Author: nicneo925

Unrealized loss racks up as earning trades go south – week 5 recap

Week 5 P/L

New trades/adjustments

Date01/2801/2901/3001/3001/3001/30
CycleFeb/21Mar/20Feb/21Feb/21Mar/17Mar/20
SymbolAAPLAAPLFBTSLA/CLJ0AMZN
IVR425560
StrategyBWB – CICICICICIC
Strikesc:-$340 * 2
c:+$337.5/+$345		p:-$290/+$285 c:-$355/+$360p: -$205/+$242.5
c: -$222.5/+$225		p:-$580/+$575
c:-$625/+630		p:-$44/+$45
c:-$59/+$60		p:-$1690/+$1700
c:-$2030/+$2040
Price$.3$1.03$0.99$2.5$0.28$3.04
PoP79%60%35%20%69%64%


Closed trades

CycleFeb/21Feb/21Feb/21
SymbolAAPLMXBI
Total open price$0.3$1.07$.94
Close price$0.12$.72$.76
Multiplier100100100
P/L$18$35$18


Daily Scalp

Table

Date01/27/2001/27/2001/29/2001/31/20
SymbolSPXNDXNDXNDX
StrategyCr – PCr – PCr – CIC – L
Strikes-$3225/+3215-$8810/+8800-$9160/+$9170Multiple
Price(o/c)$60/$0$150/$30$86/$0$314/0
P/L$60$120$86$314
TriggerSPX opened sharply lower as a continuation of last Friday’s drop, had a contrarian bet on the market. Break even is below the low opening of the day.Similar bet to SPX, but actually traded Wednesday cycle since Monday NDX is not available. Was luck to closed in on Tuesday.NDX had an early up move to 0.8%, placed call spread on gap fill of previous high resistance line. NDX was down 2%, which is really rare, so scaled into fear and legged into IC

P/L Change

  • P/L Week: $651
  • P/L Year: +$2041(40.82%), including P/L for FB, TGT and TSLA rolls
  • Total commission & fees: $291.56
  • P/L Year w/fees: $1749.44(34.99%)

Jan Recap

This month is a great start and I’ve made a lot of money on paper. What I did right is 1) always keeping 40% of cash on hand of scalp and adjustment. 2) Use longer date cycles for earnings 3) defined risk for earnings. What I incurred too much risk is 1) With volatility rising, many trades have gone to the wrong direction, 3 out of 4 earning trades are outside the expected range… Will try to defend them and survive!

Volatility is back – in a sad way – Week 4

Week 4 P/L

New trades/adjustments

Date01/2101/2101/2101/2201/24
CycleFeb/21Feb/25Feb/21Feb/14Mar/20
SymbolTGT/NGH0NFLX/CLH0VXX
IVR33.929.7825
StrategyIC – LICCr – CCr – PCr- P
Strikesp:-$115/+$110 c:-$120/+$125p:-$1.8/+$1.7 c:-$2.0/+$2.1-$380/+$385-$52/+$51-$14
Price$2.27$.39$0.79$0.1$1.61
PoP41%46%50%62%

Closed trades

CycleJan/28Feb/21Feb/14
Symbol/GCG0NFLXVXX
Total open price$1.6$.79$1.13
Close price$0.8$.24$.97
Multiplier100100100
P/L$80$55$16

Daily Scalp

Date01/22/2001/24/20
SymbolNDXNDX
StrategyIC – LIC – L
Strikesp: -$9180/+9170
c: -$9250/+9260		Multiple
Price(o/c)$2/$0$7.53/$2.94
P/L$200$459
TriggerNDX had a 0.8% move to the upside so I entered call side first, then added put side to collect more premiumBecause of the Coronavirus news market has high probability to fall from record highs, however added put side too early! for the whole day I was fighting with market down trend as I added more trades and premium! At some point I had $20 spreads! Finally the market showed me some pocket money for the new year!

