07/30 Daily Summary

Nice recovery on the AUG trade this week! I’m looking for the exit to be honest, am very likely to start peeling this trade off as soon as Monday given the wild ride it was, getting out with near 10% of return is awesome!! Nothing like managing the storm, staying in the game and bringing home the bacon in the end :)

07/29 Daily Summary

I had a smile on my face as we were trading around 1950 and bellow Today, for that entire move my position had lost absolutely nothing since Yesterday, so being proactive in rolling those puts out was a great way to handle the current environment. Now I’ll give a bit more thinking on my game plan as to what should be the next adjustment steps and if I should further condorize it Tomorrow. Bottom line, I’m being conservative, but then again, this trade has seen the bottom, now we’re surfacing :)

07/28 Daily Summary

I’m back in the game and trading to win! Let’s bring this butterfly home and land some profits, shall we? By end of day Today I used the pull back and executed a few vertical rolls to move both my short Puts and Calls further away from the money. Typically I would start condorizing by end of next week, but given that this is the first day with profits, I figured I’d do this adjustment to reduced risk by reducing the amount of capital required on the trade, and cut my Gamma exposure. I want to keep this recovery going and not give it all up if we have another 2+ st. Deviation day all of a sudden... By moving a few of the calls and most of the Puts out a strike I cut my gamma, gave up a bit of theta, but to me the trade off was worth it.

07/27 Daily Summary

Another day without any adjustments, that’s awesome! I’m very grateful for the P/L recovery in the past 2 days. I have a feeling the elephant is getting tired of running up, let’s see what Tomorrow brings, because Today was a bearish formation I’ve decided to move my up-side adjustment a few points closer because if we take out the previous highs I figure it is a good sign to go on and hedge against the upside. Let’s see what Tomorrow brings. We’re approaching 2 weeks into the trade, so I must make a decision by the end of this week: stay longer or start closing up shop (i.e. condorizing/exiting sooner).

07/26 Daily Summary

Didn’t touch the trade Today, I’m very grateful for a full day of time decay after the weekend. We moved a bit higher and I have my eyes and contingent orders set in case we continue to push upwards.

07/23 Daily Summary

Phew! The weekend is finally here. Today I used a butterfly roll to move my 1825/1900 call spreads to 1900/1975. I did not want to add an additional iron butterfly because it was Friday, will see where we are on Monday and do so if needed. So far I’m down about 13% and looking for the weekend and a quiet Monday to take some of the heat off the position. Depending on where I am on Monday I’ll dive in with the extra butterfly and pump up my Theta.

07/22 Daily Summary

One thing I’m grateful for Today: I did not sell my long Sep 1900 Call Yesterday, it looked tempting to dump it provided we closed with such a bearish candle formation... I opened the computer around 7 AM expecting to be ready to dump my long calls and manage the down-side, what a surprise to see we were already at my up-side adjustment and the contingent order had done its job at 1960. I kept watching and noticed the Vols were not letting off and this was forcing me to be more long deltas than I originally wanted, so I replaced the 1925 call for the 1950 with a vertical spread. This locked in some profits out of the 1925 and moved the position’s delta a bit more in line with what I wanted. Now it is a matter of watching the market Tomorrow and doing a cut and roll on my short 1825 calls. This up-side swing wouldn’t be this hard if the vols were going down with it, but with 3 fast moving days in a roll, the market makers are not letting the vols out of the contracts any time soon.

07/21 Daily Summary

As 8 AM, I noticed that we didn’t have a lot of volume and the market was more towards bearish than bullish, I moved my up-side adjustment to 1860 and let it ride. No matter how much you study before making a move, there is always a situation that will prove you wrong, so I decided to leave the trade alone, it turned out ok. Would I rather not have that long SEP call? Absolutely, but then again, if we had moved higher Today it would be a different story, right? Best thing I can is to follow my plan and keep working the trade as the market moves around. So far so good, it posted a decent recovery, looking for a few quiet days to post additional recovery.

