sector ETFs and bonds. Several futures books are genuinely successful — but none of them is top-five by profit, which is why they are not on the desk yet. The mandate is to test every liquid market and deploy capital only where the evidence clears the bar.
Why 1–3 DTE: the books were re-run across the full 0–4 day ladder. SkyQ WICK at 0 DTE nets $8,489 with a $761 drawdown; at 1 DTE it nets $10,184 with $736; at 3 DTE it falls to $8,954. SkyQ LEVEL peaks at 1 DTE ($29,993, DD $3,297). SkyQ RANGE peaks at 2 DTE ($11,542, DD $607). SkyQ SIGMA-S peaks at 3 DTE ($16,433, DD $896) and SkyQ SIGMA-Q at 2 DTE ($16,931, DD $946). Each book is held at the point where net profit is highest and drawdown is lowest — not where raw return is highest.
Seven years of share-level results, and one honest read of the crisis years.
The option books have 12.8 months of history. The signals underneath them have been tested much further back on shares, which is the only way to say anything defensible about 2008 and 2022. Everything in this section is at 25 shares unless labelled otherwise.
2022: every book was positive
A bear market with violent two-way ranges is close to the ideal environment for an intraday mean-reversion book. The books do not forecast direction; they sell stretch and buy it back. Three of the four beat their 2019–2021 average.
| Book | 2022 net | vs 2019–21 avg |
|---|---|---|
| SkyQ WICK | +$1,997 | 2.6× |
| SkyQ RANGE | +$2,379 | 3.8× |
| SkyQ LEVEL | +$7,698 | 4.1× |
| SkyQ SIGMA-S | +$2,126 | 0.7× |
At 100 shares SkyQ WICK made +$11,336 in 2022 on 80.8% wins and SkyQ SIGMA +$9,919.
2008: survival, not outperformance
SkyQ SIGMA is the only book with a pre-2019 sample. Across 2007–2012 it made +$1,718 at 100 shares — profit factor 1.015, Sharpe 0.17. It did not blow up. It also did not make money in any meaningful sense after costs.
| SkyQ SIGMA-S block | PF | Net |
|---|---|---|
| 2007–2012 | 1.015 | +$1,718 |
| 2013–2019 | 1.254 | +$32,079 |
| 2019–2022 | 1.269 | +$50,778 |
| 2023–2026 | 1.623 | +$126,741 |
| Full 2007–2019 | 1.139 | +$33,797 |
22,894 trades · 83.7% wins · Sharpe 1.45 · max DD $4,261 · 98 of 149 months positive.
The 2007–2012 block is the most important number in this document after the fill assumption. A strategy that is flat for six years is a strategy that can be flat for six years — and a founder drawing a living from it would have quit in year three. It is also why the plan sizes at one contract rather than ten, and why the challenger protocol in section 09 exists.
No 2008 or 2022 result exists for the option books. The archive starts in October 2025. Buying 1-DTE calls in October 2008, with implied volatility near 80%, would have been a materially worse trade than the share-level result above. Any claim to the contrary is a sales pitch.
The risks that matter are not the ones on the marketing page.
There are no naked shorts, no martingale, no averaging down and no overnight exposure. The loss on any single trade is capped at the debit. What remains is four real risks: fill quality, negative skew, correlation, and capital adequacy.
Diversification, answered directly
Five books is excellent implementation diversification and only modest statistical diversification. Both halves are true, and they answer different questions.
This is why the next hire is a different market, not a sixth SPY book. The micro-futures and swing books already in research are the real diversifiers: SkyQ WICK MNQ is positive in 8 of 8 years at PF 1.92, and the RSI-2 swing overlay is 7 of 7 at PF 3.83. Neither is top-five by profit yet, which is precisely why they are research and not production.
1 Fill quality
The replay exits at the underlying's level with a resting limit. Exiting at the printed close of the touch minute instead turns +$95,038 into −$60,000. The first live quarter is a measurement exercise, not a profit exercise.
