...our last update was after 15-Aug-2007 close. We will now try to make some sense with regards to these subsequent trades. With the markets [DJIA/Nasdaq/SPX/QQQ/NYA/RUT/MID/SML/SOXX] in complete disarray as a result of the schizo action we've been experiencing for months, the close on 15-Aug-2007 - with all these indexes below support - and the ominous pre-market futures and open and the Vix/Vxn sending flashing signals that we are surely going to further bank on what we've been waiting for SO LONG, we entered a bearish call spread in AAPL (ITM) and in RIMM (WOTM). AAPL was at the Sep 115c/Sep110c strikes for 10 contracts (still open) and RIMM was at the Sep 220c/Sep230c strikes also at 10 contracts. Well...we all know what the Fed did to screw that up. We did manage to close the RIMM position for a profit. And when managers return to their desks after the holidays, perhaps we can get some improvement in our AAPL position. The 2 trades you see in AAPL that were opened and closed on the 16th were mistakes (wrong strikes). Loss $400. After this trade you'll see another mistake in STO QQQIU 150 contracts profit $1,350. The next QQQHU for a loss of $125 was also a mistake (opened and closed). The next two also were mistakes QQQHS and QQQHT. They were both STO when I wanted (1) STO and the other BTO as a "spread". So I closed these loss $375 gain $250. I was trying to contruct the appropriate "spread" trades - which I finally did. See 16-Aug-2007 BTO QQQHT Aug07 46c and STO QQQHS Aug07 45c, 125 contracts each. This was closed for a $2,875 loss. Another $250 gain/mistake at 14:52 on 16-Aug-2007 in QQQHT 125 contracts. Collective2 makes you "leg into" these trades which I'm still getting used to. My 150 contract spread at the Sep07 48c/49c strikes seemed safe enough OTM early on the 16th...but the Fed action and subsequent market open forced a close of this position for a loss of $3,300. We did open a spread trade at the Sep07 49c/50c strikes that is still open. It seems far enough out the money...but last week's jump in light trade is making it squirrelly as well. Lastly the QQQIV trade of 130 contracts was a $1,040 (loss mistake as well. The idea was not to open and close all these "mistakes" for small gains/losses or to accumulate commission costs. The idea was that the market was going to go into a tailspin with COMPLETE PANIC about to unfold so bearish bets were made ITM with AAPL and WOTM above overhead resistance in RIMM (220/230). And to capitalize on QQQ penny bid/ask spreads AND 45/46, 47/48, 49/50 (with support already broken) strikes as being above resistance levels we WERE well positioned. Unfortunately, the Fed intervened and further delayed the inevitable - a complete rush for the exits - that will accompany the bottom of a true correction. Also - as you all know - volatility disappeared last week and the mostly only stocks that went up on anemic volume were AAPL/RIMM/BIDU/BCSI etc. So stops were hit and here we are. Well where are we in relation to the ET (hypothetical) 1M account? Who knows...but when you look at my C2 graph you can see that serious gains (or losses recouped) have been made off the lows using index spreads while the market is in a downtrend. It seems this market "top" took a while to unfold and for institutional favorite stocks to hit a rough patch (as you know our first attempt/entries, although ultimately would've been very profitable - but in heeding our stop loss methods were closed to bring $1M down to about $.75M.) No fear though, (since we know what we are doing) this was easily enough mostly recouped...but with the market ONLY correcting 10% before the Fed jumped in...we still have work/profit on the way down that unfortunately is temporarily being further delayed. This market has been trying to properly correct since March!!! But idiot/newbie Wall Street managers keep wanting to buy a few stocks and keep an uptrend - that of course cannot sustain, forever. Now that support had been seriously breached and GOOG/RIMM/AAPL etc., starting to get hit...these get bid up last week and the indexes move back up above support levels ON LIGHT TRADE - as if there weren't even any overhead resistance!! So things are getting a bit murky with the translation of trades made in my C2 account to the ET Fund. At C2 the AAPL trade (currently open) is an ITM "bearish call spread". Also I have opened another (small) such trade in RZ. Also the covered call trade in PRKR opened on the 8th is not in keeping with my WOTM Index Spread Strategy, but I'll do my best. Since the 15th...C2 went from $91,960 to $93,270 or a 1.425% gain. Previous ET account at $896,277 is now $909,045. Also note that C2 (erroneous) reporting of bid/ask prices at some closes is off a bit and resulted in the about 5% extra drawdown (from -18% to -23%). Also I think I will try to construct spreads with ES and SPY to diversify holdings a bit more to smooth out equity curve from these "spread" trades. Once the market did actually top (our 26-Jul-2007 call) funds have increased from 25% in a very short time We will keep you posted. Paysense aka Gilbert
