Wow! Thanks, @Jeff240sx! It's my pleasure -- I'm glad to know this journal is interesting, maybe even helpful, to someone out there! I know my style and system are a little "counter" to how most folks trade here...which is not to say that is a bad thing at all...just different! I like to think of my journal as an alternative, another option out there for anyone and everyone looking to try something new, or maybe just pick up a few of the hard lessons I've learned (and continue to learn, or in some instances re-learn!) along the way. Feel free to chime in anytime if you had a question on what I'm doing, or how I'm doing it, or if you just want to throw a couple of cents out. I always appreciate the conversation, for the good or for the bad -- I like to think by now I have tough skin! Thanks for stopping by, Jeff! And thanks to the 1,500ish people who have stopped by -- OK, OK, I'm sure I account for 1,400 of those hits...but still!
SNAPSHOT: Stock Symbol: RUT Type of Trade: Theta Burn-off via Bear Call Spread Trade Size: 50% of Available Risk Capital Trade's Return // RORC: 0.61 // Max @ 6.37% Annualized RORC: TBD // Max @ 70.45% TRADE DATA: BCS Leg: STO @ 1450 // BTO @ 1460 Probability OTM: 91.53% Current OTM: 5.75% Delta: 0.039 Theta: $0.03 per day Risk-Reward Formula: 33% Risk @ 47 // 50% Risk @ 25 TRADE CHART: TRADE DISCUSSION: Wasn't expecting to make another trade for 2016, but this one came into play today so I took a small bite. I am expecting a pullback in the RUT this week, followed by a Santa Rally...maybe even another run up in January a the inauguration draws near. If that's the case, I'll exit this position with whatever credit I can retain, and it'll go into my 2016 records -- otherwise, if I hold this into 2017 or until expiration, I'll carry it forward. We'll just have to see how (IF) this plays out! I entered into this trade in 2x tranches. The first went immediately at the Mid, 0.57 per spread, whereas the second took some time to trigger. The Mid jumped up to 0.68, despite little-to-no reason in the price action, so I put in an order to meet it. Nothing. It went up to 0.70 -- again, for seemingly no reason. Still nothing. So I dropped to 0.65, and got an immediate fill. Not ideal, but enough of a increase in credit to make the move -- especially given what I am seeing in the charts, which I'll dive into now. I know that you can make charts to say anything, or rather you can interpret them to say anything, so I will try to be as unbiased as possible...but ultimately, I entered the trade, so I am admittedly biased. In my first chart, I see a small bear flag forming. Yes, when looking at just the week one could say an ascending triangle as well, but if you compare this pullback to the most recent (marked by the orange arrow), you will see much different behavior. Both pullbacks were approximately 40-points each, but the last pullback recovered almost immediately, with one day of indecisiveness followed by a very strong buy candle...one which engulfed the three previous days combined. This pullback we see a failed engulfing candle followed by a red candle with much more action in the bottom half, and then today....not quite engulfing, with most of the day occurring in the bottom half. Based on this first chart, even if there is more upside coming, I do not see the same level of conviction, so Theta burn-off should still win out here. The second chart, I am looking at the Standard Error Bands, which I prefer. Here, I see 4x days of failed attempts to get above the Smoothed Linear Regression Line. I also see expanded volatility, i.e. a reversal of the trend, leading into the pullback, and now the immediate narrowing of those bands -- signaling possible continuation of that pullback, or maybe just sideways consolidation. Either way, Theta burn-off...one just at a faster rate than the other, obviously. I'd like to see the action move down to the lower band, which coincides nicely with that former resistance TL...breaking below that would be interesting, and really pick up the Theta burn-off. The third and final chart, I see two contradictory things. First, the bad news, the Linear Regression Curve seems to be holding support. Friday the RUT clearly failed to break above the curve, but today it did, and it held for that matter. Second, the good news, I see a divergence between the price (rising) over the past four trading sessions, while the MACD Histogram is accelerating to the downside. Again, this differs from the most recent pullback in that we didn't see that acceleration to the downside. Additionally, looking back to the pullback that occured immediately prior to the pivot higher that started it all (early Nov 2016), we see green candles coinciding with a reversal of the MACD Histogram -- but not this time. Price in still nudging higher, but the MACD Histogram is accelerating, albeit slightly, to the downside...divergence? I am going to be monitoring the debit-to-close carefully, and when I see an opportunity I will set up an exit order in the event the RUT does surge back to the upside. My goal is to retain at least 25% of the net credit...anything over that would be gravy. We'll see...