2 Negative skew
High win rates hide a poor reward-to-risk ratio. SkyQ RANGE wins 84.5% of the time at a profit factor of 1.37, which means one stop is worth four average winners. A cluster of three stops is a bad week.
3 Regime dependence
2022 was a gift to mean reversion. A low-volatility, low-range grind is the opposite: targets are never reached, the time stop fires, and the book pays the spread 722 times a month for nothing.
Controls in the code
Isolation, attribution and limits
Every fee, and what the broker actually charges.
At 722.8 round trips a month, commissions are not a rounding error — they are the difference between a viable business and a hobby. This is the single largest controllable cost in the plan, and it is why the desk trades on Tradier Pro rather than a per-contract broker.
| Tradier Pro | Cost |
|---|---|
| Monthly subscription | $10.00 / mo |
| Equity & ETF option commission | $0.00 / contract |
| Stock commission | $0.00 |
| Index option commission (SPX, NDX…) | $0.35 / contract |
| Clearing | $0.0775 / contract / side |
| ORF (options regulatory) | $0.02 / contract / side |
| SEC fee | $0.0000206 per $1 sold |
| FINRA TAF (options) | $0.00 through 31 Dec 2026 |
| Trade reporting | $0.000054 / equiv. share |
| Assignment / exercise | $9.00 |
| API and desktop platform | Included |
| Outgoing domestic wire | $30.00 |
| Margin interest | 9.75% |
| Inactivity fee (<2 trades/yr) | $50.00 / yr — n/a |
| All-in, one-lot round trip | ≈ $0.21 |
722.8 round trips × $0.21 regulatory + $10 subscription. Annualised: $1,942. Commission: $0.00.
At $2.08 all-in per round trip, the identical 9,251 trades cost $19,261 a year instead of $1,942. Choosing the broker is worth about $17,300 a year — more than the entire formation budget, every year.
Formation and operating budget
| Item | Provider / note | Year 1 | Recurring |
|---|---|---|---|
| LLC formation & registered agent | Northwest Registered Agent — state filing + agent | $575 | ~$125/yr |
| Trademark “SkyQuant” | USPTO, Class 36 (financial services), one class | $350 | $0 |
| DBA / assumed name | County or state filing | $50 | $0 |
| Domain | skyquant.ai — plus defensive .com if available | $50 | $50/yr |
| Tradier Pro | $10/month | $120 | $120/yr |
| Non-trading total | Excludes trading capital | $1,145 | $295/yr |
Bookkeeping and tax preparation are paid from trading profits and are therefore outside the raise. Tradier fees per the published schedule, November 2026.
From a single-member LLC to a fund at $1.5 million.
The entity work is cheap and sequential. The tax election has a deadline that does not move. The fund conversion is worth doing once, at the size where it pays for itself.
Formation sequence
- Name and trademark search. Confirm “SkyQuant” is clear in Class 36 before filing the LLC. A conflict found after formation is the expensive version of this step.
- File the LLC with the state, Northwest as registered agent — $575 including year one.
- Obtain the EIN (free, IRS, same day online). Never use a Social Security number on the brokerage application.
- Adopt a written operating agreement and open a business checking account in the LLC's name.
- File the DBA — $50 — so the LLC can trade as “SkyQuant”.
- File the trademark — $350, one class, TEAS.
- Register the domain and set up business email before any public announcement.
- Open the Tradier account in the LLC's name and fund it from the business account.
The mark-to-market election is filed with the prior year's return, and an extension does not rescue a missed deadline. To trade 2027 under 475, the statement goes with the 2026 return, by 15 April 2027.
A December 2026 launch therefore trades its first month under ordinary capital-gain rules. Elect with the 2026 return and the wash-sale rule stops applying on 1 January 2027. One month of disallowed losses is a deferral, not a tax: the loss moves into the basis of the replacement contract and is recovered when that position closes.
