Saturday, April 12, 2014

My Trades for Week 4/11/14

Trades placed this week for credit.

Total Credit$4465I generally give back about 65% of this amount when taking off trades. I am not pocketing this full amout.
LegsDateBuy SellPriceAmount RecievedCredit ReceivedSpread
+APOL 17MAY14 25.0 P2014-04-09, 13:27:19-30.29$87.00P$87.00P
+NDX 25APR14 3800.0 C2014-04-11, 12:01:03-10.43$43.00C$43.00C
+NDX 09MAY14 3800.0 C2014-04-09, 12:33:57-43.5$1,400.00C$440.00Bear Call Spread
+NDX 09MAY14 3825.0 C2014-04-09, 12:33:5742.4-$960.00C$0.00Bear Call Spread Leg2
+NDX 23MAY14 3150.0 P2014-04-11, 09:40:43118.47-$1,847.00P$805.00Bull Put Spread
+NDX 23MAY14 3225.0 P2014-04-11, 09:40:43-126.52$2,652.00P$0.00Bull Put Spread Leg2
+NDX 21JUN14 3775.0 C2014-04-08, 11:56:29-315.75$4,725.00C$1,020.00Bear Call Spread
+NDX 21JUN14 3800.0 C2014-04-08, 11:56:29312.35-$3,705.00C$0.00Bear Call Spread Leg2
+RUT 23MAY14 1180.0 C2014-04-09, 15:59:38-118.22$1,822.00C$760.00Bear Call Spread
+RUT 23MAY14 1200.0 C2014-04-09, 15:59:38110.62-$1,062.00C$0.00Bear Call Spread Leg2
+RUT 23MAY14 1010.0 P2014-04-10, 12:04:2035.14-$1,542.00P$240.00Bull Put Spread
+RUT 23MAY14 1020.0 P2014-04-10, 12:04:20-35.94$1,782.00P$0.00Bull Put Spread Leg2
+RUT 30MAY14 1030.0 P2014-04-10, 12:23:1718.77-$877.00P$635.00Bull Put Spread
+RUT 30MAY14 1070.0 P2014-04-10, 12:23:17-115.12$1,512.00P$0.00Bull Put Spread Leg2
+SPX 19APR14 1950.0 C2014-04-07, 09:30:2810.15-$15.00C-$5.00Bear Call Spread
+SPX 19APR14 1960.0 C2014-04-07, 09:30:28-10.1$10.00C$0.00Bear Call Spread Leg2
+SPX 17MAY14 1895.0 C2014-04-09, 14:30:17-113.35$1,335.00C$365.00Bear Call Spread
+SPX 17MAY14 1905.0 C2014-04-09, 14:30:1719.7-$970.00C$0.00Bear Call Spread Leg2
+SPX 17MAY14 1925.0 C2014-04-09, 14:53:36-14.58$458.00C$290.00Bear Call Spread
+SPX 17MAY14 1950.0 C2014-04-09, 14:53:3611.68-$168.00C$0.00Bear Call Spread Leg2
+SPX 23MAY14 1900.0 C2014-04-11, 15:10:12-14.5$450.00C$450.00C
+SPX 23MAY14 1905.0 C2014-04-11, 15:20:20-23.8$760.00C$760.00C
+SPX 23MAY14 1945.0 C2014-04-10, 13:17:5151.6-$800.00C-$150.00Bear Call Spread
+SPX 23MAY14 1950.0 C2014-04-10, 13:17:51-51.3$650.00C$0.00Bear Call Spread Leg2
+SPX 30MAY14 1705.0 P2014-04-08, 10:28:45310.1-$3,030.00P$315.00Bull Put Spread
+SPX 30MAY14 1715.0 P2014-04-08, 10:28:45-311.15$3,345.00P$0.00Bull Put Spread Leg2
+SPX 06JUN14 1750.0 P2014-04-10, 14:30:18115.9-$1,590.00P-$1,590.00P

