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.
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