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Sunday, February 25, 2018

Weekend Portfolio Analysis (February 25, 2018)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2018-02-25).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the 2018 Track Record page


Last Weekend Analysis now publicly available:
Weekend Portfolio Analysis (February 17, 2018) 
Recent Trading Activity

- Closed RUT March 1320/1330/1680/1690 Unbalanced Iron Condor on Wednesday for a $1590 profit.

- Initiated an April SPX Elephant on Wednesday. Net credit: $1608.

Wednesday, February 21, 2018

April SPX Elephant

Trade Details:

SELL 20 SPX April 2440/2450 Credit Put spreads @0.60
SELL 8  SPX April 2890/2900 Credit Call spreads @1.00
BUY  8 SPY April 290 Calls @0.49

Net Credit: $1608
Days to Expiration: 58


Saturday, February 17, 2018

Weekend Portfolio Analysis (February 17, 2018)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2018-02-17).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the 2018 Track Record page


Last Weekend Analysis now publicly available:
Weekend Portfolio Analysis (February 10, 2018) 
Recent Trading Activity

- No Activity

Saturday, February 10, 2018

Weekend Portfolio Analysis (February 10, 2018)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2018-02-10).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the 2018 Track Record page


Last Weekend Analysis now publicly available:
Weekend Portfolio Analysis (February 3, 2018) 
Without a doubt, this was the worst week (Credit Spreads trading wise) since I started writing on this site seven years ago. So far in 2018, not a single Iron Condor or Elephant has worked. They have been either hurt on the Call side, or on the Put side, or both.

Despite inevitable bad streaks in the past, I was never down more than 15%. Well, this time I am. 27% to be precise. And it is important to make a pause an analyze why this happened.

- Aggressiveness on the Call side. I started the year finding myself on a couple of 2:1 Iron Condors. Thinking we were too overextended to the upside, I became aggressive using 2:1 ratios instead of the 4:1. Well, I was right that the markets had gone too far up, but not right on the timing. The 4:1's were the variation to play, and not only looking at it in retrospective. No. That was the variation to play, simply because that is the one. The one profoundly learned after years experiencing how uncomfortable an inefficient it is to defend the Call side. Playing aggressive Call sides led to taking unnecessary additional losses, which, later led me to try to make up by selling more Credit Put spreads than usual, and that causes to the second problem.

- Risk Concentration. On Monday there was a point where I was riding five different Credit Put spreads. This is sacrilegious in the original LTOptions materials, where riding three spreads on the same direction was deemed the max healthy limit. Talking about concentration. In the previous weekend analysis, I mentioned that one of two RUT Credit Put spreads needed to be closed due to similarities in the projected adjustment point. I could have done it early on at a small loss or a scratch on Monday, and not taken two losses as it eventually happened.

Not being aggressive on the Call side on the way up would have made my losses smaller. Consequently the desire to make up for them quickly (by selling more Puts) would have been smaller, leading to less risk concentration on the Put side and eventually smaller losses on that side of the spectrum too. Losses would have existed. No doubt about that, but the draw-down I'm seeing today would have been way smaller (around 10% instead of 27%).

I could mention other mistakes, like thinking that markets don't crash from all-time highs. Another confirmation that markets can do anything at any time including breaking any previous record of whatever stat you are looking at. Finally complacency. Years of relentless bullish action that lead to overconfidence on the Put side.

The original principles of the system are fine, and I'm going back to them. It is rarely the strategy who fails when it has been designed with risk calculation in mind. It is usually leverage that kills you. And this is a case of that.

It is at times like this one when most just want to throw the towel. And I get it.....
I had a conversation on the phone this week with someone who wanted to end his life due to recent losses in the market. I tried to somehow talk him out of that. This is a tough game. The market is serious stuff with real lives and destinies being affected. Anyone who says otherwise is full of it.

...For me, throwing the towel, walking away and never writing again would have been the easy way out. I won't. I never will. Even if I finish the year down 100% and end up totally ridiculed. At least, that would leave more value on one corner of the Internet. A legacy about  "what one must absolutely not do when trading Credit Spreads".


Recent Trading Activity

Monday
Closed Feb. RUT/IWM - 1455/1460 - 147 Elephant Put side $5500
Opened Feb. RUT - 1340/1335 Credit Put spread ($1400 credit)

Closed Mar. RUT - 1450/1440 Iron Condor Put side $3940
Opened Mar. RUT - 1330/1320 Credit Put spread ($1400 credit)

Closed Mar. SPX/SPY 2940/2950 - 295 Elephant Call side for gains $379
Closed Mar. SPX 2615/2625 Elephant Put side $2980  
Opened Mar. SPX 2400/2390 Credit Put spread ($1280 credit)

Opened Apr. RUT - 1330/1320 Credit Put spread ($610 credit)   

Bought 2 December SPY  295 Calls @5.28 debit
Bought 1 January 2019 SVXY, 120 Call @18.50 debit
===============================================================

Tuesday
On Tuesday morning, I basically woke up with the decision to liquidate the excessive Put side exposure, without waiting for 30 deltas or anything like that. I only left the two safest positions on.

