Hello, this is a journal to record my trading activities and thoughts. This is basically for my own study. You are welcome to read and comment, but I won't reply any questions or comments, nor engage on discussions. Please don't get offended if you don't get a reply. I'm specialized in Future Options (FOPs) basically in the selling side. Started with a tiny capital (US$ 16,743.45). Trying to test my strategy before bringing more funds. Will test for 6 months, expect to get a return above 50% in that period. Strategy is as follows: - Diversify as much as possible in three sectors: Ags, Energy, Metals - Take small positions (400 - 1000 $US) - Schedule premium collections using layering, ie, should try to get FOPs expiring aprox every month - Assume long term direction of underlyings based on fundamentals - To open a new position, margin cushion should be at least above 0.7 - Look for far out of the money strikes -- should be above / below the high / low 52-, 26-, 13-weeks or near to 50% of spot price for both calls and puts. - Look for events that generates overreaction in the traders and then sell them overpriced options - Always sell high. Offer the Ask price minus 1 or 2 min ticks (more if difficult to fill). Risk control - Margin cushion never should go below 0.5 - Take a loss when a position gets negative in the same amount that the premium - If there is a change in the fundamentals of the underlying future and there is an overreaction against the position, exit with a lose to protect the capital. First trades I actually already started my trading some time ago. Have only two positions so far. I will publish the basic details, for the following entries I will provide more information on the analysis made to enter the trade. Trade 01: 2014-10-20, 08:25:05 == 4 x ZS MAY15 7.0 P Entry: 0.0225 - US$ 450.00 - 11.24 = US$ 438.76 Here I was lucky. The trade was filled in a dip and the underlying future immediately resumed the uptrend. Current profit so far (11/3/14): US$ 155, pending premium US$ 284. So far so good. Trade 02: 2014-10-30, 07:30:17 == 6 x SI APR15 10.0 P Entry: 0.0330 - US$ 990.00 - 13.86 = US$ 976.14 Very poor entry, lack of research, bad trading technique. I left a previous sell order unchanged and didn't follow the news in the night, nor did the proper research. That day (10/29), Ms. FED Chairman spoke and announced the end of QE3, plus there were a 3.5% growth indicator for US economy. That gapped down gold and silver the very next day. My trade was filled, but the downtrend continued (a second gap down the next day!) creating an continuous and scaring loss. The US unemployment claims were slightly worst than expected by the analysts, but this was not taken into account by the market. The initial reaction was to exit immediately with a loss. All the analysis, comments, etc were very negative. I tried to close, but the lose was too high (the spread is very wide in this kind of instruments), and I was a little ambitious in the buying order, trying to minimize the lose. The exit trades I tried were not filled. By the end of the second day, I noticed that despite the gap down, the bar was ending in green, signaling a possible bottom / stabilization. Still tried to exit the next day (today), this time accepting a wider lose, but the buying order again was not filled. By the end of the day, although it was red, it was in the upper range of the previous bar, signaling a potential sideways movement in the next days. I don't like this position, too scary. Current lose (as of 11/3/14) for this position is US$ 677. However, the buzz in the forums and analysts are less negative. Also, by the end of Nov there will be a referendum in Switzerland to decide if they want the gold standard for the Swiss Franc or not. If approved this will support gold and silver prices. Besides, as mentioned, the US unemployment claims were slightly worst than expected by the analysts. This may be a good thing for gold / silver, as the FED may start a QE4 if this tendency continues. That will mean an immediate surge for precious metals. For my improvement: For precious metals: review the FED meeting schedule, never take a position before this announcements, wait for them and trade accordingly 2-3 days after it to check the market reaction and only then establish positions. Will see what happens tomorrow. Decision is that if during the week the price goes below 15 - 14.5 max, I will close the position taking any loss that I have. No new position will be taken until this trade shows were is heading. 3/11/14 20:33 Prorun
Trade 01: 4 x ZS MAY15 7.0 P Soybean gap down, closed 18 1/4 down (-1.8%). Profit down to US$86 from US$155. Fundamentals says recent dry conditions in Midwest allowed farmers to speed up the US harvest. Will check tomorrow if trend line is broken. Trade 02: 6 x SI APR15 10.0 P Silver moving within range. Profit up to -US$ 534 from -US$ 667. Forums reports strong buying on physical silver, but lots of bearing buzz. Check behavior the next days. Will start reviewing energy FOPs...
Trade 02: Silver gaped down yesterday (11/5), so I closed the position. Too risky, it seems that the floor is not yet defined, it can easily go to 12 or 10. Bought back at 0.080, total loss US$ 1,437.72. Today it continue to go down, so it seems that I made the right decision. I only regret not exiting before. Lesson learned: Once the fundamentals have changed and it seems it may affect an opened position, close it right away. Wondering if the fundamentals will change is just wishful thinking, a losers game. All in all, the bleeding was stopped timely. Trade 01: Is doing fine. Yesterday it went back to the uptrend channel. Likely it will start to go sideways. Will consider to sell calls on this if this is confirmed. Unrealized profit US$175, pending to make US$ 263. I will evaluate selling calls for SI, and analyze NG. No hurry.
Trade 01: 4 x ZS MAY15 7.0 P Doing fine, it clearly went back to the uptrend channel. Unrealized profit US$314, pending to make US$ 125. If profit hits US$400, will close the position to lock them. Current margin: Initial 372, Maintenance 298. Trade 03: 6 x NG MAR15 10.0 C Excellent opportunity. NG was a 4.325, got a call of 10 (more than double the underlying) at 0.035, with an incredible cheap margin. Revenue US$ 2086, Margin US$ 2000 aprox (Note: In the future need to record this more accurately). Actually I could be patient and sell it at 0.042. Right now is in uptrend, but not likely to follow. No scary gap ups, just regular 1-2% max increases. Current status: Potential profit US$2,835, current loss of 749 (normal fluctuation, let's the time pass). Current margin: Initial 2508, Maintenance 2006. *** Account status:
Trade 01: 4 x ZS MAY15 7.0 P Doing fine, today it went red but still inside the uptrend channel. Regular noise. Unrealized profit US$296, pending to make US$ 142. Current margin: Initial 1,489, Maintenance 1,191. (Yesterday margin figures were incorrect, forgot to multiply by the number of contracts) Trade 03: 6 x NG MAR15 10.0 C Good luck on this, red day. Typical sell the news situation. Yesterday there were some speculation that the unusual low temperatures in North America could trigger up NG prices. Check chart. If you notice, there were 9 days in a row in green, very likely driven by speculators pricing in the ongoing situation of low temperatures / cold fronts in NA. Once the press starts talking about the potential impact of this in the NG prices, it had a large red bar. Apparently I entered in the last day of the uptrend. Current status: Potential profit US$2,170, current loss of 74 (great recovery, near to go green). Current margin: Initial 2,163, Maintenance 1,730. *** Account status: Cushion is right now 0.81 (too high, meaning I'm under-invested). Looking for another trade...