WHAT WE DO? WE SELL OPTIONS FOR INCOME. WE USE THAT INCOME TO BUY DIVIDEND GROWTH STOCKS!
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Posted by Martin September 02, 2019
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Quarterly reporting


August is over. My trading was in a “damage control” mode as my trades got whipsawed. I made money, but not as much as I wished for. I also adjusted my trades to long term trades (45-60 DTE), although I take 0-2 DTE trades too but very little. I also reduced amount of trades to prevent damage from the erratic market moves. Now, I use long term trades’ credits to adjust my short term trades which are in bad shape (to either close them or roll them and all debits are offset by long term credits).

September is historically bearish month (with few exceptions), and given the escalated trade war, I think we are heading to an interesting month. I expect bearish month this year.

However, I also decided to report my progress and never ending struggle of trading options on a quarterly basis as I have a lot to do and not much time writing. My a bit detailed report will be out at the end of September 2019.

Good luck all! Trade small and stay safe.




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Posted by Martin June 29, 2019
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June 2019 financial freedom report


June 2019 finished fast and sound. I was following my path to financial freedom strictly, although I must admit, I got a bit greedy and did a few adjustments to collect more credits. These adjustments were not necessary and could potentially endanger my efforts to become financially free.

I am aware of this deficiency and getting back on path with my goal and strategy.

I had many discussions over my strategy with many investors and followers. Many didn’t like that I collect $30 – $35 dollars per contract. They say, it is not worth it.

But my strategy is to collect “crumbs” which would allow me to widen my strikes so far away from this crazy market, that I can sleep soundly, calm, and well. What is it worth to collect large premiums when the trade goes bust later on? If you see my track record you will find out, that I have mostly winners. So is it worth to me to collect small premium? Yes it is, as it allows me to collect it week by week without losses. And if you want large premiums and potential frequent large losses, go ahead. But not my style. Not anymore.

In June I followed the rules but I over-traded a bit. Although, there was a lesson in it. I learned how much fees and commissions I pay. And it was not a pleasant discovery.I learned it cost me 30% to trade!

Before, I ignored the fees and commissions. I saw it as a necessary business expense. The only difference here is that – one – your journey to financial freedom is slowed down – significantly! – and two – you cannot claim those expenses as a business expense unless you achieve a Traders Tax Status (TTS).

As I mentioned before, in my May 2019 post, I had to adjust my minimum premium requirement from 0.30 to 0.35 per contract just to account for fees. And that gets me closer to the market and make my trade more dangerous.

But recently, about two days ago, I decided to dust off my old theory of what is better – a 5 dollar or 10 dollar wide Iron Condor? There was a very heated discussion and debate on Facebook about this matter. There were people who claimed that it doesn’t matter, others were claiming that 10 dollar wide is a bad idea, and some liked it.

There was definitely one good reason for a 10 dollar wide trade – commissions. With 10 dollar wide trade, I can trade fewer contracts, achieve same result but reduce commissions. Thus, next month, I will investigate this opportunity and will try a few trades 10 dollar wide to see how that goes.

 

 · June 2019 results:

 

But let’s go to the June 2019 trading results.

June income has been great and exceptional. However, I do not expect it to repeat at all in the future as the income has been achieved by over-trading and for the next month it must not be done again.

It was not that I traded too many contracts but I was rolling them. For example, the very last trade #23 was going well and as the market kept sliding lower and lower, I started lowering the call spreads down, collecting additional premiums. It was an exceptional trade. But I endangered my call side and realized my mistake as soon as the market reversed on Thursday and continued rallying. Fortunately, I wasn’t punished for these unnecessary adjustments, but it reminded me not to touch the trade until it is really necessary. It was good and it felt great collecting additional premium, but it could turn into a large loss.

In June 2019 we made $4,945.43 revenue (double of the plan).

 

report
 

 
June 2019 trades:
 

Trade #23
Trade #22
Trade #21
Trade #20
Trade #18

 

Here is a link to my live 5 year plan spreadsheet.
 