The last chart looks like it's a hidden bullish divergence? http://www.babypips.com/school/high-school/trading-divergences/hidden-divergence.html I like the thread. I've been putting up some spreads lately too and the explanations are very helpful. Good Luck!
Thanks for the post, @penny_wise! I'm glad to hear you're getting into spreads lately and that my ramblings are helpful! Ah yes, I can definitely see that hidden bullish divergence now! Funny, my first two charts I captured the fact the RUT wasn't putting in new highs, but then as I moved on to the third chart, I missed that connection completely! By the RUT not putting in higher highs as the MACDHistogram made lower lowers, a hidden bullish divergence it is (maybe, but I hope you're wrong!) Nice catch, thanks for pointing that out! Definitely weren't wrong yesterday...I was hoping for more of an engulfing bear candle today, but didn't quite get it. Guess we'll see...
TRADE CLOSED Symbol: RUT Type of Trade: Theta Burn-off via Bear Call Spread Trade Size: 50% of Monthly Risk Capital Trade's RORC: + 2.93% Annualized RORC: + 97.21% SUMMARY: The SNAPSHOT for this trade can be found above @ Post #22. I definitely did not expect to squeeze in one more trade for 2016, but here I am! I'll write more on this next point later, but this trade symbolizes an adaptation to my system I am going to work on in 2017...sort of a coincidence it played out in the closing hours of 2016... Ultimately, my analysis proved correct enough to come out profitable. I entered the trade 1x day early, but even still I think my analysis to do so was sound...I saw the RUT bumping up against a short term ceiling it had set in. Now, we see that the RUT had another day of upside to go before setting in a pivot high & establishing what is now a resistance TL. At the time of the trade, this data point wasn't available, so I'll give myself a pass. However, I will not give myself as pass for yet again jumping in too early. Yes, I learned my lesson a little bit by taking 2x tranches vs going all in...but...my threshold for the 2nd tranche, in hindsight, was not high enough. The credit shot to $1+ the next day, where my max entry was in the upper 60-cents per spread. Still a lot to learn... The price action caused more burn off than Theta, but I'll take it either way. The RUT turned downward after the next day's rise, and my spread became...and stayed...profitable from then on out. As I wrote in the Weekly market discussion thread, I had a feeling the RUT would bounce off the 20 DMA -- and it did -- which is what triggered my stop & closed the position. The bounce off the 20 DMA we saw on Dec 29th's opening bell generated enough volatility to spike the debit-to-close from 0.15 per spread up to 0.30 per spread...which is where I set my stop to retain about 50% of the trade's net credit. I told myself I would establish the stop order when this trade had 25% profitability, so the fact I was able to make out with nearly 50% is icing on the cake. I'll go more into this next point in a future thread, but this trade's initial, annualized RORC was 70%, whereas this trade ended with an annualized RORC of 97% thanks to the trade closing in 11 days vs. 33 days if it went to expiration. THE GOOD: 1. I set a trade plan, and I followed my trade plan 2. I made my decisions with as little emotions as possible 3. I'm continuing to uphold my standard for pre-trade analysis -- but there is always work that can be done here! THE BAD: 1. Patience -- I've said it before and I suspect I'll continue to say it....but patience. I went in with 2x tranches over the course of 1x day...so maybe in the future I should limit myself to JUST 1x tranche per day? I need to think about this more, because I find myself over and over breaking my capital into tranches, but then I don't hold on with enough patience to make those tranches count. Tranche #1 to Tranche #2 saw a 15(ish)% increase in credit. The next day, credit spikes to over a 70% increase...enough said. 2. I missed the hidden bull divergence, as pointed out by @penny_wise (thanks again, btw!). Had I seen it, maybe (admittedly a big maybe) I would've held my entry one more day. Or maybe (now a huge maybe!) I would have been more inclined to be patient with Tranche #2 Overall, I'm very pleased with this trade and how my system is adapting, continuing to grow!
