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June 2018 trading, investing, results

S&P 500  2,713.22 -13.49 (-0.49%)  Dow 30  24,174.82 -132.36 (-0.54%)  Nasdaq  7,502.67 -65.01 (-0.86%)
 

May resultsJune is over and I battle with myself to keep up posting my trades and results. It is hard to do so. I work full time and manage a few accounts at the same time. I trade many trades and it is difficult to post them all.

Just in June itself, I made 666 trades in one account – the IRA account alone. Overall, I made 2593 trades.

 
Trading Results
 

With so much trading, it became more and more difficult for me to keep up posting all my trades and their adjustments. I wish I could post more to be able to help others to learn trading but as of now I do not know how to do that without being consumed by it.

I do download my csv file from my brokerage account which I upload to the spreadsheet which then calculates everything else for me, such as premium income, number of trades, net liquidation value, and other portfolio metrics but I still couldn’t figure out how to record my individual trades so you can benefit from it. As of now, I am not able to do it and must stop doing it as it is very time consuming.

I still will be posting some of the trades on our Facebook Page where you can follow those trades.

 

I trade options to create income. Income, I can use to invest into dividend growth stocks and to pay for the bills and other expenses.

As of today, I manage three accounts:

1) A business account
2) An IRA account
3) A ROTH IRA account
4) A personal margin account

Over time, I finally came to realization that a trading capital is important. I am under-capitalized in my business account. And I struggle in that account very much. I get beaten hard and losing money no matter how much I try not to.

Same thing is happening with my ROTH account. Not enough capital. Troubles to trade. And… losing.

But the IRA account has enough capital and trading it is easy and not stressful. When a trade goes against me I feel no fear as I have enough capital to adjust the trade and move on. I don’t have such comfort in the business account and in the ROTH account. Unfortunately.

Thus, I decided to adjust my strategy. I will mute trading in the business and ROTH accounts and will start saving money. I will take only small trades, small enough to take stock assignment should it happen or have enough capital to adjust a trade. This means no trading in those two accounts and be saving only to raise enough capital.

 
Here is the June 2018 trading and dividend investing results. The results are mixed. Mixed with great income in IRA account but terrible losses in the business account.

 
Trading Results
 

As you can see above, the IRA account performed great while other accounts suffered losses. For example, I got assigned to JNJ stock but I didn’t have enough capital to take the assignment. So I had to liquidate the position at a loss. Or another position – STX going against me (volatility raising) and the account couldn’t bear it, so I had to close at a loss. Over-trading and little capital is a killer.

There fore, I need to adjust and start saving.
 
 

Here is the entire year results so far:

 
Trading Results
 

 

 · Dividend stock investing

 

Dividend investing is doing great. I keep using 50% of all options income and buy dividend stocks.

Since the death of David Fish, who maintained the great dividend champions list I had to create my own list to keep the selection of stocks running as no one seems to be updating the David Fish’s list anymore.

As of now, my list is semi automated so I do not have to do all updates manually myself but it doesn’t include all stocks, only those I invest in. And I keep buying.

 

Here is a review of our accounts stock holdings:

 
Traditional IRA
Trading Results
 

ROTH IRA
Trading Results
 

TD account
TBD
 

In June we purchased the following shares:

 
Dividend growth stocks

 

 · Dividend Income

 

ROTH IRA dividend income
Trading Results
 

IRA dividend income
Trading Results

 





4 responses to “June 2018 trading, investing, results”

  1. Mike says:

    Seems like your option selling strategy only works during long periods of falling volatility and a rising stock market. If the next year or two is similar to the first half of this year in terms of higher volatility (which I think is likely), I fear your accounts will continue to see lower net-liquidation values. Being down over 12% this year while the SPY is up slightly would seem to support my theory. It might be time to re-assess the merits of this strategy considering the current outlook for the market.

    • Martin says:

      So what strategy would you suggest?

      Start buying options?

      Many of my recent losses were from options I purchased! These are too directional for me and I suck in determining the direction. Few trades worked many failed. I keep converting them now into credit spreads to salvage at least some cash.

      Or not to trade at all during the market like this?

      Not sure this is what I want as this market may last long time. I for sure reduced trading and will be reducing trading more but I do not want to stop trading whatsoever just because we are in a choppy market.

      Or purchasing stocks only?

      I don’t think this strategy would help improve the net-liq at all.

      Or what other strategy I should re-evaluate?

