As you can see this entry is a little behind. I got caught up in the preparing for the Thanksgiving holiday and had to do some extra travel and various sundry things that took me away from getting this post ready. That being said I hope I can shed some insight into your trading this week. Here are what my initial positions were:
S&P 500 Index SPX
SPX 1225 Put $2.47
SPX 1215 Put $(1.69) This gave a Net Credit of $0.78 for a 7.8% ROI
Russell 2000 Index RUT
RUT 705 Put $1.82
RUT 695 Put $(1.24) This gave a Net Credit of $0.58 for a 5.8% ROI
NASDAQ 100 Index NDX
NDX 2290 Put $3.00
NDX 2280 Put $(1.24) This gave a Net Credit of $1.76 for a 17.6% ROI
Breakdown
Things were going well with all of the spreads for most of the week. Then on the 17th things began to unravel for the SPX and NDX spreads. The decline that didn’t stop until the 28th of November started on the 17th. My NDX and SPX positions which were call positions needed repair. I had to make the following adjustments:
SPX
SPX 1215 Put $7.69
SPX 1225 Put $(12.81) This gave a Net Debit of $5.12 for a -51.2% ROI
This gave a total Net Debit of $4.54. Right now I am heading toward a BIG loss, but headed off an even bigger one if I didn’t do this adjustment as by expiration SPX broke through the 1200 into the high 1190s.
NDX
NDX 2280 Put $10.19
NDX 2290 Put $(13.70)
NDX 2280 Call $5.89
NDX 2290 Call $(3.21) This gives a Net Debit of $0.83 for a -8.3% ROI
Again this helped avert an even bigger loss as the NDX pushed into the high 2100s by expiration.
So this week wasn’t the best, but we averted a complete disaster through making the adjustments. Still overall I am up close to 83% and am looking to be up 100% by year end.
Later after the close Friday it seemed that there was some unusually high programmed trading and algorithmic trading that took over the Wed-Fri markets. As one sell limit was reached that triggered others and the indexes just cascaded down. Unfortunately this is one of the risks we really can’t manage or hedge out. These programmed trading platforms each have their own proprietary programs that generate buy/sell signals for the trading houses. Once the triggers are hit they automatically generate trades that look like trades you and I make just on a MUCH bigger scale.
Looking back on the trading rules I have, I actually followed my rules and still got lit up a bit. That is going to happen. When you are trading you have to go into the game realizing that occasionally you will lose on a trade here and there. The goal is to minimize those losses when they do occur. That is what I did this week. Take the punch and go to my corner to shake it off. Remember we are still up very well for the year and get ready to hit it again next week.
I am working on some book reviews and will start posting links to articles I read or are sent to me by you fans.
TTFN
Ashley
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