Got out of a 1165/1180 March bull put on Friday for a $0.20 debit. Received $0.80 credit initially so I managed to keep 75% of the credit with almost 4 weeks left to expiration. This should give me a good opportunity to place another bull put spread for March with decent credit.
Basically I look for aqn average of 2 - 3% a month. Some months you will make more than that (close to 10% for a good Iron Condor like last summer), other months adjustments might cost you some profits in order to manage your risks. Each person has their own profit goals so some here may shoot for higher montly returns others may be happy at 1 - 2%. As long as I am making money, I am happy . I know this was not the point of your question but to add further, many people get hung up on returns as a means of pounding their chest, comparing themselves to others, or attacking others (i.e., you only made xx%, I made XX%!). This happens a lot here on ET and it is pretty much a waste of time. Traders are like snowflakes and a blizzard, no two are exactly alike and we all exxagerate about the number of inches we actually get (multiple entendre here ). The obvious goal when trading is to make money, and no worse than the risk-free rate. Whether we make 12% or 40% is a manner of measurement to guage ourselves, not as a substitute of self-worth we shove at other people, as if a high number immediately makes us a worth person. My opinion is that if you are an ass, you are still an ass even if you are making 30% a year. So everyone should realize that the only truth is in their own account statements and the only person I need to tell my returns to is my wife. It does not mean have no need to share them, but always remember that annual returns are not a measure of a person no more than someone's batting average in baseball is a measure of who they are as a person. Losing who you are simply to be able to "brag" about who you think you are is an empty existence. Why is what I say relevant? Because if winning does not make you a bigger person than who you already were before you began trading, losing does not make you less of a person. Returns are your personal scorecard for your wealth creation, not an indicator of character. That is why we never take losses personally, or a losing year as a sign of our self-worth. Nor do we take winning years as proof or validation of anything other than the hardwork and determination you put in. A winning year is meaningless on Jan 1 of the next year because you have to start all over and repeat the success and a losing year also becomes meaningless as you have a new slate to make back the money you lost. It is not like sports where we always remember the great champions of past. A 60% return 6 years ago is as distant as the Roman Empire as the market looks upon you with disdain and quotes the Janet Jackson song "What have you done for me lately?". So unbundle your personal measurements from those we use to track our trading performance. This is the first step to removing a significant part of the emotions, ego, greed, fear and doubt that negatively affect our trading. We use risk management to limit our losses wihtout attachment, emotion or regret. I strive to take a loss as easily as I take a win since the big picture is my focus and I am who I was and will be who I am no matter what % I make or lose. I know this was not the focus of the above question, but it is good to be reminded of the point every now and again. The seperation of self-worth and financial worth is a big step in developing the right frame of mind to trade. Since we all "fail" many times as traders, many cannot make the above separation and quit too soon, attaching their trading failures with personal failures as opposed to recognizing the lessons to be learned or the difficulty of the path they chose. This is the lack of respect for the market I have often spoken about. This is a game of attrition and losses are not personal failures but as normal as a basketball team giving up points in a game they eventually win. Each score by the opponent is not a personal failure it is a part of the game and is unavoidable. OK, I now take you back to your...well whatver it is you do.
I'd save that post for the opening paragraph of the "What is a Trader" chapter in your next book. Nicely said!! -Cash
Wondering if anyone is thinking of Iron Condors for March? I've got the Call side covered for March contracts with the 1325/1320's and based on the trends and stochastics it looks like we're heading down from here. Would obviously like to see us run down and begin a turn back up before trying for any kind of Bull PUT spread but that might take the bulk of the month ..... maybe a Bear PUT spread on the way down ?
Coach, That was a great post. I appreciate what you have done for us not just trading but risk and emotional management as well. -Nick
In case you forgot that I called a market pullback on 2/17 and the reasons why I re-quoted it below. For those of you who did not trade off the Coach Phil Contrarian signal.... how many free lunches do you want LOL.
Did you put on your bull put side yesterday? You may be right about a run down but right now there is more pressure to the upside and time (and premium)is running out for a Mar Put credit.