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Saturday, January 24, 2015

Weekend Portfolio Analysis (January 24, 2015)

Pretty quiet week where the market moved up a little bit in just 4 trading days from 2020.76 to 2051.82 for a 1.52% gain. The S&P500 is now almost flat for the year, in fact it was up for the year at one point in yesterday's trading session. It all gets interesting from here as the market moves up and volatility gets killed making the options selling business more challenging. Time will tell if this is a replay of the 2013 & 2014 story, but so far, the long term uptrend channel is still in play.

Yesterday I started playing the March expiration cycle. I entered a March unbalanced Iron Condor on the SPX index. I spent exactly one month without entering trades (Talk about being a lazy trader). I didn't set that level of inactivity as my goal. I was simply playing by my rules. So far I have only traded one position in January, one in February and one in March. Hopefully I get more opportunities in the March expiration cycle to be a little more active and obtain more credits.

Friday, January 23, 2015

March 2015 SPX unbalanced Iron Condor

Today I sold an SPX unbalanced Iron Condor using March options.

Tuesday, January 20, 2015

My interview on the OptionAlpha podcast

Folks, I was invited to the OptionAlpha podcast where I was interviewed by Kirk, whom many of you already know. It was quite an honor as he is one of the traders I always looked up to and because, well, he's been trading since he was born, or so I hear.

We talked about the challenges of trading while having a full time job, we talked about strategies and the specific details in terms of entries, exits, position sizes etc. No hype, no general market useless talk but concrete stuff the way we all like it here at The Lazy Trader. You have the bonus of listening to my beautiful voice and Latin accent for the first time. You just can't miss this opportunity. Check it out!

Monday, January 19, 2015

ETF Rotation Systems to beat the Market - SPY + IWM + EEM + EFA + TLT + TLH + DBC + GLD + ICF + RWX

This is the fifth and last chapter of the ETF Rotation Systems to beat the Market series. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities
- ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM
- ETF Rotation Systems to beat the Market - SPY + EFA + IEF + GLD + ICF

Today we are going to take the concept of diversification a little farther. We will exploit the idea of the fourth chapter materialized in the SPY + EFA + IEF + GLD + ICF portfolio. That is, we will create a portfolio that uses the same asset classes: Equity (US), Equity (International), Bonds, Real Estate and Commodities but this time we will choose two symbols for each category instead of just one.

Saturday, January 17, 2015

Weekend Portfolio Analysis (January 17, 2015)

Yesterday was January expiration and with that I'm officially up for the year. The SPX 1820/1825 Credit Put Spread, as anticipated, expired worthless yielding max profit. This was the only position I played in the January expiration cycle. The return for January after trading costs is +1.12%. There was a point in the cycle where I should have sold the 2150/2155 Credit Call spread, but I was excessively patient waiting for the 2160 level to reach 10 deltas, which never happened. Had I sold the 2150/2155 Credit Call spread we would have been talking about a 2% or 3% growth for the month instead of 1.12%. Anyways, the S&P500 is down 1.9% for the year which means the vast majority of investors in the universe is negative, so I'm fine with my small out performance.

Friday, January 16, 2015

ETF Rotation Systems to beat the Market - SPY + EFA + IEF + GLD + ICF

Welcome to the fourth chapter of the ETF Rotation Systems to beat the Market series, where we explore different ETF Rotation portfolios and their potential to outperform the markets and do it with less volatility and smaller draw-downs. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities
- ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM

In the previous chapter we started to diversify the portfolio by adding other asset classes into the mix. The American Equities + TLT + GLD + IYR + EEM portfolio delivered some very interesting results in terms of both performance and draw-downs for 12 years of back test. With such encouraging results we inevitable start to wonder, how far can this go?

Tuesday, January 13, 2015

ETF Rotation Systems to beat the Market - American Equities + TLT + GLD + IYR + EEM

Welcome to the third chapter of the ETF Rotation Systems to beat the Market series, where we explore different ETF Rotation portfolios and their potential to outperform the markets and do it with less volatility and smaller draw-downs. If you haven't done so, you may want to read the previous chapters:

- ETF Rotation Systems to beat the Market - American Equities
- ETF Rotation Systems to beat the Market - Global Equities

So far, we've only discussed systems whose instruments belong to one single asset category: Equities. The Global Equities rotation system delivered a solid +17.2% Compound Annual Growth Rate for over a decade. But it was still pretty volatile (17.6% volatility) and its worst draw-down at -22.2% would have had many investors screaming for the exit. That's what happens with equities: the asset class that over time delivers the best returns is also the most volatile one. Although the yearly return of the portfolio was solid, we need to address the volatility on that equity curve and also that worst draw-down value. We'll address that by exploring the benefits of diversifying the portfolio with other components such as Bonds, Real Estate and Precious Metals.