2016 YEAR IN REVIEW TOTAL RETURN: + 19.18% MARKET SCORE CARD: RUT 2000: + 19.48% // Lost - 0.30% S&P 500: + 9.54% // Beat + 9.64% 2016 vs. 2015: Profit: $4,318.66 // - 72.34% Return: 19.18% // - 57.34% Avg Risk: $35,320.08 // - 45.16% Trades: 15 // - 81.25% Win %: 93.33% // + 16.66% Avg Profit: $308.48 // + 26.43% SUMMARY: Thank you, 2016 -- what a year you ended up being, because I'll tell ya what, at the start, I did not think things would turn out like this! I know my old HSM journal is long gone, so let me remind y'all: in my monthly roll up for Jan 2016, I posted a loss of $7,662.42 -- thanks, ecoli + CMG! Given how my system is based on credit spreads, that is quite the mountain to surmount right off the bat! But we made it, slowly but surely, as credit spread systems go. My comparison of 2016 vs. 2015 is skewed by the fact I only traded 8 months this year (vs. all 12 months in 2015)...not to say I would've been right those 4x months I missed! I guess my 2017 vs. 2016 will also be skewed, but who knows, work might get in the way again. Even had I traded those 4x months, I doubt I would've recovered from the deficits seen in Profit & Return. Those drops can mainly be explained by the equally huge reduction in Risk Capital I worked with this year -- due mainly to my home purchase earlier this year (I'd say the house was worth it though!) What I'd like to focus on is the second half of those comparisons: my # of trades fell from 80 in 2015, to only 15 this year. Had I traded those additional months, I would've made 4x more trades, but that's about it...maybe 6. Recalling my lessons learned from 2015, I really wanted to improve my tendency to over trade -- I think I've accomplished that goal! The reduction in trading allowed me to focus much more on the analytics, which I see evidence for in the improvements I made in my Win % + Avg Profit. I'm very happy with my accuracy this year -- an uber critical piece of credit spreading! I also chose better trades this year, more profitable trades. But of course, there is always room to improve... LESSONS LEARNED: 1. Don't catch knifes (or try to contain rocket ships) -- With CMG, I tried to play a credit spread below where I saw a solid floor. But when knives fall, they often punch right through the floor...which is exactly what happened. Similarly, a couple of my RUT trades this year I set up a BCS into where the RUT was heading, often times I matched my short strike with a resistance TL or a ceiling...same problem, just on a different side of the movement. The volatility knives / rockets create generate a lot of potential profits, but these instances also allow for a lot of buffer, so I need to better capitalize on that instead! 2. Small gains, over time, add up to big wins -- This year I really widened out my short strikes, putting them even further OTM than I had in 2015. Initially, I had some concerns as I watched my RORC drop to only 2-3% per month -- but those months added up, which of course I knew, but seeing is believing somethings...and here we are seeing! 3. Analyze, Re-analyze, and then analyze some more -- In 2015, I drew most of my analysis from watching the RUT as it behaved around DMAs and trend lines. This year, I added linear regression, standard error bands, fib lines, and MACD histograms to the mix - to great affect. 4. Let the market drive the Leg -- In 2015, I set up Iron Condors in 1x trade. This trend continued in the beginning of 2016, but since October, I started setting up the Leg that Mr. Market favored, i.e. if the RUT was surging, I established a BCS and waited for a pullback before dropping the BPS leg. Granted, the RUT was such a beast these past 3 months I never had a great opportunity to pull the trigger on the second half of the IC, but still...the thought was there, and intention was good. Perhaps I can modify this to drop the other leg closer to expiration, to at least get something on the table -- after all, once 1x Leg of the IC is established, the other is mathematically risk-free, so to not employ it cutsreturns significantly. GOALS: 1. Retain credit -- This is one thing I did not get better at from 2015 to 2016. All too often, a credit spread would move the direction I needed it to, I would be at a 70% or better retention of credit, and the RUT would turn. Fortunately, I never ended up with a loss, but I could have -- this past Dec19 options were a perfect example. What I want to do more of in 2017 is exactly what I did in my very last trade of the year...a spread goes my way, I establish a contingency order to trigger a stop, and see what happens. This might result in me making multiple trades on the same spread in a month, i.e. the RUT goes the way I want, I close it as it turns around, and then I re-enter the same spread when I think the RUT is going to head back the way I thought it would originally. I'm excited about this development, I think it'll make my system much more dynamic...but I know myself...I have to be sure this is not my way of getting back into over trading...it's like an illness! 