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Thursday, October 29, 2015

The Crossroad

 
I started writing on this site more than five years ago, back when us humans were more innocent and believed in trading gurus that promised the moon without revealing long term, honest and transparent track records.

Wednesday, October 28, 2015

December Iron Condor adjustment

Today I adjusted the unbalanced SPX 1790/1795/2135/2140 December Iron Condor as the market keeps defying gravity. If you click on the link you can see had originally received $220 for this unbalanced Iron Condor (adjusted to the model portfolio size).

Tuesday, October 27, 2015

The Trader's Wife

I may become part trader + part sexual counselor after all. It may be my final mission in life.
Hank is having marital problems:

Saturday, October 24, 2015

Weekend Portfolio Analysis (October 24, 2015)

If the first half of the year was a paradise for out of the money options sellers, this second half has proven to be a real nightmare.

Friday, October 23, 2015

Fighting a monstrous rally

More than losing money trading, I hate having to write an article with three hundred different trades. That's just confusing and messes up everybody. It discourages reading this site.

I like to keep things simple and very easy to understand because, in the end, my trades are not the center of the universe for you to be dedicating even an hour to them. It is enough of an honor that you spend some of your time coming to this site.

Thursday, October 22, 2015

Closed December RUT Credit Call Spread

I closed the RUT 1235/1240 Credit Call spread today for 0.15 debit.
This trade had originally been entered on October 8 for 0.53 credit. The profit is 0.38 in 13 days or $76 for the model Portfolio.

December SPX unbalanced Iron Condor

Yesterday I played the first position of the December 2015 expiration cycle. This may be the last trade with 2015 options. Here's my tweet:

Tuesday, October 20, 2015

Options Trading - Monthly Digest (October 2015)

Well, the time has come to go over my Options Trading performance for the cycle that just concluded: the October 2015 monthly option expiration cycle.

The goal of these articles is to recap and determine what went wrong, what went well, mistakes that were made, things that could have been done better, etc. These articles are intended to make us better traders with constant feedback from our own recent actions and the community of like-minded readers that contribute to this site.

Saturday, October 17, 2015

Weekend Portfolio Analysis (October 17, 2015)

The SPX index opened the week at 2015.65 and closed at 2033.11 for a 0.87% gain. It was a very quiet one for me where I didn't trade and I simply saw my two remaining October positions expire for max profit. I had an early loss with October options as I had sold an Iron Condor position back in August right before the crash, the worst moment to enter a Delta Neutral and Vega negative trade. However, with the adjustment made and an additional RUT play I ended up the cycle in positive territory. All the details of my trading activity in this cycle can be found here.

The Year To Date performance for the model portfolio is now +12.43% vs -1.25% for the S&P500. Two more months to go. I'll see if I can achieve that elusive 20% growth this year. Seems pretty challenging. Only time will tell.

Wednesday, October 14, 2015

Setting up an alert based on the Delta of an Option

I usually set up my alerts based on price levels, not greek values. For example, if I have a Credit Call spread at 2100/2105 I may instruct my trading platform to send me an alert when the SPX index moves past 2070 . I want to be alerted early about the potential problem and I have grown accustomed to setting up alerts based on price levels due to its simplicity. In the LTOptions system, a simple, yet accurate technique is detailed that allows you to predict at which price of the index, my option contract will reach X probability of expiring in the money, and that is what I always use. I don't really look at deltas. Probability of Expiring In the Money is a similar statistic but they are not the same thing.

Sunday, October 11, 2015

Weekend Portfolio Analysis (October 11, 2015)

Hello fellow traders,

Today I'm writing to you from sunny and colorful West Palm Beach, Florida on a quick weekend trip to enjoy the beautiful things in life.

(Do not click on image to enlarge, it might be dangerous for you psyche)

Friday, October 9, 2015

November 2015, RUT Credit Call Spread

Yesterday I started a new position seeing a market going up too far too soon according to my system. It's not that the market can't keep going up. With less than 40% of stocks trading below their 200 Day Average it is obvious that there is plenty of upside room in the long run, but in the shorter term, which is all I care about, the market is overly optimistic at this point and should take a pause at least.

Thursday, October 8, 2015

Reassurance

"The markets have been insane lately. Do you have strong faith that the lazy trader option selling strategies will continue to generate steady and stable reasonable 1%-4% returns a month? No intend to doubt you, just want some reassurance. Can you provide it?" - Karl

Monday, October 5, 2015

Short Put vs Buy and Hold

A while ago I discussed a simple strategy that beats most traders which consists of simply being long SPY to obtain market-like returns plus dividends. If 90 - 95% of traders lose money, then following an index with a positive return guarantees you beat a huge % of that population. If 75% to 90% of "professional" money managers fail to beat the S&P500, then you are also guaranteeing better results than most "professionals". So, overall you are being extremely lazy, keeping trading costs to a minimum, as well as tax liabilities. You are paying very little attention to the markets and still, beating the vast majority of participants while nicely growing your nest egg.

I also argued that perhaps selling out of the money Calls, in addition to holding the index, was even better but I was not sure until I saw the evidence: BXM, an index that simulates a permanent Covered Call strategy on the S&P500 and has beaten the market in almost three decades. I discussed BXM in the Covered Call vs Buy and Hold article.


Well, today I want to talk about another very simple strategy that beats most traders/investors: 
Short Puts on the index, the CBOE PutWrite Index (PUT)

Saturday, October 3, 2015

Weekend Portfolio Analysis (October 3, 2015)

Friday was a phenomenal day. The S&P moved up +3% measured from the low of the day. At that rate the index will more than double in just the next 24 trading sessions. Do you think that will happen?

So, what follows after this?
Obviously a horde of "analysts" turning bullish little by little, hoping everyone forgets they were bearish just a week ago. Same story over and over again in this joke of an industry folks. Nothing new. Respect price action, and if the entire world expects something, then do the opposite. It usually works. Be aware that it is uncomfortable as hell though. Trading well hurts.

So anyways, Mr. Market now down 5.22% for the year and legions of investors using their underwear backwards across the globe.

Thursday, October 1, 2015

The Markets and my Empty Fridge

I spent less than 10 minutes in total looking at the markets this past week. No, seriously. It is possible.

Knowing that your positions are so far out and having the piece of mind provided by correctly set up price alarms (sound, email, sms) is the recipe that allows me to detach myself from the markets and be productive in other areas of my life.