What 475(f) does and does not do
The fund conversion, costed honestly
The intended structure — SkyQuant Capital Management LLC as general partner, SkyQuant Capital Fund LP as the fund, 2% management and 20% performance — is the standard shape. It pays for itself at $1.5 million under management, which is the trigger this plan uses.
| Line | At $1.5M under management | Amount |
|---|---|---|
| Management fee | 2% of $1,500,000 | +$30,000 / yr |
| Performance fee | 20% of a 25% year ($375,000) | +$75,000 |
| Fund formation counsel | LP agreement, PPM, subscription docs | −$35,000 to −$75,000 |
| Audit | Annual, required by most LPs | −$15,000 |
| Fund administration | NAV, capital accounts, K-1s | −$12,000 |
| Compliance & insurance | Form ADV, E&O, D&O | −$8,000 |
| Year-one result before trading | Fees minus the compliance stack | +$35,000 |
At the top of the counsel range ($75,000) the same year is roughly −$5,000; at $2M under management it is +$70,000. The threshold is a break-even, not a rule.
Stay an LLC. Manage proprietary capital.
No securities offering, no fund counsel, no audit. The 475 election and the Tradier account are the whole compliance surface. This is the correct structure from $0 to roughly $1M.
Separately managed accounts.
Manage each lender's or investor's capital in their own brokerage account under a limited trading authority. No pooled vehicle, no LP, no 3(c)(1). Fees can still be 2/20 if the client is a qualified client under Rule 205-3. This is the practical bridge from $1M to $1.5M.
Launch the LP at $1.5M+.
Launch when commitments reach $1.5M — from one investor, or from several whose signed commitments total $1.5M or more. At that size the management fee covers the compliance stack and a 20% year pays the rest. Structure as a 3(c)(1) fund under Reg D 506(b), Form D within 15 days, Form ADV, qualified-client performance fee.
This is structural and tax information, not legal, tax or investment advice. Fund formation requires securities counsel in the state of organisation and, for the adviser, SEC or state registration analysis.
Thirty-six months, three assumptions, one contract per book.
This is not a compounding fantasy. The model holds the desk at one contract per book and adds nothing: it shows what the current capacity produces if the replay repeats at a fraction of its rate. Scaling is a separate decision, gated on live evidence, and is set out in section 09.
| Scenario | Monthly | Year 1 | Year 2 | Year 3 | Equity at 36 mo |
|---|---|---|---|---|---|
| Backtest case — 100% of replay | $7,426 | $107,112 | $196,224 | $285,336 | $285,336 |
| Base case — 50% of replay | $3,713 | $62,556 | $107,112 | $151,668 | $151,668 |
| Stress case — 25% of replay | $1,857 | $40,284 | $62,568 | $84,852 | $84,852 |
$7,426 a month on $18,000 is 41% of opening capital per month at one contract per book. No allocator should accept that as a forecast. Cut it in half and the base case still returns 8.4× the opening capital in three years; cut it to a quarter and the stress case still returns 4.7×. Returns that large are a reason to demand more evidence, not less.
Tax (roughly 25–35% of the net, and ordinary income under 475), the founder's salary, withdrawals, any capital injection, and any change in volatility regime. A flat year is a real possibility — SkyQ SIGMA had one that lasted six.
The same signal, three ways to express it.
The bots are signal engines, not options strategies. The option wrapper is a capital-efficiency choice for the first $1M; full shares are the capacity choice after it. Both use the identical entry and exit logic, so the evidence carries across.
| Expression | Size | Capital required | Model net / mo | Max DD | Character |
|---|---|---|---|---|---|
| Options — launch | 1 contract / book | $14,101 floor | $7,426 | $6,482 | Capital-efficient, fill-sensitive, theta decay |
| Options — scaled | 2 contracts / book | $28,202 | $14,852 | $12,964 | Same edge, double the fill risk |
| Shares — 25 | 25 sh / book | ~$92,000 | $2,012 | $5,990 | No decay, no greeks, thin P&L |
| Shares — 100 | 100 sh / book | ~$370,000 | $8,983 | $22,497 | Capacity, lower operational risk |
Share-level results currently cover 2022–2026 for SkyQ WICK, SkyQ RANGE, SkyQ LEVEL and SkyQ SIGMA, and 2007–2019 for SkyQ SIGMA only. A uniform 2007–2026 run across all five books is the next research task; until it exists, the long-horizon claim rests on SkyQ SIGMA alone.