2. Have patience -- I've definitely gotten better...in the past year I'd typically jump all in vs. using tranches to maximize gains (or at least try to)..but there is still work to be done here. Maybe I should start with an artificial limitation, i.e. only 1x tranche per day...and adjust from there. Still working on this, thinking it through, but even an artificial limitation is worth a try until I can develop something slightly more evidence-based. 3. Add Market Profile to my analytic toolbox -- I recall putting this in my Goals section from 2015 -- yet here I am again. I started the year off scouring the old HSM site for information, but I don't recall finding much. My main problem is I cannot find a product which shows Market Profile...does anyone know one? I know ToS has something similar, but it doesn't show the level of detail needed for true Market Profile Analysis...at least I cant figure out how to get it to...anyone? Again, thank you 2016 -- and thank y'all here at SA who have chimed in throughout the year! Good luck to everyone, let's continue learning together! I'm excited for what 2017 holds for us, so we'll see...
New Year, New Widgets! I don't consider myself uber tech savvy or a big social media personality, but I signed up over @ StockTwits tonight! I've heard folks here talk about it, and I've wandered over there a couple times myself...looks pretty cool, so I thought I'd give it a go! As most know (or quickly learn!), limiting myself to 140 characters is nearly impossible, so this should be interesting...
SNAPSHOT: Stock Symbol: RUT Type of Trade: Phased Iron Condor Trade Size: 1x Tranche Trade's Return // RORC: 0.36 // 3.75% Annualized RORC: 67% TRADE DATA: BCS Leg: STO @ 1470 // BTO @ 1480 -- Opened on Dec 19th BPS Leg: STO @ 1310 // BTO @ 1300 -- Opened on Jan 13th Probability OTM: 98.13% (Combined) Current OTM: 5.25% // 7.14% Delta: 0.02 Theta: $0.02 per day Risk-Reward Formula: 33% Risk @ 81 // 50% Risk @ 73 TRADE CHART: TRADE DISCUSSION: Hindsight is always 20/20, I know, so I'm trying not to kick myself too hard right now. Bottom line, with how the RUT reacted following Trump's election, I got a little trigger shy when it came to my strategy. Seeing the chop we've been in for the past month, I should've done exactly what I said I was going to do -- set up credit spread with stops to retain credit & let them play out. I did that once, and have since been sitting on my hands...and my capital. That isn't entirely fair -- a few times I did put in a BCS or a BPS looking for some kind of continuation the next, but I never got it, so my orders were never filled. This trade is lame -- I really don't like it -- but it was either this or nothing. As mentioned above, I entered into the BCS-leg way back in Dec. Since, I've been waiting for a confirmed move to the downside, which obviously would stir up some volatility and allow me to put in the BPS-leg. Never happened -- so in a last ditch effort, I opened up the BPS yesterday. It wasn't worth doing any more than 1x tranch, which matched my BCS-leg. I could of, should of, been adding to my BCS with each of those pops -- especially the 8 sessions ago when the RUT busted the RTL -- but I didn't, so here we are. Since I haven't done anything with the majority of my capital thus far, I'm holding on to about 4x tranches as my "reserve," in the event the Inauguration or some other event this week decides to wake the RUT up. I should be able to roll whichever spread is in trouble up a few strikes in order to get away with it. Clearly, I still have some things to work out as I evolve my system into something a little more nibble than it was in 2015. I'm not entirely sure why I didn't pull the trigger with each one of those pops amidst the chop, other than the aforementioned concern post-election. Maybe that really was all it was...jitters. Either way, 80% of my capital sat on the sidelines this month, a month which ended up being near picture perfect for how I trade. Like I said, hindsight is always 20/20. We'll see...