P/L Change

  • P/L Week: $810
  • P/L Year: +$1191(23.82%)
  • Total commission & fees: $233.1
  • P/L Year w/fees: $957.9(19.158%)

My option trading strategies 2020

Premium selling

I primarily sell OTM options, and since my account is small, I only sell naked strangles for low price underlying(<$30), for bigger stocks I sold Iron Condors with $5 width spreads.

For Iron Condors I stick to the Tastytrade rules which shows $5 width is a good balance between risk and reward.

Most of the time I go delta neutral, but sometimes I have direction bias.

High liquidity, high IV

Liquidity is king. Since my account is small, I really hunt for the most liquid underlying.

As of high IV rank, it’s really hard to come by nowadays at the beginning of 2020. An IV rank of >30 for ETFs, and >40 for stocks are good options.

Product-agnostic – sort of

Technically with high IV and liquidity as the main indicators, I should be okay with product-agnostic. However I do find it more enjoyable when I trade the products that I’m familiar with, which are tech stocks, energy, precious metals, retails and sometimes currencies.

What about earnings?

I used to trade earnings a lot, especially in the low IV environment. However I couldn’t get consistent performance, and it’s even harder to defend than daily scalps. So I’ve made a new rule: only trade earnings for the longer dated cycles. Always use defined risks. (I did have some limited success with BWB)

Management

  • Close winning trades: hitting 50% max possible profit, or at 21 days before expiration.
  • Losing trades: roll up/down the untested sides to collect more premium, do not invert unless really necessary.
  • Take defined risk losing trades to expiration day.
  • Undefined losing trades: close when loss is 2X premium collected.
  • Do not roll except for core positions. Always prefer opening new trades on the same symbols(with new assumptions).

Daily Scalp

I trade index options(SPX, NDX, RUT etc) on the same day of expiration. I know this is crazy and basically a fancy way of gamble. I’ve had good and bad days and especially bad days in the past. However I’ve used to this and think I’m getting better with the following rules.

  • Do not trade within the 1st hour after market opens.
  • Always scalp from the opposite side of market directions and only consider trading when the move is significant(>0.8% in the current environment).
  • Size matters: prefer $5 width, but $10 width is manageable. 10% return on capital is acceptable.
  • It’s not always a good idea to leg in and make an Iron Condor! Be prepared for the market back and forth.
  • Control your emotions and fight on! This is the most difficult part and bad days are bound to happen. Normally for a $10 width spreads, it’s possible to control the damage with inversions and keep the loss <$5.
  • Always keep powers try for daily scalp! In my experience for successful scalp w/management, I need $2k available buying power.
  • Watch for PDT rules: If all goes well, I open trades and let them expire worthless, but sometimes I did need to close/roll within same day, so be smart and do not let same day trade counter goes beyond 3!

My first losing trade /CLG0

Week 3 – P/L

New trades/adjustments

Date01/1301/17
CycleFeb/21Feb/25
SymbolTSLA/NGH0
IVR6528
StrategyCr – CCr – P
Strikes-$625/+$630-$1.8/+$1.7
Price$.68$1.5
PoP85%72%

Closed trades

CycleJan/15
Symbol/CLG0
Total open price$0.66
Close price$1.0
Multiplier1000
P/L-$340

Daily Scalp

Date01/13/2001/15/20
SymbolNDXNDX
StrategyCr – cCr – p
Strikes-$9150/+9160-$9010/+$9000
Price(o/c)$1.11/$0$.7/0
P/L$111$70
TriggerNDX had a 1% move on Monday but since option was not available for Monday I chose to trade Wednesday Low risk companion trade since the call side is almost worthless

P/L Change

  • P/L Week: -$159
  • P/L Year: +$381
  • Total commission & fees: $164.35
  • P/L Year w/fees: $216.65

