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).