07/20 Daily Summary

Today we hit 1840, that by itself wouldn’t be a big deal, yet we were trading bellow 1790 when we started trading higher and higher. By the time we were hitting 1840, the NDX had moved over 50 points, and this sort of fast-paced action usually causes wider spreads and distorted P/L picture, I’ve also noticed the vols on my short Call and Puts dropped, but not at the same pace as all other strikes: The TOS imp.Volatility dropped about 9% for NDX, my short calls and puts dropped a bit over 2% in volatility, so I guess this contributes to my P/L to be distorted and worse than planned last night when I estimated the NDX at 1840. Not much I can do here, I got the long SEP call as previously planned and am now on stand-by waiting to see how the trade will look like Tomorrow. If the vols drop a bit and spreads go back to normal I will see a good P/L recovery.

07/19 Daily Summary

Today I got in my AUG trades, I filled the position early in the morning while volatility was actually higher than last Friday. Usually I’d have preferred filling the position one contract at a time squeezing for better prices as the market traded higher through the morning, however, I’m on vacation this week working with limited Internet access so went in with the full position in one shot. Let’s start the journey to AUG profits!

I’ve also added a few cash-secured puts on KO and WMT. After listening to several sessions in the Sheridan Mentoring site, and after back-testing for the past 3 years I’m convinced that this is a great way to keep the long-term portion of my portfolio working for me as well. I won’t be publishing day-to-day positions on the cash-secured puts/covered calls, but might add them at the end of each month just to track performance. I’ve sold the 47.5 Put on WMT and the 50 Put on KO both for about 1% ROI on the capital.

07/16 Daily Summary

Friday’s move was certainly a welcome pump in the volatility. I’m looking to start my NDX position next week, possibly Monday (as long as we don’t gap big in the opening). The storm is not over yet, as you can see were still having a few 2+ st. Deviation days. One thing worth doing is to go over past daily summary charts on the blog, if you go back a month, you’ll see we were having a lot more action.

07/14 Daily Summary

Thought about posting, no changes left on the JUL paper trade. I’m glad I got my real cash out of the JUL contracts as soon as I did. By looking at this paper trade in hindsight, I figure the next time it happens I can add another butterfly after the second cut and roll, this will bring extra theta and revert the vega back to negative. I think that having a vega positive position in the end wasn’t the best choice, as you can see from the dashboard the volatility went up 30% then came back down to zero... In any event, glad it was a paper trade. :) Looking at the AUG position, I’m starting to expect a pull back from this recent up-side swing, quite honestly the candle patterns don’t look that bullish to me.

07/12 Daily Summary

Not much else going on for this trade, will let the remaining contracts expire as they are far both out of the 2 st. Deviation range for this week. All and all, the trade lost about 13% ROI. I’m starting to keep an eye out for the AUG contracts, will wait for a good entry time (big down-day or so) between now and the 30 days till expiration, which is my line in the sand to get in. Any Sheridan mentoring student out there? What are you guys thinking for AUG? Should we get back in the water sort of speak?

07/09 Daily Summary

As we traded higher Today my contingent order got triggered to sell my AUG put, I’m officially condorized and there is not much left to do on the trade but document the lessons learned: (1) First and foremost, whenever you get a gift of fast profits, take them, I sure did so on my live JUL position, and while on this paper trade I saw 6% ROI that I would again cash out if it was a live trade, since I wanted to keep my practice on I let the trade run. (2) Second big lesson is to adjust in 2 steps: hedge first, then cut and roll the next day (let the market show its hand a little bit). (3) Don’t let your self get caught up with positive vega, make sure you do whatever you can to balance out those long puts because once the vols drop back down you want to be in a position to really recover your P/L, on this paper trade month I let my puts in the trade for way too long, they ate away my profits. (4) Last but not least, I want to make sure I have time during the evenings and early mornings for a fresh and focused review of the position, this being a paper trade I was way too relaxed (paper money is quite different from real money).

07/08 Daily Summary

I was planning to sell the long PUT Today, but as I waited for end of day the market traded back up. I’m scaling out of the position if not entirely, almost so. At this point it doesn’t seem to be worth holding it through expiration, the market is still bouncing around quite a lot..