A rollercoaster – week 2

Week 2 – P/L

New trades/adjustments

Date01/0601/0701/0701/0801/10
CycleFeb/21Feb/21Jan/15Jan/28Feb/14
SymbolTGTXBI/CLG0/GCG0VXX
IVR42.83149
StrategyIC – LICIC – RIC – LCr- P
Strikesp:-$115/+$110 c:-$130/+$135p:-$85/+$82 c:-$100/+$103-$60/+$59-$1540/+$1535-$14
Price$1.72$.94$0.2$1$1.13
PoP57%65%62%

Closed trades

CycleJan/28
Symbol/NGG0
Total open price$0.014
Close price$0.007
Multiplier 1000
P/L$70

Daily Scalp

Date01/08/2001/08/2001/10/20
SymbolNDXSPXNDX
StrategyIC – LIC – LIC – L
StrikesMultiple $10 spp:-$3220/+$3215 c:-$3260/+$3265Multiple $10 sp
Price(o/c)$5.9/$10$.95/$0$4.8/$0
P/L-$410$95$480
TriggerNDX had huge swing overnight on Iran news, decided to short it on opening, which turned out to be premature.A companion trade with NDX scalp, but with smaller size.Emotional Trade! No good setup but eventually got lucky!

P/L Change

  • P/L Week: +$235
  • P/L Year: +$540

I violated my rules

Jan 8th 2020 is not a day that I am particularly proud of: I violated my rules and almost blew up my account.

The background is a little complicated: Iran attacked US base in Iraq the night before and futures were down almost 2.5% at some point, and I thought there was no way they’ll bounce back and we might see a -3% day the next day. So I almost ready for scalping from the long side.

However in this wicked world we live in, Nasdaq opened green… I got up early and saw it, I go, how is this possible? Angrily puzzled, naturally I shorted NDX… and SPX, $10 spread and $5, then started my nightmare day, when /NQ is getting greener and greener, and my spread was fully in the money.

Then came the familiar feeling: I had to check the market every 10 second, I felt dizzy and defeated and wanted to close my eyes, and then I started to believe my trades had to work.

Finally I started to manage the position by selling put spread against it and I added to the short position, which at some point was tested too, when /NQ was up more than $100! My account lost almost 50% at the worst time, because my /CL and /GC positions started to go against me too.

Finally the option god heard my pray and the last 15 minutes the market started to reverse, however my $10 spread was closed under the water.

The daily scalp business continued to proved to be just gambling. However something I could do to improve? Stick to the plan!

  • Do not scalp immediately after market opens.
  • Wait for 1% move(in my defense, the market moved from -2.5% to +0.4% when I placed the trades)
  • Do not go too big! Currently $10 spread is still too big for me, especially when other conditions are not ideal.
  • Do not force emotional trades!

A green start for 2020

week1-p/l

Week 1 – P/L

New trades this week

Date01/02/2001/02/2001/03/2001/03/20
CycleJan/28Feb/21Jan/15Jan/28
Symbol/NGG0M/CLG0/GCG0
IVR36.74127.946
StrategyCr-P SpStrangleCr-C SpCr-C Sp
Strikes-$1.95/+$1.85$15p/$18c-$66/+$67-$1600/+$1605
Price$0.014 cr$1.07$0.13$0.6
PoP73%63%80%84%
  • /NG: High IV, bullish since it’s been down for long time.
  • M: High IV, price between short term resistance/support, familiar retail stock.
  • /CL: High IV, bearish since it’s been up for so long.
  • /GC: High IV, bearish since it’s been up for so long.

Daily Scalp this week

Date01/03/2001/03/20
SymbolNDXSPX
StrategyIC – legged inCr-P Sp
Strikesp:-$8760/+$8750 c:-$8850/+8860-$3215/+$3210
Price(o/c)$2.5/$0$.55/$0
TriggerNDX down 0.8% within 1 hour tradingSPX down 0.8% within 1 hour trading

P/L change

  • P/L Week: +$305
  • P/L Year: +$305