Saturday, October 30, 2010

Facebook page

I've just created a Facebook page to build a community of people around the options trading strategies and ideas I'm using on my trading business. My goal with this page is to publish information in a more informal way, even if they're not related to the strategies I'm using, perhaps talk about charts, patterns, etc..

I also like the idea of learning from others, listening what you have to say, etc..

I hope that you can join the page, and looking forward to hearing your feedback, input, comments, etc.. Just like starting any new position in the market, we shall see where it goes..

I've added a box to the right, you can click on "Like" and it will add it to your Facebook stream so we can stay connected.

Take care!

Friday, October 29, 2010

10/29 Daily Summary

It seems that volatility is the issue for this past week, price action is not that active but due to the wide intra-day swings and the proximity of the FMOC (Tuesday), market makers are pushing the volatility higher on my short contracts, this is making the position look worse than it should. I will be looking at it in more details over the weekend to see exactly what this looks like for the contracts I have in place.

Thursday, October 28, 2010

10/28 Daily Summary

Market kept working its way up once again Today, seems like the bearish candle formation are piling up.. No matter what it does, I'll follow it and work my way into profits this month.

Wednesday, October 27, 2010

10/27 Daily Summary

No major change Today either, market keeps crawling up after bouncing back down in the morning, I guess the trade is holding my profits out by a few points by pushing it higher without a drop in volatility. This could be related to the FMOC announcement next week: market makers keeping the vols higher to drop them like a stone after the announcement... It is like a market-wide earnings report.. I'm navigating through it, let's see how it goes.

Tuesday, October 26, 2010

10/26 Daily Summary

Nothing much to say, except that volatility went up Today due to this morning's gap down.. even though we traded back up during the day, this swing kept volatility higher and this is keeping my profits out for now. The position is doing good and no major change on my game plan from Yesterday, except a few changes on PL due to the volatility spike.

Monday, October 25, 2010

10/25 Daily Summary

We went beyond my 2120 area and I added the extra long NOV call as planned, the contingent orders triggered and now the trade is back to B/E, I usually try and avoid using this long call if the market goes straight down from my entry then great, if we bounce up a bit then I get the extra long to reduce my delta exposure, that is the case this month. Game plan updated accordingly

Friday, October 22, 2010

10/22 Daily Summary

No major update or news Today, looks like the very first step towards a good month has been accomplished: go through the 1st weekend with profits, this to me seems like the very first step to a good (and profitable) month.

Thursday, October 21, 2010

10/21 Daily Summary

I entered the remainder of the position Today and the market proceed to gift me with a great volatility drop and % returns. I am super grateful for it, thank you! So grateful indeed that I spent some time cleaning up my game plan sheet, it now shows my next adjustment points and automatically calculates how many st. Deviation points I am from adjusting (based on historical vols, not implied). I hope you enjoy, cheers!

Wednesday, October 20, 2010

10/20 Daily Summary

Started the NOV trade Today, I tried filling more than one contract but was not able to do so at a decent price. As the market traded lower by end of the day. I will scale in the remaining contracts Tomorrow either early AM before my day begins or by end of day during my lunch hour. The key here is getting started, overcome that initial mixture of fear and adrenaline rush of a new position and start to get the toes wet once again.

Sunday, October 17, 2010

OCT 10 NDX Iron Butterfly - Day-by-day Review

Trade Result: +2%

Started the trade with less than optimum position, since I didn't have Internet connection at the hotel in Geneva and had very limited time to evaluate and prepare with contingent orders. When the market moved against me, I had 1 set of contingent orders missing and therefore the position went further into the red than I anticipated. By the 27th, I put together a game plan to recover, did another cut and roll and add the extra butterfly, it took a few days but the volatility finally dropped on the OCT contracts and I started seing the money early in October.

Of course, by the 5th of October I got hit with a huge whipsaw, the market stroke the down-side adjustment one day and flew up 3+ st. deviation the very next day, making me hege with a long call and put, this reduced my rate of recovery, yet by then I was already locking in profits.. By the last week we kept moving up and I ended up closing all my call contracts, locked a few bucks this month, certainly better than taking the loss as it was looking like by end of September.