SNAPSHOT: Stock Symbol: SPX Type of Trade: Monthly Credit Spread -- Bull Put Spread Trade Size: 25% of Available Risk Capital Trade's Return // RORC: 0.35 // Max @ 3.5% Monthly / Annualized RORC: 42% // 44% TRADE DATA: Based on Time of Trade on Jan 19, 2017 BPS Leg: STO @ 2110 // BTO @ 2100 Probability OTM: 91.80% Current OTM: 7.28% Delta: 0.07 Theta: $0.01 per day Risk-Reward Formula: 33% Risk @ 21 // 50% Risk @ -18 TRADE CHART: TRADE DISCUSSION: Switched over to the SPX for 1x tranche (about 25% of my available risk capital) of my monthly trade on the Feb17 options. I had a couple orders in on the RUT, but couldn't get anything filled -- at one point my order was 7-cents UNDER the mid...highly unusual to see that lack of liquidity this far out & that far under the mid. It's not like volume wasn't there...50+ contracts trading vs. my 15-contract tranche. Weird...but I digress. Really like the set up of this credit spread. Data-wise, the RORC / ARORC is right where I want to be, as are the Prob OTM & Delta. Wish I could've gotten a little further OTM, with a little more Theta, but at leas the Theta will increase with each day the SPX chops. Interestingly, despite the numbers, my 50% Risk-Reward formula is showing a NEGATIVE score...indicative of the RORC not being 48%, whereas the Prob OTM is right on the money around 90%. I know it's sort of silly, but the positive/negative result of that formula does help keep me honest in terms of not letting me chance totally insane bad bets. Works for me, anyway. To the chart, working my orange arrows left-to-right, I am seeing ample support -- and in my opinion there needs to be given how uncertain we are market-wise & how long the SPX has droned on without ANY 1% moves. I think that pre-election pivot, and the following huge green candle, will provide a lush-area to cushion the SPX if she turns south. That zone corresponds nicely with the 50 DMA + where we see some slight seller exhaustion closing out 2016. The iron support, however and IMHO, comes at the 200 DMA + support TL -- which is drawn off the Feb 2016 pivot low that kicked off this latest run skyward. I definitely see a pivot being put in here if the SPX does head in that direction prior to Feb 17th -- if nothing else enough for some Theta burn, maybe to roll the spread, or maybe to make a second play on that move to re-coup whatever losses I'd incur...soften the blow if you will. Conversely, if we see a run up @ ATHs, I'll be quick to set in a contingency order to retain NC -- similar to what I did on my Jan20 contracts on the RUT. Anyway, this is Trade #1 I'm hoping to make on the Feb17 contracts. Ideally, I'll add a BCS-leg to this position, and potentially add more contracts on the BPS-leg as well depending on what I'm seeing. Or, if I can get away with it, I'll open BPS under this one. We'll just have to wait and see... EDIT: Oh, forgot to mention! I posted this trade near-real time on my StockTwits for anyone interested. Never did that before, kinda cool! Posted the trade & then followed up here with my usual detailed write-up, and another "abridged" version via ST.