Thursday, April 10, 2014

My Strategy Summary

Trade SPX, RUT, NDX

Strategy of Selling Credit Options Spreads far out of the money using some technical analysis.
Summary
  • A strategy to profit on Theta (time decay) and volatility
  • Rules may be changed depending on market trend and volatility
  • Sell calls or puts or Spreads independently
      • Sell more puts depending on market trends (I use a weekly chart to determine overall market trend)
      • In 2013, maxed out on the put side to sell twice as many puts as calls
  • Sell call spreads with greater risks as market does not crash up
  • The variable ratio of put to call contract sizes allows the strategy to adapt to market trend
      • In 2013, I should have stayed light on call side and to sell calls with shorter period of time (in late Nov I was heavy on Call side and suffered some pain.  
Trading Vehicles
  • Traded SPX RUT and NDX options mainly, sometimes I sell puts in stocks
  • I trade QQQ, IWM, and SPY and do not worry about taxes.
  • I like trading the SPX best - No problems with SPX option liquidity
  • I go to the RUT and NDX when I  need other positions to put on. Long (or Short) deltas are are essentially the same in all three when I try to “balance the portfolio”.  
  • I sell puts in stocks
Sell far out-of-the-money, high probability options depending on market volatility
  • In 2011 & 2012 when volatility was higher (VIX >= 15), sold puts with 2 SD (5% ITM Probability)
  • In 2013 when volatility was low (VIX around 11 to 13), sold puts with 1 SD (15% ITM Probability) to 1.5 SD (8% ITM Probability)
  • Sell calls with 10% ITM probability

Option Cycle Selection
  • 30 days to expiration for calls in general for 2013
  • 56 days to expiration for calls if price can be projected and good premium can be obtained from far above the projected price
  • Use trend analysis including 2 SD Bollinger bands, resistance, and FIB retracements and Fractals
  • 56 days to expiration for puts spreads



Trade Entries Triggers
  • Sell calls spreads for credit when market rises
  • Sell puts spreads for credit when market falls
  • Trades are entered in multiple days around predetermined option expiration days
  • On a Bollinger Band Touch or a Fractal Breakout (reversal soon) when the market is still rising - I sell call spreads and try to “load up” allowing my portfolio to go un-balanced
  • On a Bollinger Band Touch or a Fractal Breakout (reversal soon) when the market is still falling - I sell Put spreads and try to “load up” allowing my portfolio to go un-balanced
  • Because I am using Defined Risk Trades - I do not worry about my portfolio going un-balanced
Trade Exits
  • Actively take profits and risks off the table
  • For options (puts) starting around 56 DTE
    • Close positions if profits reach 50% within 1st 16 days
    • Leave positions on after the 40 DTE neighborhood if they are not closed yet so that they can expire worthless
  • For options (calls) starting around 30 days
    • Close positions if profits reach 20% to 30% or even better 50% in a few days
    • If price continues to rise with 1 week left for call options, then take the calls away and move them to next week while keeping puts on
Trade Adjustments
  • Close out losing trades that have a DTE of less than 14
  • Try to make up the loss either through selling more put or call contracts

Money and Risk Management
  • Use Defined Risk Trades
  • Do not over-manage positions

Psychology and Mindset
  • Control the emotions of both fear and greed
  • Trust statistics and high probability (Use 2 SD for 95% odds of success)
  • Use structured method and manage positions well
  • Require a high level of confidence and repeatable successes for a long time.

Team Members

  • None

Made several Credit spreads on 4/8/14 in $SPX $NDX $RUT

Total Credit$1994I generally give back about 65% of this amount when taking off trades. I am not pocketing this full amout.
LegsDateBuy SellPriceAmount RecievedCredit ReceivedSpread
+SPY 17MAY14 193.0 C2014-04-09, 16:00:05-20.48$96.00C$52.00Bear Call Spread
+SPY 17MAY14 195.0 C2014-04-09, 16:00:0520.22-$44.00C$0.00Bear Call Spread Leg2
+APOL 17MAY14 25.0 P2014-04-09, 13:27:19-30.29$87.00P$87.00P
+NDX 09MAY14 3800.0 C2014-04-09, 12:33:57-43.5$1,400.00C$440.00Bear Call Spread
+NDX 09MAY14 3825.0 C2014-04-09, 12:33:5742.4-$960.00C$0.00Bear Call Spread Leg2
+RUT 23MAY14 1180.0 C2014-04-09, 15:59:38-118.22$1,822.00C$760.00Bear Call Spread
+RUT 23MAY14 1200.0 C2014-04-09, 15:59:38110.62-$1,062.00C$0.00Bear Call Spread Leg2
+SPX 17MAY14 1895.0 C2014-04-09, 14:30:17-113.35$1,335.00C$365.00Bear Call Spread
+SPX 17MAY14 1905.0 C2014-04-09, 14:30:1719.7-$970.00C$0.00Bear Call Spread Leg2
+SPX 17MAY14 1925.0 C2014-04-09, 14:53:36-14.58$458.00$290.00Bear Call Spread
+SPX 17MAY14 1950.0 C2014-04-09, 14:53:3611.68-$168.00$0.00Bear Call Spread Leg2