Well, as with anything options related, I am always confused. But my question is, have you made any money on this stuff this week? It seems complicated as you describe it. I am down 600 bux Monday, up 3 bux today. Not looking good for me so far for the week. Are you fairing better?
Dude, he was long 12 shares of SPY and short $22 in QQQ premium. And that uncorrelated (sic) position was too much for him, so he rolled it. And of course right before the mkt dropped.
Well, rolling is good, yes, because he can preserve his hedge...Like if you roll a dead whale along the bottom to preserve the meat at the upper levels? (I have no idea where that analogy came from, just stream-of-consciousness typing.)
So he was up long 12 but short 22... If SPY and QQQ were to move in tandem...I...Well shit, that is like going long in NQ and short in YM I suppose? I do not like those sort of hedges.
Sorry, I was trying to make it simple. Fault would be mine. Let me give it another shot. It's basically this simple: 1) Long the Stock Market per SPY per the signal, for the entire month: We're up +0.60% thus far for the month. On $5,000.00? That's up +$30.00. 2) Short the Stock Market per Options. Lost on the first Trade, -$9.70 ... we're in the second trade and it's not over yet. We could make near +$22.00 on it, but at the moment, we're only up +$10.20 on it. So all told? By both being long, and being short ... we are up +$40.20, or up about +0.80% on the money, in 7 days time.
Sorry, that should read ... short those QQQ 202 Calls. Spreadsheet has the correct terminology, we're SHORTING call spreads, per previous posts ...
No happy face!!! SAD face! Up 40 dollars in a week!?! Why not just trade micros for that kind of gain. :-(
Oh one could. Without question. Were it me? I might do that very thing. Something I want to stress now, and you'll see me say it a billion times. This is only to highlight the principles of non-correlation. It's an inefficient use of Buying Power, and there are a million ways to apply that principle. Almost all of them better. Earlier in the thread, I mentioned I have been running this example, for some traders I'm trying to help. I've been running the same example, in Futures. I've been showing it to them for years now. Here's the link to that particular spreadsheet that's been running for a few years now ... That is using the /ES, and SPX Call Options, as you'll see in that spreadsheet. I show three different capital models, to show them how capital can be adjusted, for any given strategy for different results, and how they should consider MTE for whatever model they wish to run. But I flat out refuse to do it the best way possible. They've asked me what would be the most efficient ratio's for spreads, to the Futures I'm running. I won't do that either; though I do tell them it needs tweeked. I basically tell them that's stuff they have to work out for themselves. Heck, I didn't have any of this when I started out in the 1990's. There's a lot of value of banging out stuff for oneself. This is all, to highlight principles of non-correlation. If it was the BEST way possible to do it? Well, heck, that stuff is in my own portfolios. And that I'm not sharing. Heheheh. First, because I'm under contractural obligations with Partners, and at the same time ... well ... let's face it ... I'm just not going to share it.
Well, something you will see me do when I post performance? I put everything in BPS, or percentage terms. In the professional world? We never discuss dollar amounts. It's usually on a VAMI index, which means, it's the Percentage gained on the money, for that month. The percentage gained OVER the Risk Free Rate (basically, Risk Free Rate, or RFR? It's like saying, HOW MUCH BETTER did you do, than just having your money in the bank). So I basically put everything in percentage terms. Easier to translate to any capital amount (sorta)
And something there? Is that if you just traded something directionally? You're exposed to all sorts of risk. What if it doesn't trade the way you want? What if you have a bad week? The principles of non-correlation? It's harder to get hurt too badly, and almost impossible to blow up an account. I hate to say it, but a bomb goes off and the stock market sinks? Well, I have a short position on. As you saw this week, the market rallies on great news? Great ... I can just adjust my short call position, and enjoy the rally on the long side. It's harder to get hurt. In the Portfolio's I manage? Imagine that principle, only expanded on. I have risk off assets. I have Risk ON Assets. I have a long Gold position from July? And I'm trying to spread that off, and short it at every opportunity at the same time. I have individual names. I have indices. In fact? I am long the Q's with a BIG leveraged position, and I layered on another term trade, and I'm also short the Nasdaq that could pay off in a BIG way, if we even get a retracement down to 8150 on the /NQ. And every strat I run, has a positive expectancy over time. All layered on top of each other; all with very specific rules as to the way I run it. Which leads to a smoothed out return series.