MONTHLY OPTIONS ROLL UP JANUARY 2017: + 3.75% RORC YTD 2017: + 3.75% TRADE LIST: RUT ~~ Phased Iron Condor ~~ + 3.75% (Historical IC RORC @ 5.92%) MARKET SCORE CARD: RUT 2000: - 0.39% // Beating + 4.14% S&P 500: + 1.45% // Beating + 2.30% SUMMARY: For starters -- D'OH!!!!! I saved this as a Draft...thinking it would carry over to today / next time I logged in. NOPE! Works out in y'alls favor, you're getting the short version of what it typically my long winded rambling self...but damn, why did it do that?! Back @ HSM, drafts would carry over from log in to log in...hmph...bummer! But like I said, probably GOOD NEWS to you Good start to 2017 -- but oh aren't numbers misleading? What the above doesn't reveal is that only 20% - 25% of my available risk capital made it onto the field this month. Ugh! So while yes, 3.75% is great, when compared against my average risk capital, it's more like 1.09% - when compared against the risk capital I actually had available this month, it drops even further to roughly 0.80% -- not quite the banner month, huh? As always, I am thankful for coming out on top, obviously, ANY winning month is better than a downer. But as I look to Feb 2017, I need to get more creative with HOW I am trading. Yes, as mentioned in Post #28 above, I was trigger shy this month due to the Inauguration...now that that unknown is behind me, I need to get back after it. IMPROVES FOR NEXT MONTH: 1. Increase Risk Capital @ Play via Weeklies -- What difference does it make if I put on a credit spread on the Monthly or the Weeklies? Probably nothing...20 - 30 days to expiration, theta burn off, Prob OTM...all of the factors I use in my system are the same whether that expiration day is the month's or one of that month's weeks. So why am I not trading the Weeklies? Volume, for one, I think? I'm fairly certain the RUT's Weeklies do not have the liquidity I'd need as far OTM as I play. SPX, maybe a different story. This coming week will be interesting, as I look at a Weekly trade for the first time, the Feb24s. What I need to ensure here is that A) I am not using this as an excuse to get back in the BAD OLD HABIT of over trading; B) The Weekly set ups are on par with what I'm doing on my traditional Monthly plays. If I can do B, then I think A takes care of itself...because my over-trading-self is/was prone to chasing BAD trades. 2. It's OK to Take LESS Credit (If the Math is Still Good!) -- In addition to being a recovering over-trader, I am also a struggling dog piler...meaning, I find a trade and then instead of phasing in over a series of buys, I gobble up all the contracts I can in one swoop. Typically, since my timing often sucks, this results in me taking, for example 50-cents NC when the next day, or two, or three the NC goes up to 75-cents, a dollar, whatever. BUT every once and a while, like this month, I actually do time it just right. I jumped in here @ 40-cents and it never looked back...each day down it went. OK...would it have been so bad to take 35-cents? 30-cents? Looking at the math, the trade still checked out. Sure, I wouldn't have returned 3.75% -- probably would've come out @ 3%. BUT that 3% (in real dollars in my account) would've been greater than what I'm left with now @ 3.75% -- because I would've had more risk capital at work. So the 1x tranche a day is a two-way street. If I get the trade right, and the RUT moves the way I think it's going to, I need to be OK with taking a little less credit, in order to get more risk capital at work. Again...it the math is still good...if the trade still checks out. Funny how obvious this all seems to me as I type it out Hope everyone is having a great start to 2017 -- and a great January! I'm turning my eyes to the Feb 17 & 24 contracts. We'll see...