<b>How is everyone?</b> Hope all got thru the correction with their psyche intact. It's all routine here, but I continue to learn very valuable lessons. I've been through many, many, many corrections and the last Bear Market. I lived in Silicon Valley in the hey-day (I've now gone Hollywood - CA that is.) By following the flow of institutional money (price and volume action from the major averages) I prepare well for 'tops' and have called every market 'bottom' within days. This bodes well for a "trader" and by selling option premiums...I have fully-refined a relatively conservative strategy that AVERAGES 50% per year. Since coming to EliteTrader, it was brought to my attention that "slippery" money will not allow for me simply staying in cash (like I've been training members for years at my covered call website which btw manages the world's only "live" covered call fund - that actually meets these lofty expectations and hence IS the best-performing fund on the planet) during downturns, so here at ET I dusted off a nearly fully-developed index spread strategy and implemented it in my Covered Call Fund at Collective2.com. Granted this late-stage bull market continues to exude frothiness, yet I've learned the very valuable lesson of including to my (price/volume) <i>proven</i> methods that relative strength amongst market-leading institutional favorite stocks at this juncture can "prop" markets up (as it did from Mar-July as well as the abbreviated, re: Fed intervention, recent correction) - hence no need to be too cautious (like my 2002 stop-loss successes), despite a rapid buildup of distibution days, when GOOG, RIMM, AAPL, BIDU and now a whole slew of Chinese stocks continue their ascent. These spread trade skills (coupled with my market timing routine) have now increased my AVERAGE annual return substantially - probably on the order of about an additional 20% per year! My <i>initial</i> entries into (bearish) index spreads at what (on first glance) appeared to be the strong possibility of a market "top"/pending correction - indeed had to be stopped lowering capital by about 15-20%. Of course this was recouped with my eventual 25-30% jump, but during these events (tops and bottoms) we'd like to PROFIT the 15-25% <i>almost</i> each time. MORE IMPORTANTLY is the fact that a strict stop-loss methodology ensures preservation of capital and <b><i>these methods can be used for life!</i></b> So after the initial "failed" entries <b>the</b> near-exact "top" was spotted and profited from in my C2 account - that only recouped the 12-15% standard hit to a (high-yielding/risk managed) Covered Call Fund. <b>WE LOOK TO NOW JUMP FORWARD</b> 30-50% with our Sept 18 re-enty of our funds in the next few months - not only with covered calls, but with our stock spreads, married puts, bullish index spreads and of course all the while continuing with a <b><i>strict proven stop methodology,</i></b> which is oh-so key. Of course no real profits have yet been made, but the astute student will learn that all is very well on track to meet the annual average (every 52 weeks my funds routinely outperform the Nasdaq by about 25% - so this annual return is an <b><i>average</i></b> dictated by the annual market return) with low risk, plenty of free time and sleep and eventually (2-3 years) blasting past the Forex Funds, scalping systems, etc. Paysense We actually got hit an extra 10% or so: 7% from not having a stop on IOC (now all positions - not just biotech holdings - have stops and I diversify more) and another 3% plus from various "learning curve" errors. The one spike to the lows was an option "quote" on one open leg of a spread that the actual bid/ask prices we starkly different...and I've adjusted my allocation model for less volatility. Also, my fund was postioned for ANY Fed action but the drift from the highs was the low volume lull that occured when waiting. As you see 20% was quickly recouped with low risk. continued...
