Results for the Week ending August 26, 2011

RESULTS FOR WEEK ENDING AUGUST 26, 2011

Ok, so the results for the week weren’t exactly what I wanted, we did post a positive result for the week.  There is a great lesson that comes out of this week.

Here are the trades put on last week:

RUT   665   Put     $2.12

RUT   655   Put    ($1.49)     This gave a net Credit of $0.63, 6.3% ROI

SPX   1125  Put     $2.64ere Hh

SPX   1115  Put    ($2.06)     This gave a net Credit of $0.58, 5.8% ROI

GLD   177  Call     $4.00

GLD   179  Call    ($2.40)     This gave a net Credit of 1.60, 16.0% ROI

All was good until literally about 3.50PM Eastern Time.  The GLD had been rising a little all afternoon.  But as the close loomed GLD starting shooting up by $.20 - $.30 increments.  As time was running out Friday I had to make an adjustment on the GLD spread.  The total GLD transaction flow looked like this:

GLD   177   Call   $4.00

GLD   179   Call  ($2.40)

GLD   177   Call  ($3.90)   This gave an overall net Debit of ($2.30)

The adjustment was needed as GLD finished at 178.46.  This would make me owe $146 for every GLD 177 Call I had sold.  This time I had 10 contracts.  So the adjustment meant I was down $230 rather than $1,460.  This is one of those times where it is better to take a small loss on a particular trade and stay positive overall than to take the big loss and virtually wipe out the week’s gain.

Thus two BIG concepts reared themselves this week.  (1) Diversification gave us three potential profit streams.  (2) Adjustments, when it became clear that the GLD stream was going the wrong way we were able to make an adjustment to stem the bleeding and keep us in the green overall for the week.  Remember Rule 1 !!!!!

If you have any questions or comments you can post them below or email them to:  hashleycm@yahoo.com or tweet me @Awagel01

TTFN

Ash

PS - still working on getting the pics to come in right in blogspot.  The graphs are comign in all messed up.  When we get that situation fixed there will be much more in depth analysis.  Sorry for the delay.

Latest Update - Lots of Stuff and Info

TRADING RESULTS FOR WEEK ENDING:  August 12, 2011

Ok folks, after the PCLN mess we came back to what we know best and do well.  The high volatility for the week was a real hindrance to finding the path for the week.  Up one day, down the next.  We played this trend during the week to make our money. 

TRADES:

SPX    1195     Call     $2.15

SPX    1205     Call     $1.20     This gives a $0.95 Credit for a ROI of 9.5% per Thousand

SPX    1190     Call     $2.49

SPX    1200     Call     $1.54     This gives a $0.95 Credit for ROI of 9.5% per Thousand

GLD    166      Put     $0.44

GLD    164      Put     $0.29     This gives a $0.15 Credit and a ROI of 6.0% per Thousand

We put these trades on Wednesday afternoon.  At the time these were 2 SD away from the underlying price for the S&P and just under 2 SD for the GLD.  S&P was net losing for the week so we went the other way and put call options spreads on.  Just the opposite for the GLD.  Gold was going up – way up to record highs – so we went to the put side. We went out far enough to still get good returns (helped greatly by the high volatility) but still were far enough our that we could be thinking we were safe.  Turns out we were right.  The trend for Thursday and Friday was up for the S&P, and net down for gold, but were stayed safe by staying way wide with the SD.

Now to talk a little about the PCLN debacle.  This happened two Fridays ago.  This is a time where I should have stuck with the girl I brought to the ball.  I had my nice gain of almost 10% locked up, but thought I could make a little extra during the last minutes of the Friday trades.  I entered the trades and lost literally at the last minute when the strikes were violated.  I lost all my gain on that.  This is why I say the last minute trades are not for the faint of heart.  I basically lost the week of trading.  Lots of work for nothing but a hard lesson learned.  I still plan to do last minute trades, but have modified my rules to make anything over commission instead of trying to make a minimum of 3%. 

Now for the upcoming week:  Trades look like they will be SPX, GLD and maybe RUT or NDX.  Check the Twitter feed for the trades just after I do them. 

TTFN

Ash

Analysis for Week Ending 07 29 2011

RESULTS FOR WEEK ENDING JULY 29, 2011

First let me apologize for the lateness of this entry.  I had a massive allergy attack over the weekend and am still recovering.

This week was a weird week as all the debt crisis info was flitting about the airspace.  Each day seemed to bring a new rumor or a repudiation of a previous rumor.  With all the noise about it made for a difficult week on the trading.