SNAPSHOT: Reference Post #29 for the BPS-leg Stock Symbol: SPX Type of Trade: Monthly Credit Spread -- Bear Call Spread to complete Phased Iron Condor Trade Size: 20% of Available Risk Capital Trade's Return // RORC: 0.20 (BCS-leg) // 0.52 (IC Total) // Max @ 5.42% Monthly / Annualized RORC: 65% // 73% TRADE DATA: BCS Leg: STO @ 2360 // BTO @ 2370 Probability OTM: 91% (Combined) Current OTM: 3.5% (BCS-leg) Delta: 0.05 (Combined) Theta: $0.03 per day Risk-Reward Formula: 33% Risk @ 44 // 50% Risk @ 17 TRADE DISCUSSION: Admittedly concerned we might see a fade following today's pop, I wanted to take advantage of the unusual movement in the SPX & set in the BCS-leg to complete a Phased Iron Condor for this month. While I am far from thrilled with the Current OTM of my BCS-leg, the math checks out with the Prob OTM, Delta, and Risk Formula. I probably could've gone 10 more points further OTM, to be honest, looking at the Monthly / Annualized RORC being well above my target. Somewhat easing my concerns is that fact that this trade + my RUT BCS put me down for 50% of my available risk this month -- so I do have capital leftover which I can use to roll the BCS out further if need be. It was interesting, after hitting a new ATH, that we pulled back to below the previous ATH for the close. I am looking for that to mean a continuation of this chop for the coming week(s).
SNAPSHOT: Stock Symbol: RUT Type of Trade: Credit Spread -- Bear Call Spread Trade Size: 25% of Available Risk Capital (50% Total for Feb) Trade's Return // RORC: 0.33 // Max @ 3.22% Monthly / Annualized RORC: 38.64% // 46.99% TRADE DATA: Based on Time of Trade on Jan 24, 2017 BPS Leg: STO @ 1450 // BTO @ 1460 Probability OTM: 95% Current OTM: 5.9% Delta: 0.05 Theta: $0.01 per day Risk-Reward Formula: 33% Risk @ 48 // 50% Risk @ 22 TRADE CHART: TRADE DISCUSSION: Write up is a little late -- I announced this trade near real time over on StockTwits -- couldn't get to the write up until today! Pretty standard set up -- didn't think I'd ever get it on the BCS-side given how much the RUT has chopped & shown more weakness that the SPX, to be honest. But Tuesday's little surge afforded me the opportunity so I took it. Data point-wise, the math checked out & so I went with it...I actually snagged a little more NC than was originally showing (0.33 vs 0.30) when I first put the trade on -- so I'm happy I did not lower my order & I showed a little patience on the intraday. This is not as OTM as ideally I'd like, but it's actually further OTM that I thought I'd be able to get (by comparison, my SPX BCS was only @ 3.5%). Given the closeness of both this & my SPX BCS, I did not add to the positions on Wednesday's follow through to the upside. That sucked, to watch net credits go up 150% -- but I need to stay disciplined. I can't beat myself up too much for jumping on the chance, because given what we've seen, I truly thought both the SPX & RUT would pull back the follow day into their chop. I'm pretty happy that I only went with 1x tranche on each -- not only because I'm sticking to my strategy, but also because I now have some degree of flexibility if either of these start to get away from me. Since I'm on the subject -- this puts me at about 50% of my available risk for the month. I'm comfortable here and plan to see what happens this week before I commit any additional risk. Basically, I don't want to add a new position (i.e. accept more risk for the month) only to see the RUT or SPX move against my short strike(s). If we see chop-chop-chop this week, then I'll add to my existing positions, understanding I won't get as much NC as the original plays, but better than ended the month like I did in January with a lot left off the table. As the chart mentions, I am flooking for a BPS-leg to this trade -- I can put this in without any additional risk (mathematically speaking), so I will look to do that this week if the RUT continues to drift toward the bottom of that channel it appears to be in. I'd like to see the RUT @ about 1350 - 1340 before I put in that BPS-leg. Before I go, a quick summary of where the positions are at, in terms of debit-to-close (DTC) / Delta / Current OTM, so far this month. I'll probably just give this section below an update or two throughout the week if I don't add anything new: As of Jan 28, 2017: SPX BCS: 0.35 DTC / 0.07 / 2.84% -- Losing by 0.15 SPX BPS: 0.07 DTC / 0.03 / 8.04% -- Winning by 0.28 RUT BCS: 0.33 DTC / 0.04 / 5.78% -- Even @ 0.33 We'll see...