 

 · Weekly short term trading strategy

 

Here is a quick list of our short term (3-4 DTE) strategy (simplified):
 

1) Open a new trade on Tuesday morning only.
2) Open with the same week Friday expiration (3 DTE).
3) Collect min. 0.35 credit.
4) No wider than $5 per trade.
5) Multiple contracts based on available buying power (BP).
6) Let the trade expire.
7) Wings at 5 delta or near as long as credit is 0.35.
8 ) Close one half of the position when tested side reaches delta 30 and roll the entire untested side down (or up) to offset the cost.
9) Close another half of the trade when the tested side reaches delta 40 and roll untested side lower (or higher).
10) Roll the remaining tested side higher (or lower), open more contracts, and roll untested side down (or up).

Here is an example of above described adjusting strategy:

We open 10 contracts with delta 08.
Put side gets tested and reaches delta 30.
We close 5 put contracts and roll 10 call contracts down.
Put side gets tested further more and reaches delta 40.
We close additional 3 put contracts.
We roll 10 call contracts lower.
The put side gets tested even more (touch).
We roll the remaining 2 puts down and open new 3 (or more) put contracts (at delta 16).
We roll call side lower.

 

 · Monthly long term trading strategy

 

We are also trading long term Iron Condors. We split the buying power to trade between the short term trades (3 – 4 DTE) and long term trades (50 – 60 DTE). However, the traded buying power of both combined trades shall never exceed the total allowed buying power.

Here is how I will be trading those long term trades:

1) DTE shall be 50 or more.
2) The IC width shall be 25.
3) The collected premium shall be $3 or more, the more the better (12% of margin)
4) The short delta 10 or less as long as collected premium is $3 or more. If a premium at delta 10 is less than $3, increase DTE.
5) Adjust the trade up or down if any short strike reaches delta 30.
6) Close the trade to collect minimum of $1.25 or more (5% of margin).

The adjustments for these kind of trades will be rolling the entire trade, when the tested side hits delta 30 or more, down or up. However, as soon as the trade reaches the minimum required credit, we will close the trade and immediately opening a new a new one.

 
Previous posts related to this plan:
 

May 2019 financial freedom report – June 01, 2019
My 5-year Plan to Freedom Update – May 22, 2019
April 2019 financial freedom report – May 05, 2019
Fed up with my own lack of discipline, putting down a plan to reach FI – April 17, 2019
 
 




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Posted by Martin June 26, 2019
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Strategy update


The recent strategy I adopted for my 5 year plan to freedom works perfectly. Well, I knew it would work. I have traded that strategy for about two years earlier in the days when I started trading options. That’s what I was taught by my mentor. I might have been financially free already if I hadn’t abandoned it.

Since mid April 2019 when I started trading my SPX 7-day trading strategy (in fact, it is only 3 day), I opened 27 trades. Out of those trades, only 2 were losing trades and they were very small loses, mostly due to mismanagement when I was not yet sure how to react properly to the market’s behavior.

But May and June trades had no losing trades at all. Pretty much a 100% accuracy. OK, I shouldn’t say that. I had a few trades which I adjusted and these were losing trades, but the adjustments brought in enough credit to offset the loss plentifully. I only made less money, but I made money. I didn’t lose.

And I am happy to see and share these results.

You can follow those trades on our Facebook page and paper trade them to see for yourself. You can follow the open and closed trades in our spreadsheet. You can even subscribe to our free email or text alerts, (just send us an email to [email protected] with your email if you want email alerts, or phone number, if you want text messages, or both, if you want both). Whenever we post a new trade, you get an alert to check the Facebook page for details. Whenever we adjust the trade, you also get an alert. And it’s free; at least for now.

I wish you all good luck and blessings.




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Posted by Martin June 01, 2019
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May 2019 financial freedom report


May 2019 is over. For many this month was very difficult and a lot of people lost money, that was at least, what I have read in Facebook Groups. Of course, there were savvy traders and investors who made money in this volatile market. I made money too.

