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Wednesday, October 5, 2016

Options Trading Monthly Digest (September 2016)

Well, the time has come once again to go over the Options Trading performance for the most recent month: September 2016.

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.

Although the main focus is the long term viability of our strategies and not the month to month seesaws, hopefully these monthly updates will provide readers with confidence and serve as an authentic guide of what can be achieved with a realistic and sustainable approach to the business of Selling Options.

It's important to realize that we don't need to double our accounts every year, which entails unsustainable risks. With a simple 2% monthly return, money grows at a rate of +26.82% per year. Start trading with $10,000 and obtain those returns annually while investing 5,000 additional dollars out of your own pocket every year and you get close to the 1-million-dollar mark in 15 years. And you don't even need to get that far to make it worth it. Relatively small portfolios can consistently generate $400, $500, $600 a month, a meaningful help in the budget of the average family. Whether you want to trade for a living or only as a side activity for supplemental income, you are only truly limited by your own will. How much are you willing to dedicate to studying and training hard? That's all there is to it.

And while there is absolutely no guarantee that anyone will achieve any arbitrary numerical return in the future, the fact is: the power of compounding is truly remarkable and can do wonders even with small amounts of money.


Market Environment
 
September was pretty much a sideways market with the SPX opening the month at 2171.33 and closing it at 2168.27. The high of the month: 2187.87, the low: 2119.12. So, a rather small range between high and low, and almost identical opening and closing prices. Every time we see this, we are bound to do well, as the likelihood of getting any of our positions threatened decreases dramatically. This was precisely the case and we had the second best month of the year behind May.



The Trades

SPX - Oct. Lazy Elephant 2005/2015/206/2255/2265
The position was initiated on September the 6th. The Call side was closed just 3 days later after a sweet and gentle market decline. The Put side was taken off the table on September 22. Easy peasy. Total gain: $662, and the satisfaction of being 2 for 2 with Elephants.


SPX - Sep. Space Trip 1825/1800/1625/1600
An insurance position that was in play since May. I just let it expire as the doctor prescribed. A $160 loss.


SPX - Sep. Credit Put Spread 1980/1970
Initiated on July 27, never ran into any trouble. Successful expiration on Sep 16 and a $1,200 gain.


RUT - Oct. Iron Condor 1100/1110/1320/1330
This unbalanced IC was initiated on August 26. I got to close it on September 30 after a significant profit level had been reached 3 weeks before expiration. A nice $1,850 gain.


Solid month.
Unfortunately, the better the month, the less you learn. Tough.

Gross profits of $3,552 for the month. $3,294 after commissions.

In percentage terms: a +3.44% performance for the whole account. Subtracting commissions: +3.19%

YTD Results for 2016
Up +6.51% at the end of September, whereas the SPX closed the month up +6.08% for the year.
The US Elections now take the center of the stage. The next couple of months can turn out to be really interesting for the markets. Don't forget to read my article "Warned", about my thoughts on the elections.

Thanks for reading.
Cheers,
LT

If you are interested in a responsible and sustainable way of trading options for consistent income and a smooth equity curve, consider acquiring LTOptions, my options trading system to the last detail.




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