Closed Apr RUT - 1330/1320 Credit Put spread (which had been initiated the previous day) $540

Closed Mar SPX - 2400/2390 Credit Put spread (which had been initiated the previous day) $1320

Closed Feb RUT - 1340/1335 Credit Put spread (which had been initiated the previous day) $1200

Closed Feb SPX - 2625/2620 Credit Put spread $1200
Closed Feb SPX 2520/2525 Credit Put spreads $0

Opened SPX June 2050/2025 Credit Put spread ($1320 credit)

Bought SPY - December31 Long 287 Calls  @7.24 debit 
Bought SVXY - January 2019 Long 17.5 Calls  @4.75 debit  
Bought SPY - Dec Synthethic stock (long 264 Call/Short 264 Put) same as being long 200 shares

===============================================================

Wednesday
Bought SVXY January 2017 Long 13 Calls @4.85 debit

Tuesday, February 6, 2018

June SPX Credit Put spread

Trade Details:
SELL TO OPEN 8 June SPX 2050/2025 Credit Put spreads
Credit: 1.65 ($1,320)

Trade Update (Feb 27, 2018)
 
CLOSED 8 June SPX 2050/2025 Credit Put spreads @0.40 debit

Net gain 1.25 per spread. $1000 in dollar terms for 8 spreads.


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Long Synthetic SPY Stock

Trade Details:

BUY  2 SPY 264 December31 Calls @19.65
SELL 2 SPY 264 December31 Puts  @17.86

Net: 1.79 debit ($358)
Margin consumed on entry ($13,800)

This is equivalent to being Long 200 SPY Shares but investing much less money. Of course, without the benefit of holding indefinitely and without the dividends.


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Long SVXY January 2019 Calls

Trade Details (February 5):
BOUGHT 1 January 2019, 120 Call @18.50 debit

This was at 2:51 pm
SVXY Was trading at around 86 at the time I opened this position.

Now, after hours, SVXY is trading near 15. Talk about a move.


=============================================

Trade Details (February 6):
BOUGHT 3 January 2019, 17.5 Call @4.75 debit


=============================================

Trade Details (February 7):
BOUGHT 2 January 2019, 13 Call @4.85 debit





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Long SPY December Calls

Trade Details (February 5):
BOUGHT 2 December31, 295 Call @5.28 debit


==========================================
Trade Details (February 6):
BOUGHT 2 December31, 287 Call @7.24 debit



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Monday, February 5, 2018

April RUT Credit Put spread

Trade Details:

SELL 10 April RUT April 1330 Put @9.16
BUY  10 April RUT April 1320 Put @8.55

Net Credit: 0.61  ($610)
Days to expiration: 73

Only half position due to excessive portfolio exposure.
RUT still in the 1500's. I think these are good odds.



Trade Update - Feb 6, 2018

I closed the 1330/1320 spreads for 1.15 debit.
Original credit 0.61.
Net loss: 0.54 per spread ($540)

Check out 2018 Track record


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Saturday, February 3, 2018

Weekend Portfolio Analysis (February 3, 2018)

This week's analysis has been published at LTOptions.com

Download Weekend Portfolio Analysis (2018-02-03).pdf

If the above link doesn't work for you, simply log in to LTOptions.com, navigate to the "Weekly Analysis" tab and download the document from there.

The Weekend Portfolio Analysis will be available on this site next week for historical reference.

All currently open positions can be seen on the 2018 Track Record page


Last Weekend Analysis now publicly available:
Weekend Portfolio Analysis (January 27, 2018) 
Important Note 1: New material has been added to the LTOptions's library. Elephants vs Iron Condors (Full Comparison) is an eBook that details among other things: key differences between the two strategies; pros and cons; which one performs better according to the environment; evolution of the T+0 line over time, etc. This new eBook is visible on the page that comes right after logging in: 


Important Note 2: Some modifications have recently been made to the 2018 Options Trading Plan. The changes are focused on efficiency and simplicity when defending Credit Call spreads. Log in to LTOptions.com and consult the 2018 Options Trading Plan ebook.


Recent Trading Activity

- Closed the Mar. SPX 2900/2905 Credit Call spread partially hedged with Long SPY 290 Calls
on Monday at a $1770 loss. Pretty bad timing here. Had I followed the original plan of holding until SPX 2895, well, I wouldn't have taken this loss. Psychology, psychology, psychology.

- Initiated a March SPX Unbalanced Elephant on Thursday for $1,527 credit. Also, awful timing here. Had I opened a position on Friday instead of Thursday, it would have been just Credit Put spread much lower down thanks to the oversold condition reached. Perhaps a good lesson that when we are so close to overbought, it is better to not rush an entry on Thursday and instead wait until Friday to see if the oversold condition materializes.

Thursday, February 1, 2018

March 2018 SPX Unbalanced Elephant

Trade Details:

20 SPX 2615/2625 Credit Put  spreads 0.55 Credit ($1100)
  8 SPX 2940/2950 Credit Call spreads 0.95 Credit ($760)

plus

9 SPY Long 295 Calls @0.37 (-$333)
I didn't add the Long Puts in this case

Net Credit: $1527
Days to Expiration: 43

This is for a $100,000 model portfolio.
For a $20,000 portfolio, some tweaks can be made and play 4/4/2/2 + 2 instead  ($336 credit overall)
For a $10,000 portfolio, it could be 2/2/1/1  + 1 ($168 credit overall)

How to set up sound alerts on your email box

If you follow a trading newsletter and you want to be alerted about new incoming emails as soon as they are received, you can set up sound alerts (and visual alerts too). This is a useful tool not only for following a day trading newsletter. Really you can configure it to receive alerts from a particular sender, whoever that person or business is, and whatever your reasons are that require immediacy.

The below procedure works for Gmail and you need to have the Google Chrome web browser installed in your computer.