Here are the trades put on:

SPX  1340 Call     $1.48  Sold

SPX  1350 Call     $0.68  Bought     This gave a $0.80 Credit for an 8.0% ROI

SPX  1335  Call     $1.58  Sold

SPX  1345  Call     $0.73  Bought     This gave a $0.85 Credit for an 8.0% ROI

NDX  2425 Call     $2.41  Sold

NDX  2450  Call    $1.56  Bought     This gave a $0.85 Credit for an 8.5% ROI

Using my basic criteria for trades here is the blow by blow:

(1)   We started out the trades just more than 1 SD away from the underlying when we made our Wednesday purchases.  As the market sunk that margin just grew and grew helping us be more assured of our margins.

(2)   The spread size was our normal $10 making the math easy for ROI and Margin calculations.

(3)   Minimum premium of $0.40 per contract.  We way overshot this getting twice as much with $0.80 and $0.85 for our spreads.

(4)   Going with calls when the market was falling was the contrarian way to go and made our margins more locked in each day.

(5)   We had spreads on two different indices the NDX  and the SPX, so we were looking at all the indices and not just centering in on one particular.

Something I have been experimenting with is looking to put on last minute trades to complete the condors on spreads I have going on.  I have done this the past three weeks and it has proved successful.  I am not recommending this for others as this is more an art than science!!!!!  But if you want a little more spice in your life than you could try this approach.  If this works for you here are my guidelines I use when looking for these last minute trades:

1.       I start looking about 2:30 PM Central Time (3:30 PM Eastern) using the last 30 minutes lessens the considerable risk I am undertaking.

2.      Watch the trends and price changes very closely.

3.      See if there is a spread you can put on that will gain money.  With Optionshouse, my online platform, I do not incur any more margin as long as I keep the position size equal on the call and puts.  I do have to pay the commission on the trade.

4.      If there is not a trade to do – don’t make one. 

5.      If the trade feels too risky to you – it is and don’t make one.

6.      You have already made your money for the week, don’t lose any by making a trade here that you are unsure of.

7.      These trades require a strong stomach.  Only do them if you can take the anxiety that it causes.

If you do try these there is potential for good size rewards.  You can add as much as 25% to your income total for the week.  But as I have said these are quite risky until you get a feel for them. 

Here is the last minute trade I did last week:

SPX  1290  Put     $0.40  Sold

SPX  1280  Put     $0.05  Bought     This gave a $0.35 Credit

Market closed at 1294.42 Friday giving me a nice little profit.  But as you can see the close and my sold put were very close together.  Due to the nature of these last minute trades this will always be the case whether you go call or put side.  I put the trade on when the underlying was 1294 so it changed little in the 20 minutes overall, but there were some gyrations where the underlying came very close to my strike but never hit it.

QUESTIONS:

I have a hard time consistently making a profit.  I get 4 out of 5 trades right, but I am barely breaking even.  What can I do to be more consistently making money?

I ran into a similar problem.  Well,….the exact same problem.  For me it came down to position sizing.  I was all in on my trades.  Now I break up my trades, putting only a portion of my capital in one trade.  Diversification is what it is called.  I learned that lesson that hard way as well.  Try putting two or three trades in two or three different indices or with multiple strikes. 

You try for 4%, but I can only find 2.5% - 3% spreads.  How do you find consistently the 4% and more spreads?

Most of it is using my basic criteria.  Then it becomes a hunt and peck.  If I do not see a trade that meets my basic criteria towards the end of Wednesday I will take to lower percentage.  The 4% is a goal, not a baseline.  I have made 3-3.5% trades and have been happy with getting the money.  Remember the first two rules:

(1)   Make money each week

(2)   Don’t lose money made by going after risky trades.

+3% is better than -1% any day of the week.

Well, that is all folks.  I will Tweet when I make trades today (Wednesday August 3, 2011) and will also try to post here what trades I did.

TTFN

Ash

DISCLAIMER:  All the trades shown here are my real trades.  BUT I am not saying to blindly follow my trades.  Do your homework, your own due diligence.  If the trades you see me doing fir your style and your risk tolerance level, then feel free to copy them.  I am not recommending any stocks or options or any trades whatsoever to anyone who reads this.  I am just putting up my own experiences for educational purposes only.  I am not a licensed trader, I am just a geek who reads a lot and loves to play in excel to model.  If you send questions I will answer them, but will not recommend any particular stock or option or any other financial vehicle to you in particular.  I will only say what I would do in a circumstance.  What you do with that info is all you.