In this month I met the goal as planned. I was very careful to follow the plan and trade as described in my goal plan. Following the rules strictly helped a lot to no lose. Although, the end of the month was very shaky and I was very afraid of what the outcome may have been, I started even panicking at some point and started adjusting my last week trade too much. I noticed that and stopped doing it. Sometimes, it pays to really do nothing but it is easy said than done.

 
May 2019 results:
 

In May I stuck to the rules to the tee! No rules broken, no violations! I started also trading increased number of contracts. My first month going with 10 contracts and going up to 16. It was scary at first. I was well aware that increasing the contracts would bring more premium but also wipe out more of the previous gains should the trade go bad. But that was a risk I was OK to take to grow my account into independence.

I learned another thing which at first I considered negligible – fees. Once I started trading larger amount of contracts, I realized that with the fees (even though low fees compared to others) I will not be able to meet my goal as planned. I had to adjust my minimum premium to account for the fees if I wanted to stay on track. So I decided to increase the minimum premium collected to 0.35 from 0.30 a contract.

 
Monthly long term trading strategy
 

Another adjustment to the trading was adding a long term Iron Condors. I decided to split the buying power allowed to trade between the short term trades (3 – 4 DTE) and long term trades (50 – 60 DTE). But the traded buying power of both combined trades shall never exceed the total allowed buying power.

Here is how I will be trading those long term trades:

1) DTE shall be 50 or more.
2) The IC width shall be 25.
3) The collected premium shall be $3 or more, the more the better (12% of margin)
4) The short delta 10 or less as long as collected premium is $3 or more. If a premium at delta 10 is less than $3, increase DTE.
5) Adjust the trade up or down if any short strike reaches delta 30.
6) Close the trade to collect minimum of $1.25 or more (5% of margin).

Here is an example of a first trade I opened in this manner. My goal is to hold this trade no longer than a month. That means, I want to be opening this kind of trade every month. If it cannot be done, I will probably stop trading these long term trades. I do not know yet.

The adjustments for these kind of trades will be only rolling the tested side (delta 30) down or up and moving the untested side closer to offset any debit needed to roll. But, as soon as the trade reaches the minimum credit, I will be out and immediately opening a new trade.

 

Here are the results:

 

In May 2019 I met all goals as planned:

1) Starting value was as per the plan
2) Number of traded contracts was as per the plan
3) Monthly premium collected exceeded the plan (the plan was $1,680.00, collected premium was $2,690.00)
4) Monhtly deposits slightly exceeded the plan (the plan was $2,600.00, deposits were $2690.00)
5) The ending value was slightly below the plan (the plan was $14,342.00, final value ended at $14,337.00)

The shortage was caused by fees and due to the plan adjustments in the middle of the month. But overall, I consider May as accomplished per the plan.
 

report
 

 
May 2019 trades:
 

Trade #17
Trade #16
Trade #15
Trade #14
Trade #13

 

Here is a link to my live 5 year plan spreadsheet.
 

Weekly short term trading strategy
 

Here is a reminder of my strategy and way how to trade (simplified):
 

1) open a new trade on Tuesday morning only
2) open with the same week Friday expiration (3 DTE)
3) collect min. 0.30 credit
4) no wider than $5 per trade
5) multiple contracts based on BP
6) let it expire
7) wings at 5 delta or near as long as credit is 0.30
8 ) close one half of the position if the loss reaches $1.00
9) close everything if the loss reaches $1.50
10) if the market swoons through $1.00 and reaches $1.50 or even swings further, close everything.

with 5 delta, (2 SD) the swings still may happen (you never know what crazy people would do on Wall Street) but the breach is very rare. It still may happen, everything may happen, but it should happen occasionally, when panic hits…

 
Previous posts related to this plan:
 

My 5-year Plan to Freedom Update – May 22, 2019
April 2019 financial freedom report – May 05, 2019
Fed up with my own lack of discipline, putting down a plan to reach FI – April 17, 2019
 
 




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Posted by Martin May 22, 2019
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My 5-year Plan to Freedom Update


At first I didn’t want to post the entire plan to my freedom because I was afraid. The numbers in the plan look so ridiculous that I was afraid that after posting the whole plan it would be ridiculed. So I decided to post it only a year by year. I would post a year 1, then two years, three years, and so forth.

But I also take this plan as a challenge. I am aware that the numbers in the plan look unrealistic and maybe they are. But if they are not, I want to see for myself whether they are achievable or not. And if they are achievable, I wanted to have a record of this plan from day one. I wanted to show to all people who follow my blog and my trading that this is what I said in 2019 and this is what I have achieved in 2024. And posting my plan in 2024 could be seen as cheating. Like I have posted this only when I was sure I could meet the plan but avoid posting it if I fail. This doesn’t go with my strive to be transparent.

Therefore, I am posting here the full plan to freedom I set in April.
 

5-year Plan
 

Lately, I was playing with the numbers how to adjust the plan to achieve the goal faster. The reason for that was some personal life issues which made me to think that I need to achieve the freedom earlier than as planned above. I will post about the reasons later, not now.

I am still aware of all the risks. I am aware of possibilities of losing trades which would delay the plan. But I have a plan and trade management in place and thus I am aware of potential risks.

To speed up my path to freedom, I decided to further consolidate my accounts and liquidate my Motif account and transfer the funds to my trading account. This would bring in additional $2,600 dollars to this account.

I also decided to raise my traded contract from current 50% to 70% of available buying power. With these adjustments, the new plan would look like this (and it would also shorten the entire time to freedom by one entire year – given, there will be no stupid loses…):
 

5-year Plan
 

Here is a link to my live 5 year plan spreadsheet.
 

I have tools, I have determination, and I have a money management to achieve the goal. All I need is a discipline to follow the rules and mitigate potential losses to minimum. If so, I should be able to achieve this goal. Let’s see…
 

 
Previous posts related to this plan:
 

May 2019 financial freedom report – June 1, 2019
April 2019 financial freedom report – May 05, 2019
Fed up with my own lack of discipline, putting down a plan to reach FI – April 17, 2019
 
 




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Posted by Martin May 05, 2019
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April 2019 financial freedom report


April 2019 is in the books. In this month I met the goal as planned. There were a few changes I made which modified the entire plan:
 

1) I decided to combine my trading accounts into one. I closed my TD Ameritrade account (TD) and transferred funds to my Tasty Works account (TW).
2) This transfer increased money in my TW account and adjust the goal (see below).

 
The Original Plan:
 

report
 

Adjusted Plan:
 

report
 

April 2019 results:
 

How did I do in April 2019?

I did well:

  • The starting value of the account was as planned.
  • However, I violated number of contracts. There were occasions were I traded more contracts than what the plan allowed. I “approved” this to myself saying that I traded more contracts to catch up with short trading weeks available to me. The plan was to trade all four weeks in April but I only could trade three weeks. Although this didn’t backfire (unlike the breaking of the rules at the beginning of May 2019) I made money, not lost money.
  • We exceeded the premium collected over the plan.
  • The deposits were made as planned and actually exceeded the plan.
  • The ending value exceeded the plan.
     

Here are the results:

 

report
 

Here is a reminder of my strategy and way how to trade (simplified):
 

1) open a new trade on Tuesday morning only
2) open with the same week Friday expiration (3 DTE)
3) collect min. 0.30 credit
4) no wider than $5 per trade
5) multiple contracts based on BP
6) let it expire
7) wings at 5 delta or near as long as credit is 0.30
8 ) close one half of the position if the loss reaches $1.00
9) close everything if the loss reaches $1.50
10) if the market swoons through $1.00 and reaches $1.50 or even swings further, close everything.

with 5 delta, (2 SD) the swings still may happen (you never know what crazy people would do on Wall Street) but the breach is very rare. It still may happen, everything may happen, but it should happen occasionally, when panic hits…

 
Previous posts related to this plan:
 

May 2019 financial freedom report – June 1, 2019
My 5-year Plan to Freedom Update – May 22, 2019
Fed up with my own lack of discipline, putting down a plan to reach FI – April 17, 2019
 
 




TastyWorks

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Posted by Martin April 17, 2019
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Fed up with my own lack of discipline, putting down a plan to reach FI


I started trading and learning trading options in 2010… I think it was 2010. I made money, lost money, made money, lost them again.
 

In 2012 I thought I knew everything. I didn’t.
 

In 2014 I started my own trading business. I though I knew everything. I didn’t.
 

Then I made money again. And almost lost them. This time actually I didn’t lose them. But, I locked my accounts in a deadlock of bad trades and they tie almost all money. Instead of trading for a living, I am dragging a few big, bad trades around.
 

And you know why?

 

Because I was constantly breaking my own rules!

 

I was constantly over trading and usually excused it with “it will expire and if not I will roll it and deal with it later.”
 

And this time, I got fed up of myself! This is not what I was taught, was I learned! This is not a strategy I wanted to do! I always told myself that even small amount of money could compound into big returns. Yes, if you f**king follow the rules!
 

dream
 

I laid out a 5 year plan to raise my account to a level which will allow me to retire early, in 4 years. The 5th year should be a retirement year. The cumulative numbers I will be trading in retirement are very scary as of now. It seems like I will never be able to trade such a big account and be comfortable. But, I planned it so I can start teaching my mind to it.

In January 2023 I should be on my own if my plan works.

 
All it needs is discipline and do, what I said I would do. A hard thing if you are undisciplined like I am/was! How I am planning restraining myself? I lay down how much money I will start to trade at the beginning of a month, how much money I can risk per trade, how many contracts to trade, how much money I want to make every month, and how much the account should end up with at the end of each month.
 

So, here is my year 1:
 

plan 1
 

Granted, the plan may not be accomplished if something goes wrong, but all it can take is that it may take longer to achieve my goal. But, I hope not!

But, I learned that it was not enough for me to just say what I would do next. I learned I needed a check mechanism, something what will make me self-aware of what i said I wanted to do and that I am really doing it.
 

And thus I decided to put this plan down which will state:
 

1) My account monthly starting point.
2) Number of contracts I am allowing myself to trade.
3) Monthly premiums I plan on making for each particular month.
4) Monthly deposits I plan on adding to my account to grow it.
5) And… end value for each particular month.
 

And, every month, or every week, or as often as possible, I will write down a report on fulfilling and following the plan. For example, if the plan says, that I will take 1 contract per week, then I will be required myself to trade only 1 contract! I need to act like a proprietary firm. Here are the rules and if you break them, you are out!

I once made a decision that I would limit amount of money to be made (in other words how much I can trade and how much it will make per month) and once I reach that goal I would stop trading. And then another member of the FB group told me why to limit my ability to make more money if I could make more money. So I broke my rule. And now I am in deep (well not that bad) shit. Don’t listen to others who have no idea and one day will learn the lesson the hard way.

So, below, I am posting my monthly reports. I will also be posting the plan for the upcoming years and monthly reports on my Facebook page.
 


April 2019 report (continued)
04/17/2019
 

1) We started trading with the beginning value as projected. ✅

2) We exceeded the number of contracts traded, but we did that to catch up with “mo premiums” plan as the plan expected all 4 weeks in April to be traded and we could trade 2 weeks only; thus this temporary exception was approved. However, if the “mo premiums” will be reached (for example this week) then we will go back to trading only the number of contracts allowed for the month. Also, the number of allowed contracts is determined by the available buying power. ✅

3) The ending value is projected to meet and exceed the plan, unless something unpredictable happens by EOM; ❌

4) We deposited cash as per plan and slightly exceeded the plan. ✅

5) Premiums, so far; are projected to exceed the plan. ❌
 

report

 
Previous posts related to this plan:
 

My 5-year Plan to Freedom Update – May 22, 2019
April 2019 financial freedom report – May 05, 2019
 
 




TastyWorks

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Posted by Martin April 15, 2019
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Lending Club’s spike in defaults is a dead investment


When I started with Lending Club many years ago (pretty much when LC started) I was excited. I saw it as a great addition to my investment portfolio. I had a control over the notes I was invested in and I liked it.