One contract set plus a small buffer. This is the entire argument for starting in options.
Nineteen times the capital for the same monthly cash flow — with far less fill risk and no decay.
On roughly $370,000 of notional. A 29% annual return on capital, with no leverage and no premium at risk.
Options until roughly $1M, because capital efficiency dominates and the premium at risk is bounded. Shares from $1M, because a 100-share book has no greeks, no expiry and no fill assumption beyond the underlying's own liquidity. Futures run alongside as the research diversifier. The signal is the asset; the wrapper is a financing decision.
Where AI is used, and where it is deliberately not.
There is no language model in the order path. That is a design decision, not a limitation: a strategy that cannot be expressed as a deterministic function of the tape cannot be tested, and what cannot be tested cannot be trusted with capital.
AI is used for
AI is not used for
The 90% rule and the challenger protocol
The top five books by risk-adjusted score carry 90% of deployable capital. The remaining 10% is a permanent laboratory: new candidates trade in shadow, at one contract, until they earn a promotion. Optimisation does not stop because the current books work.
90 days in shadow
Minimum 200 shadow trades, no capital at risk, full cost model applied.
Beat the incumbent
Higher profit factor and lower drawdown across at least two regimes.
10% pilot
Real capital, one contract, 60 live trades. Slippage measured against the replay.
Promotion or exit
Clears the bar: joins the top five. Fails: retired with a written post-mortem.
$20,000 opens the full desk. $10,000 opens a smaller one.
Two entry points, one machine. The larger runs all five books from the first day at one contract each. The smaller opens with the three books that fit inside an $8,000 book and steps up to five once the cushion arrives. Neither figure includes bookkeeping or tax — those are paid from trading profits.
| Use of funds | Amount | Share |
|---|---|---|
| Trading capital — Tradier, LLC name | $18,000 | 90.0% |
| Formation, trademark, DBA | $975 | 4.9% |
| Domain and business email | $50 | 0.3% |
| Tradier Pro, 12 months | $120 | 0.6% |
| Contingency — held, not spent | $855 | 4.3% |
| Total | $20,000 | 100% |
Five books, one contract each. Cash floor $14,101 against $18,000 — 1.28× coverage, with $3,899 of dry powder. Model net $7,426 a month.
| Use of funds | Amount | Share |
|---|---|---|
| Trading capital — Tradier, LLC name | $8,000 | 80.0% |
| Formation, trademark, DBA | $975 | 9.8% |
| Domain and business email | $50 | 0.5% |
| Tradier Pro, 12 months | $120 | 1.2% |
| Contingency — held, not spent | $855 | 8.5% |
| Total | $10,000 | 100% |
Three books — SkyQ SIGMA-S, SkyQ SIGMA-Q, SkyQ WICK. Cash floor $5,730 against $8,000 — 1.40× coverage. Model net $3,773 a month.
The three books that fit in $8,000
The three smallest cash floors are SkyQ SIGMA-S, SkyQ SIGMA-Q and SkyQ WICK — $5,730 combined, which is 1.40× coverage of an $8,000 book and the widest cushion any three books can give. On income alone SkyQ RANGE is the better third book: swapping it for SkyQ WICK lifts the month to $4,083, but it adds $607 of drawdown and drops coverage to 1.26×, which is the wrong trade to make in a first quarter. Monthly net per $1,000 of floor: SkyQ SIGMA-S $833, SkyQ SIGMA-Q $695, SkyQ RANGE $468, SkyQ WICK $456, SkyQ LEVEL $422.
| Stage | Books | Cash floor | Net / mo | Coverage | Trigger to advance |
|---|---|---|---|---|---|
| Plan B — starter | 3 | $5,730 | $3,773 | 1.40× | Equity reaches $17,000 |
| Plan A — full desk | 5 | $14,101 | $7,426 | 1.28× | Two contracts per book at $28,202 |
| Scaled | 5 × 2 | $28,202 | $14,852 | 1.00× | Live slippage inside 25% of replay |
At the base case of $1,887 a month, Plan B reaches the $17,000 step-up in about five months; at the full replay rate, in about two and a half. The step-up is funded from profits, not from a second round.
