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Saturday, December 31, 2016

Weekend Portfolio Analysis (December 31, 2016)

Well, the year is over. SPX up 9.535%, and SPY (with dividends) up 11.997% (of course minus your trading commissions, minus the management fee of the ETF). What started off as the worst year ever (down 11.2% in the first 12 sessions) ended up being a good year for the markets with above historical average returns.

It is unbelievable to think that the market was up only 2.18% for the year on November the 3rd. November 3! That's like "yesterday". I was at that point handily beating it with my flamboyant +9%. But, we all saw how quickly things changed.

Options trading wise it was a mediocre year for me, but I excelled in the other areas:

Options Trading+5.17%under-performing the SPX
Forex Trading +5.77%beating the Barclay Currency Traders Index
Investing +24.52%easily crushing the TSX Index

I'll be offering more details about these numbers in a future post, but for now let's get to the meat of the Weekend Portfolio Analysis.

Thursday, December 29, 2016

A Trading Estimations exercise for the Credit Spreads trader

Toying with some thoughts in this post where the idea is to quickly estimate potential annual returns depending on the strategies and capital allocation we use, while also adding some theoretical losses along the way.

Let's say I'm trading a 100K account and that I want to deploy at least two income positions every month (max 18K per position, so 36K of capital working on each expiration cycle). Because there will be positions in two cycles at the same time, that leads to a total exposure of around 72K, which leaves room for a hypothetical 5th trade and also adjustments.

Wednesday, December 28, 2016

Introducing the Unbalanced Elephant

It all started with the Unbalanced Iron Condor. Then the Lazy Elephant was invented. Both ideas came from the need to fight the most unfavorable environment for Option Sellers: the sustained market rallies. 

Sunday, December 25, 2016

Weekend Portfolio Analysis (December 25, 2016)

Boredom is king now as evidenced by a week where the S&P started at 2,259.24 and finished at 2,263.79. We may never see significant moves in the markets again. Kidding. Of course we all know at some point in 2017 volatility will be much higher than it is now. We may have one more slow week ahead. So, find something productive to do.

Saturday, December 24, 2016

Merry Christmas


I'm feeling particularly festive today.

It's been a loooong year.
Every visit you made throughout 2016, at the very least created some Adds impressions on this website, providing me with valuable pennies in the process. So, thank you for your support.

Feliz Navidad! Merry Christmas!
And if you are not the religious type, well, simply Happy Holidays!

May you all have a great one.
LT

Thursday, December 22, 2016

February 2017 RUT Unbalanced Iron Condor

Today I initiated a February 2017 Unbalanced Iron Condor in RUT:

Tuesday, December 20, 2016

First World Problems


I closed my last position of the year today. (at a mitigated loss) Although I applied your strategies, I still got mauled in the post-election rally. Total year's loss is a rather steep drawdown. I'm not saying that any of this is due to your strategy. I just think that 2016 was a terrible year for a newbie to begin trading options; a call spread trader had little chance this year, with several furious rallies taking place. I'm going to have to cease option trading indefinitely, because I can't risk further losses. If anything, I will wait until the present rally is over, and then buy some deep ITM puts in SPY that expire Dec 2018. That would be a low-maintenance, high-probability trade that would give me 2 years to eek out some gains. Even that seems to be risky with the present optimistic sentiment though; the market seems to be unbreakable, even by the things that "should" break it. (e.g. Brexit) I have a feeling that the market is in a bubble, but we will see with time.
- Mr. Deen


Monday, December 19, 2016

Options Trading reflections (2016 Edition)

As traders it is our duty to constantly revise our mechanics. I learn so much from this exercise every year and it for sure shapes my trading. That's how, for example, the Unbalanced Iron Condor idea was born from this article in November of 2014.

Of course, you always need to be aware that not because a particular strategy failed during a given year, it necessarily needs a re-design, nor do we need to make the radical "stop using" decision. The strategy that didn't work on a given year, may be your savior the next year. So, careful consideration is necessary before making final decisions. But with that said, there are always aspects of your track record that show you so much about yourself. Not to mention items that quickly stand out, screaming for a slight tweak.

Sunday, December 18, 2016

Weekend Portfolio Analysis (December 18, 2016)

Folks, sometimes software development sucks. The last quarter of the year in my case has been that to me. What a brutal quarter. I have stopped tweeting. I've been losing my macho stamina with all the stress. I have been forced to reduce the frequency of the posts on this beloved site.  But, the sky is clearing up. Soon, it will be like the old days, where we make fun of each other and use sexist analogies applied to this questionable life choice that is called trading.

Sunday, December 11, 2016

Weekend Portfolio Analysis (December 11, 2016)

These are the tough ones to write. Right after you have swallowed some losses. Even though they are an inevitable part of any trading system, they never get to make you happy. But bravery is measured by how many times you don't hide under a rock, and this year folks, I haven't hidden myself once. Not a single weekend. I'm not ready to break that streak.

Saturday, December 3, 2016

Weekend Portfolio Analysis (December 3, 2016)

On September 21st, I wrote the following as part of my article Warned:

"...It means that, in a Trump-win scenario, even when he is seen as the bad choice for the financial markets, there still can be a rally simply because uncertainty is removed. We don't have a crystal ball, and it is precisely for this reason that the commonly accepted notion that markets will correct if Trump wins, should not pollute our bias" 

Later on, I also mentioned that:

"...The defeat of the 'market friendly' candidate can still be followed by a rally. Just as it has happened in the past"

(You can read the entire piece here).

Thursday, December 1, 2016

January 2017 RUT Unbalanced Iron Condor

Today I initiated a January 2017 Unbalanced Iron Condor in RUT: