Biggest disappointment this week is my trade in BIDU. I was right about the direction and yet I've lost money. On Monday I bought 2x put spread (110/115) for a total cost of $746. My total potential profit was $1k - $746 = $254. I sold that spread a day later for $844, so I made profit of $98. Then I bought 4x 95 Put for $512. Market held above 95, so I've lost whole premium. Bad outcome, but I'm not sure if it was a bad trade - I did what my model told me. I reduced total risk with the second trade (844 -> 512). I'm not yet sure what to think about it, unless someone has some thoughts?
I've sold-to-close 10 C 43 calls and for the profit I bought 15 44 calls. 43 calls were still with positive expectancy but not so good, 44s give me a chance for a decent profit.
Trades for the next week: Buy 1 AAPL Feb-22-13 450/475 Put vertical Buy 8 BAC Feb-22-13 12 Call Buy 5 BBRY Feb-22-13 14.5/15 Call vertical Buy 1 BIDU Feb-22-13 97.5 Put Buy 2 C Feb-22-13 43 Call Buy 7 F Feb-22-13 13/13.5 Call Vertical Buy 3 FB Feb-22-13 28 Call Buy 1 GOOG Feb-22-13 785 Call Buy 1 IBM Feb-22-13 200 Call I decided to change my position sizing method, hence smaller trades. I've got my hands on historical SPX option prices and backtested my model. On years 2003-2010 my trend following method made about 1050 points with a drawdown of about 300. The same trades with options (spreads or outright buy) got profit about 1200 points, with a drawdown of barely 50 points. What is interesting, is that when I adjust option position size to reflect risk equivalent to futures, my profit/drawdown actually falls. It seems like spreads or options that are cheap has small chances of profit so it's a good idea to trade constant size (based on current account value and not based on current stop loss). At the moment account is in a small loss of about -5%. With smaller position size it will take me more time to overcome this, but I don't want to reset my paper trading account again.
New trades for this week: Buy 1 AAPL Mar-8-13 430 PUT Buy 3 BIDU Mar-8-13 90 PUT Buy 13 F Mar-8-13 12.5 CALL Buy 3 GOOG Mar-8-13 825 CALL Buy 2 IBM Mar-8-13 200 CALL Buy 5 NDX Mar-8-13 2825 CALL Buy 3 GLD Mar-8-13 156 CALL Buy 20 SLV Mar-8-13 29.5 CALL
New trades for this week: Buy 1 AAPL Mar13 430 Put Buy 4 BIDU Mar13 87.5 Put Buy 5 C Mar13 46 Put Buy 40 F Mar13 13 Call Buy 1 GOOG Mar13 835 Call Buy 25 IBM Mar13 215 Call Buy 1 NDX Mar13 2820 Call