December launch — the calendar
| Window | Milestone | Gate to pass |
|---|---|---|
| Week 1 · Nov | LLC filed, EIN, operating agreement, business bank account | Entity can legally open a brokerage account |
| Week 1–6 · Nov–Dec | Assumed-name notice published once a week for six weeks in the Albany County newspaper; proof filed with the county clerk | DBA is on record before the broker application |
| Week 2–3 | Trademark filed, domain registered, business email and site live | Brand and correspondence operational |
| Week 4–6 | Tradier application in the LLC's name, sub-accounts, API keys, paper trading at production size | ≥100 paper fills, zero reconciliation breaks |
| Week 7 · Dec | Account funded, first live orders at one contract per book | Slippage measured against the replay on every fill |
| Week 8+ | First monthly close, investor letter, 475(f) statement drafted for the 2026 return | Reported P&L reconciles to broker statements |
If the money comes from a private lender
Document it as a note: a written promissory note, a fixed 36-month term, a fixed rate, a personal guarantee and a monthly statement. Interest is paid monthly out of trading distributions; principal is due at maturity, or earlier at the borrower's option with no penalty.
16% is the top of what New York enforces on a loan of this size; 25% is the criminal ceiling above it, so a higher coupon would be unenforceable and is not offered. The rate sits far above the applicable federal rate, so there is no imputed-interest exposure on either side: the lender reports the interest as ordinary income, the company deducts it.
If the money comes from a bank
A conventional lender will not advance against a hypothetical strategy, and an SBA 7(a) needs demonstrated operating revenue. The honest request to a loan officer is a small operating line for formation and compliance costs, personally guaranteed, with the trading account unpledged.
Do not borrow to increase contract size. A $6,482 drawdown against $18,000 is already 36% of the account; leverage turns a survivable quarter into a terminal one.
If live slippage exceeds the replay assumption by more than 25% over the first 200 trades, the desk stops and the strategy is re-derived, not resized. If the first quarter is negative in a benign volatility regime, the same applies. The plan has one real test and it happens in the first ninety days.
The questions an investor or a lender actually asks.
Short answers, with the number that supports each one. Everything here is expanded somewhere above.
Why only SPY and QQQ?
They are the two deepest, most liquid option markets in the world, with the longest continuous intraday history in the archive — which is what makes a 9,251-trade replay possible in the first place. Futures books are also profitable, but they are not top five by profit, so they stay in research. The framework will test any market: futures, single stocks, bonds, ETFs, options.
Is five books really five bets?
Operationally, yes: five processes, five rule sets, five kill switches, and one bad deployment cannot take the desk down. Statistically, closer to two: three books trade SPY, two trade QQQ, the underlyings are roughly 0.95 correlated, and all five read the same 09:30–15:59 tape. That is why the next addition is a different market rather than a sixth SPY book.
Did these strategies survive 2008 and 2022?
2022, clearly: all four share-level books were positive, and three of the four beat their 2019–2021 average. 2008 is an honest no — the options archive begins in October 2025, so no option book has traded a crisis. The underlying mean-reversion signal was tested back to 2007 on shares and was roughly flat through the crisis: +$1,718 at 100 shares, profit factor 1.015. It survived without profiting. A uniform 2007–2026 share-level run across all five books is the next research task.
What if the fills are worse than the replay assumes?
Then the edge shrinks, and at the extreme it disappears: exiting at the printed close of the touch minute instead of at a resting limit turns +$95,038 into roughly −$60,000 across the five books. The profit is the difference between a passive fill and an aggressive one. Every live fill is measured against the replay, and a 25% gap over the first 200 trades stops the desk.
Why December?