In the future managed accounts will be held for a pre-determined period (more than one year and likely 2), expectations will be to outperform the market (nasdaq) by 20-30% each 52-week period and overtime my 8-year performance chart growth will even be exceeded. More importantly, <i>all the business I want</i> will be available, <b>compounded returns will be literally through the roof</b> for anyone that can see past 3 years and understand the market will take down even the very best of managed (actively traded) fund despite their seemingly near-term outperformance. Paysense aka Gilbert
Of course if you are like me - on track to meeting these goals, you need to do a 52-week comparison with recent performance. In-keeping with all past performance charts, the recent measure of my funds show past gains are preserved as well as outperformance vs Nasdaq (moreso the S&P and Dow). <b>More importantly it can be seen that heady gains in these funds are about to unfold</b> and to again create the untold (well I know) continued annual outperformance. The astute eye will see that my current C2 position is a bit better than the norm, but with newly added - still conservative - trading methods even more heightened gains are expected. And of course we always take into consideration what the market will continue to throw at us over the years and what is expected and when. Well look for yourself and figure it out: (Also, see all past charts you've seen unfold here at ET.)
This may be useful as copied from C2 Forum. My writing again: Well lets see, I entered my Covered Call Fund (not the actual name) on Collective2.com at just about the same time as the market was topping and just before it did I took a hit with IOC that was a bit over-allocated and didn't have a "safety" stop in place = 7.5% drop. I reduced allocations to individual positions and have a stop loss target in place for all covered call positions (just in case. This lowered risk per trade can be seen in history. Well if my charts at XxxxxxxXxxxxxx.com look appealing, as they likely do since most people are underwater without much hope of recovering after the recent semi-deep correction - coupled with the fact that most appealing systems at C2 are likely to fall just after subscibing, then expect these to low-ball my soon to unfold results at Collective2. For instance, 2006 needed much patience (nearly 8 months of plodding along) before we engaged in a nice 50% ramp through into 2007. Remember, this is a late-stage bull market and some degree of caution is necessary in order that highly compounded gains over the years are not drawndown too much (read a math book). So when the usual 10-12% hit from a correction to this type of fund (no it is not a 6-month rocket ship that will only crash back to Earth) you had to add the 7.5% and an additional 3-5% (due to mine and C2 reporting error) and you have a 23% DD instead of the usual 12%. No worries though since these are indeed the lows and plenty of upside is 'baked into the cake'. You all have just not seen this, yet. Granted in 4 months you could have, however what you have seen is an improvement to my XxxxxxxXxxxxxx.com funds. I've always just stayed in cash until the market shows a bottom then I leverage my funds with covered calls to the hefty tune (very safe way to play, mind you.) Well what you have seen is a current 35% ramp off the DD low - most of which occurred during the correction! My fund is now 5% in the positive and I expect the next 3-4 months to provide an additional engaging 40-50% runup. What sets me apart from the rest? These hefty gains are accomplished year-in and year-out and risk of much loss to these gains is quite low. A compounded 65% annual return is nothing to balk at - especially if you are ensured this can be done for life. Why wait to get in when you can get in now? Use a reverse mentality - don't be attracted to 100% ramp-ups in the first six months when 99-out-of-100 are going to fail miserably, shortly thereafter. Go for the system that is right on track to benefit you in the long run - even if you see no real progress in the first 4 months. Simply compare the drop these past few months to my XxxxxxxXxxxxxx Funds with my C2 Fund...and believe the ensuing 50% ramp will indeed occur. Gilbert (Sorry I posted in two places - too much?)
Yes, we have an update: Institutional favorites finally breakdown. Yesterday's move to "Caution" from September 18, 2007 "Green Light" call (from 26-Jul-2007 "Stop Losses" call) OUT of Covered Call or long stock and call positions may turn quickly to "Stop Losses" as no doubt this patient trader sees us finally getting a REAL correction. Some snapshots of how we hung out and may move forward now: You ask me why and how I make these calls? Volume baby...just following the big boys. Hey Atticus, et al those spread trades work great and thanks to some self-taught trading lessons will I now shine? In time, Gilbert. Paysense
Not sure if any of these posting have yet been deemed of ANY value (since I rarely get any feedback encouraging it as thus), but here is the latest: http://www.elitetrader.com/vb/showthread.php?s=&postid=1682843#post1682843 Paysense aka Gilbert
More additions to the thread - http://www.elitetrader.com/vb/showthread.php?s=&threadid=94764&perpage=6&pagenumber=64 and excitedly enuf, to the gains! Yes we are using WOTM index spreads, short index calls, long Ultra ProShares, short ES and NQ, QQQ puts etc. as this correction continues to unfold. Paysense
This thread is now closed. Further updates can be found at <b>http://www.elitetrader.com/vb/showthread.php?threadid=94764</b> My best to all, Gilbert aka Paysense