MONTHLY OPTIONS ROLL UP FEBRUARY 2017: + 4.06% RORC YTD 2017: + 7.81% TRADE LIST: SPX ~~ Phased Iron Condor ~~ + 4.48% (Historical IC RORC @ + 5.85%) RUT ~~ Bear Call Spread ~~ + 3.22% (Historical IC RORC @ - 0.85%) MARKET SCORE CARD: RUT 2000: + 2.76% // Beating + 5.05% S&P 500: + 5.74% // Beating + 2.07% SUMMARY: Posting a little later than normal this month, as I've begun using Weekly options vs. solely the Monthly expiration day. I had a Feb24 BCS on the SPX, but rolled to Mar03 after this past week's continued pop...more on that later though. For now, I'll take a look back at February, which ended up being a bit more of a nail biter than would've liked, but thankfully all ended well. My RUT trade never had any issues. I basically re-created the BCS-leg from Post #28, but had to bring the short strike slightly closer @ 1450. The full write up can be found above @ Post #32 Either way, my Current OTM at the time of the trade was nearly 6%, and while at the time I had concerns, given the sideways movement of the RUT, I felt OK with that. I never added to this position, mainly because the RUT de-coupled from the SPX for a period of time and while the SPX started headed north, the RUT did so with much less gusto & so the NC never rose to anything appealing for a 2nd or 3rd tranche. Which brings me to the SPX...the BPS-leg was a classic set up, nearly perfect on all numbers (Post #29). I set that leg in and then looked to add a BCS-leg -- mainly sine last month I had a BCS-leg in, with no BPS-leg, thus letting free risk get off easy. Needless to say, I remember being convinced I should not let that happen...under nearly any circumstances. And so I entered a BCS-leg (Post #30) on one of the SPX's first pops to the upside (i.e. the start of the SPX's breakout). I called it right from the start, "While I am far from thrilled with the Current OTM of my BCS-leg..." Yes, the rest of the math checked out, but admittedly I became lulled into a sense of complacency by how many times the SPX went to the upside, only to fade immediately. I even said that, too, "Admittedly concerned we might see a fade following today's pop, I wanted to take advantage of the unusual movement..." The "unusual movement" was the SPX starting to break out. D'Oh! Trapped in my own certainty the SPX was not setting up a Bull Flag, and lulled into complacency after seeing the SPX play the pop & fade game several times since hitting the first pivot high post-election. I bit off a Feb17 tranche + a Feb24 tranche -- trying to include those Weekly's as I discussed in my January roll-up as a means to increase my risk capital and not leave it all on the sidelines again. BUT, my mistake was opening a further out trade at the SAME LEVEL as near term trade...meaning...I opened a 2360/2370 spread for Feb17 -- and then an identical 2360/2370 trade for Feb24. Needless to say, the Feb24 spread had to be rolled, otherwise it would've closed ITM this past Friday...ouch! I never, ever, should've opened an identical spread like that -- and I might be paying the price for doing so this week. Had I been more patient, or less greedy, I would've opened the Feb24 position 1% (at least) further OTM than the Feb17 position. But, obsessed with not repeating the mistake from January, where I only played with 25% of my available money, I went ahead and made a different mistake. Go figure...replace one mistake with an entirely new one...classic. By rolling the Feb24 spread to Mar03, I managed to end February positively -- but I might have set myself up for an ugly March. Learn from my mistakes...I hope I do! We'll see...