9/20 Daily Summary
9/27 Daily Summary
9/27 Game Plan
9/28 Daily Summary
9/29 Daily Summary
09/30 Daily Summary
10/1 Daily Summary
10/4 Daily Summary
10/5 Daily Summary
10/6 Daily Summary
10/7 Daily Summary
10/08 Daily Summary
10/11 Daily Summary
10/12 Daily Summary
10/13 Daily Summary

Wednesday, October 13, 2010

10/13 Daily Summary

We had to move up higher Today, hadn’t we? Well, closed the last remaining call spread, with NDX trading this close I couldn’t afford to leave it on, specially not in the last few days. The put side is still there, and I might just take them off or leave them alone & let it expire. All and all, I’m very grateful for being able to pull this trade out of the whole and into profits, landed another month with profits and no major damage. As far as my 5% goal, got close, but no cigar,, I’ll have a beer (or two) instead Cheers! :)

Tuesday, October 12, 2010

10/12 Daily Summary

Still a few points shy of the 5% mark.. If we stop trading higher for just a day, or better yet, if we pull back and stay down for a couple of days I can get there.. It is down to the last final moments on the trade, so I’m being extra conservative to the up-side. I’ve closed a few spreads Today as we traded higher and am essentially at the same P/L as of Yesterday. Need to stay on top and shut it down if we keep trading higher Tomorrow, a few percentage points is better than nothing after all :)

Monday, October 11, 2010

10/11 Daily Summary

Working myself towards the 5% goal for this month, I should be reaching this goal Tomorrow, and am very grateful that I was able to stay in the trade and managed to control the position and bring about profits despite the rough start. I’m also very grateful the NDX gave me a break on the up-side. So, for Tomorrow my only protection is against an up-side, if we trade at or above 2050 I will close 2 spreads and roll the last 1, I fully expect the market to pull back or stay around the same levels of Today, so I can close out :)

Sunday, October 10, 2010

e-Book #1: Non-directional option trading plan for Iron Butterflies

Ok, here is my proposed outline for the first e-Book I'll be working on this quarter:

Title: Non-directional option trading plan for Iron Butterflies


1. Introduction
1.1 What is non-directional trading
1.2 What are options
1.3 A word on probability & volatility
1.4 Define risk to you
1.5 Greeks basics
1.6 Mix it all up: The Iron Butterfly
1.7 Educational resources

2. Trading Plan
2.1 Purpose
2.2 Objective
2.3 Trading style
2.4 Infrastructure
2.5 Emergency procedures

3. The Iron Butterfly Strategy
3.1 Strategy details
3.2 Entry guidelines
3.3 Adjustment guidelines
3.4 Exit guidelines
3.5 Known exceptions

4. Monitoring the plan
4.1 Trading Journal
4.3 Looking at performance
4.4 When to update the plan

5. Tools of the trade
5.1 Money management 101
5.2 Volatility cone
5.3 Trade dashboard
5.4 Market monitoring tips
5.5 Support system
5.6 Trading platform

Friday, October 8, 2010

10/08 Daily Summary

Continued to close spreads out of my position, Today I got another short call out by doing a debit spread on 2075/2100 calls, by the looks of it, I expect to reach my 5% by Monday next week, go time decay! It has been a long month, a lot of trading and adjusting, yet I like the fact I can control my position and risk exposure in so many ways with the Iron Butterfly that having one or two difficult months in the year is not such a bad deal... Remember, the September trade got me 10% in 6 days, October is making me work for my money, that’s ok :)

Thursday, October 7, 2010

10/7 Daily Summary

Exiting my trade Today, not much more left to do but to roll my short calls away from the money. I used debit spreads to move my short 2025 and 2050 calls all the way to 2075, also sold all my long NOV contracts (Puts and Calls) as well as my long OCT call that I bought as a hedge.

Wednesday, October 6, 2010

10/6 Daily Summary

Back around break-even level after we traded down Today. The market is bouncing around and I am exiting the position at the same time, plan to exit or continue to condorize it tomorrow by doing debit spreads to move my short contracts away from the money, as it turns out the 2025 and 2050 calls are way too close for comfort, they’re being helped by the long call, so it is time to clean up the inventory, free up some theta and control the gamma exposure.

Tuesday, October 5, 2010

10/5 Daily Summary

We’re acting like a bull in the china shop, -1.25 st deviation Yesterday, over 3 standard deviation Today on the opposite direction, ouch! I’m glad I started moving my short calls away Yesterday, now, I certainly can’t afford to leave these other short calls too close to the fire, if we keep trading higher Tomorrow I must hedge and get out of the way, last thing I need is a fast moving train flying higher with just a few days before expiration. So, I’m back underwater, not by a lot, yet underwater, this has been a rough month for sure.