by Jeff on September 7, 2010
I’m not going to let one bad week take me out of a winning strategy. As I write this, /ES (SPX futures) is down 5 or so and SPY could open around 109.8. Early evaluation shows (and this can change quite a bit after the open even if price is flat) a 113/115 Bear Call to be within the parameters of the methodology (0.20 credit). No, there is no PPS reversal, but there is solid resistance at 113.2 and only 4 days (or less – just the length of the white line) to hold. I’ll make the decision at 10am. See the chart below. You can bet this is going into my trade journal!
◄ Jeff ►
by Jeff on September 4, 2010
Since I added (quietly) the Trading Pro System link (formerly Trading as a Business) on my blog, I have been re-reviewing (for the 4th time) the videos from Module 00 through Module 11. What I found is that I have been deviating from one very basic concept of trading: keeping a Trade Journal for each trade. I realize that I have been shooting from the hip the last month or so and I managed to shoot myself in the foot – several times. Yeah, I record it all in a spread sheet, but nothing can replace hand-written notes.
I can always rationalize and find some uncontrollable factor to blame for this, but I must admit that it is my own lack of discipline that is to blame. So I dug out my old Trade Journal, spruced it up, and I will now faithfully fill it out for every trade and note the status each day. If you like, you can view it here and use it yourself. Note: There is a wide left margin to allow for punching holes for use in a lose-leaf binder.
August
August was a OK month. I managed to make up for most of the loss in July and came in at a positive $1,749 for a overall 3.36% gain (YTD 33.56%) – better than the S&P benchmark of -4.78%. Even with the poor S&P performance, my Conservative Account eked out a modest 1.37% gain and is almost flat for the year (S&P is down -5.9%).
But that’s meaningless compared to what happened this week. I was short a lot of delta on Wednesday when the market reversed, and I took it on the chin. Thinking that I had the Weeklys nailed, I increased my risk by boosting my lots to 15. And then, like a real idiot, I effectively doubled down by doing 10 lots on an IWM weekly Bear Call. SLAM! $2,470 in the hole and it may not be over yet.
Remember CME? I did the adjustment on Friday by rolling up the Put side and holding on the Call side. I need the market (now looking over-bought) to cool down and pull back 2% or so. This is a short expiration month – as we all know (a short always follows a long expiration period).
Eli Lilly (LLY)
Remember, I rolled this CC up to a SEP 37 last month and went negative on my credit for this position. A week later the price was below 35 and dropping. Tuesday I plan to buy back that Call (it’s now worth 4¢) and possibly sell and OCT 35 to get me back into the plus column by a hundred bucks or so and bring my cost basis to about $34.50.
Lesson? Think twice about rolling up. I could have stayed at 35, but there wasn’t enough extrinsic (time) in the SEP 35′s at that time. A possible option was to roll out one more month to OCT or later. Protective Put? Naw, I’m not a Collar kind of guy.
That’s it for now. We have off until Tuesday, unless you are a Futures or Forex trader. Enjoy the long weekend.
◄ Jeff ►
