Monday, August 29, 2011

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.

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