Because the assumed-name filing may require six weeks of newspaper publication in Albany County, and the trademark, domain and site should all be finished before the first order. Six weeks from early November lands in mid-December, which puts the first live week before year end and gives the first full year a clean January start.
Does December trading trigger the wash-sale rule?
For that one month, yes. The 475(f) election attaches to the prior year's return, so it can only take effect on 1 January 2027. A disallowed December loss is a deferral, not a tax — it moves into the basis of the replacement contract and is recovered when that position closes. December is the cheapest month in the plan's life to carry the problem.
Why $20,000 — or $10,000?
$20,000 puts $18,000 to work across all five books with 1.28× coverage of the $14,101 cash floor. $10,000 puts $8,000 to work across the three books with the smallest cash floors, and 1.40× coverage is actually the safer ratio of the two. The smaller entry is not a compromise on risk; it is a compromise on income, which is why the step-up is funded from profits about five months later.
Who pays for bookkeeping and tax?
Trading profits. They are deliberately outside the raise, and the $855 contingency exists for incidentals, not for the accountant. A monthly close and a 475-compliant return cost roughly $3,300 in year one — about three weeks of base-case net.
Why not launch the hedge fund now?
Because 2% of a small pool does not cover the compliance stack. At $1.5M the management fee is $30,000 and a 25% year adds $75,000, against roughly $70,000 of counsel, audit, administration and compliance. Below that the structure is a cost centre; above it, it pays for itself. Until commitments reach $1.5M from one investor or several, Options A and B do the same job without the overhead.
Can a lender earn more than 16%?
Not on this note. New York caps interest on a loan of this size at 16% civil and 25% criminal, and a rate above the cap is unenforceable — so a 30% or 50% coupon would be a promise the courts would not keep. A lender who wants equity-like upside is better served by Option C, where the return comes from the fund rather than from the loan.
What happens when the account doubles?
Sizing steps to two contracts per book once equity clears $28,202, which doubles net income and maximum drawdown together; the ratio between them does not change. Contract size, not strategy, is the scaling lever until option liquidity becomes the constraint — and at SPY and QQQ one-lots, that is a long way off.
Not an offer. This document is an internal planning and projection memorandum prepared by the founder. It is not an offer to sell, or a solicitation of an offer to buy, any security or interest in any entity, and it is not a private placement memorandum. Any offering would be made only to eligible investors through definitive documentation.
Hypothetical performance. Every result shown is a backtest or replay of historical data. Hypothetical performance has inherent limitations: it is prepared with hindsight, it does not reflect actual trading, it cannot account for the effect of liquidity or of the founder's decisions under stress, and no representation is made that any account will achieve results similar to those shown. Past performance does not guarantee future results.
No live track record. SkyQuant Capital Management LLC has not yet traded live capital. There are no audited returns, no verified statements and no client funds. The 9,251-trade options sample covers 2025-10-06 through 2026-10-31 only.
Options risk. Options can expire worthless and the entire premium can be lost. Long-dated and short-dated options are both subject to implied volatility changes that may move the position against the underlying. Liquidity, widening spreads and pin risk at expiration are real. Leverage amplifies both gains and losses.
Projections. The three-year projections are arithmetic illustrations based on stated assumptions, not forecasts. They exclude tax, fees not listed, withdrawals and the founder's compensation. Actual results will differ, possibly materially and possibly negatively.
Tax and legal. The discussion of Section 475(f), entity structure, securities law and fund formation is general information, not tax, legal or investment advice. Consult a qualified tax adviser and securities counsel before acting. Deadlines and eligibility rules change.
Broker and fee data. Tradier fees are taken from the published schedule as of November 2026 and are subject to change without notice. Regulatory fees (ORF, SEC, TAF) are set by exchanges and regulators, not by the firm, and the TAF waiver shown expires 31 December 2026.
Sources. MAD_Edge master ledger (31 Oct 2026) · Options_Edge backtest archive · the SkyQ book research reports · Tradier pricing and fee schedule · IRS Topic 429 (traders in securities) · IRC §475(f), §1091.