Then came some changes and investing in Lending Club’s notes changed to gambling. With little information available about the borrowers, their ability to pay, any means of assessing their credibility, ability to ask them questions and see if they are worth lending them my hard earned money, good quality notes gone snapped away by institutional lenders who go priority to invest, I decided to stop investing with Lending Club.

The whole idea of a investor was gone, cannibalized by big banks. Now, Lending Club is yet another big bank. And, if you are lucky, you may buy a few notes which may survive til maturity.

Two years ago I decided to revive my investing in Lending Club notes. I changed my selection rules and decided to invest only in low risk, good quality notes (how would you actually determine that is still a mystery to me). My new screener was set to select notes where borrowers had no previous records in their credit report, good score, long employment, owned a house, and the amount of money asked was less than $10,000 dollars, ideally $5,000 only. Also, I was looking at the ratio of overall payments, salary, and all possible data I could digest from LC platform. And let me be clear, the data provided are poor, so it is still like a chimpanzee throwing darts at notes to pick rather than analyzing them.

I deposited $500 dollars to begin with and though, I might build up a portfolio and if I saw a progress, I might add more money.

But, after all the screening possible, about five months after I started my first so called good quality note went into a grace period, then late, then default, and charge off. That was a cold water to my heated up stove. But I said to myself, “well, this may happen, there is some ratio of defaults even with notes of “A” grade.

But few months later a second note went into a grace period, then late, then default, and charge off. I didn’t like it.

At that point I knew, Lending Club was not for me anymore. You have absolutely no control over the notes. Unlike other investments, mainly options I trade, there is no way to adjust your portfolio or defend it. You just hopelessly watch your money disappear.

And collection? Has anyone seen Lending Club to successfully collect on any borrower and recover the loan? I have seen none!

But I still decided to hold on. I just knew I wouldn’t add new money. I was only willing to let run what was in the account and see if this could overcome the defaults and be actually profitable. It was growing up, slowly, nothing exciting, but it was.

Then I noticed another thing – my screener stopped returning any notes available to invest which would meet my criteria. For at least two or three months I had nothing to invest. My cash started piling up nowhere to be invested.

And then, a third note went into a grace period. That was the last nail into my Lending Club investing coffin. I decided to cash out the account, collect what’s left, and move my money to may options trading account. I sold all notes, fortunately, on the secondary platform and move my cash out. Only two late notes are still left hanging in there, and I expect them to default and be charged off.

But today, I checked the platform and saw another note (already sold) went to a grace period. The borrower made only two payments, and got late after that.
 

Lending Club Defaults

 
All I can say now, I am glad, I cashed it all out. And I am done with Lending Club.

Another thing you may notice, is that, Lending Club and Folio both charge you exorbitant fees for pretty much nothing. Not anymore.
 

What is your experience?




TastyWorks

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Posted by Martin March 27, 2019
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You will never please everyone… not at Wall Street


I borrowed this from Chris’s twitter:

You often hear “when the Fed is raising rates, it is bad for stocks”, [it is bearish].

Now with the possibility of future rate cuts, we hear “you do not want to be long stocks when the Fed starts cutting rates,” [it is bearish].
 




TastyWorks

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Posted by Martin March 27, 2019
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Topping pattern?


The market was doing well in the morning but at about 10 am MT it went into a spiraling selloff. After the fact, the media told us why. Great to know, now I can sleep better. But later on the market started recovering the loss. The market lost -1.34% intraday. It recovered a bit and ended losing 0.46% for the day. The good thing is, we closed above 2800. That is promising. But don’t be too optimistic.

The more I look at the chart, the more it resembles a topping pattern:
 

S&P 500




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