      Yes, it is a known fact that there are two types of a market – easy market and difficult market. We experienced years of easy market and now we are in a difficult market. And I expect that in the difficult market it will be a lot harder to trade, my net liq will be depressed, I will have to trade less, but I still do not see it as a problem. As long as I keep my trades positive and my cash flow is positive I do not care what the net-liq is. It is like investing in dividend stocks. When stocks are on sale I do not care what their value is as long as they keep paying me the dividend. Options trading is similar. I do not care what my net-liq is as long as I keep closing the trades as winners and they generate cash. Which is what is happening.

      It was not happening in my small accounts though but it is happening in my large accounts, so my conclusion is that I need large enough capital to navigate trades which are in trouble and not over trade.

      However, I would love to learn what “other” strategy I need to implement.

      • Mike says:

        If you keep closing your trades as winners (as you say), why is your net-liq down 12%? You must be either closing many at a loss, or have large market value losses in positions you currently hold. In either case, you would have been better off not opening the trade to begin with. My point is only that you seem to think that it is the execution of your strategy that is the issue, and you may want to consider that it is the strategy itself that is the problem. I’m not sure what your ‘edge’ is over the teams of analysts at the big banks using computer algorithms to run millions of trade simulations and able to execute transactions many times faster than you. They are the ones on the other side of your trades. Do you know something they don’t? How can you compete?

        • Martin says:

          The net-liq is down because I keep opening new trades and I have also trades with expiration yet to come. Anytime a trade closes I open a new one. Anytime a trade gets near the money or in the money I roll it (which creates a realized loss but is offset by unrealized gain), as recently the volatility spiked up many old trades increased in value and although OTM they ate some net-liq.

          I have a few trades which I had to roll due to the fall of the market. I keep rolling them, managing them, reversing into calls and keep closing as they reach my closing limit (unless I have to roll them). These fluctuate and impact net-liq. Should I have closed them when the market dropped in February? I decided not to, but rather roll them or convert them even though they have impact on my net-liq. By rolling them down and away in time and offsetting them with calls I managed to roll them almost all into the OTM state. Now waiting for them to get to expiration and close them for smaller debit than credit received.

          I am not competing with those analysts in speed or knowledge as I can’t do that. All I am trying to do is to open a trade, collect a credit and get out at a certain profit. When the market was approaching higher and higher levels at the end of 2017 and beginning of 2018 I started unloading trades, but I couldn’t unload them all as it would mean taking losses. Then the market collapsed. Trades I had near expiration I was able to convert them into bearish trades and they either expired or closed for profit. But I also had trades with longer expiration and these were not repairable. My netliq dropped from $91,000 to $75,000. Should I close those trades and realize 25k loss? Or keep playing the game and manage those trades (as of now my net-liq is $90,300, so pretty much back up to pre-correction level)? Of course, this is just IRA, my trading account got me hit hard as I had a few bad trades from 2015 – 2016 which I totally mismanaged, over-traded, and yes screwed up. So in January I decided to no longer manage them but close them at a loss (which today I consider a mistake). Many trades I had (and still have) in my trading account are a result of breaking my own rules – mostly over trading. I didn’t make that mistake in IRA that’s why I was able to navigate all my trades through this correction well and without losses. All the time, I kept my available cash (buying power) at 50% or higher. Yes, during the correction I went temporarily down and used more cash to roll the trades convert them into different structures (butterflies, back ratios, or simply from puts into calls, from put spreads into Iron Condors, etc.). I had enough capital to do that. But in my ROTH or trading account I don’t have that capital because I broke my rules in the past and repairing this situation and bringing the accounts back up to the rules is not an overnight fix, unfortunately (I wish it was). That’s why I decided to stop trading in those two accounts and raise capital, going back to the roots of a strategy described on this blog – selling against dividend stocks only and if assigned take assignment (as I deviated from this strategy by trading non-dividend underlying, mostly SPX).

          In Roth I have a trade which needed adjustment but I couldn’t do that adjustment because I had no BP. So it is now in a full loss. But I have enough time to expiration and since it is an SPX trade I do not have to worry about early assignment. It is eating up my net-liq. Should I worry about it? No. It is an 80 DTE trade. I will start worry about it when it becomes a 30 DTE trade and will try to figure out what to do with it.

          I do not want to say that it is easy to trade options. It is hell of a difficult business and it will be. Nothing will go perfect. It is easy to trade when the market is trending – and it doesn’t matter which direction it is trending as I could make money when it was going up as well as when it was going down. What makes it difficult is a choppy market like today. Even when I open a trade waiting for the market to reach what I deem a support then I take a put spread, it still will not guarantee my net-liq will go immediately up. It will go up in the next couple of days when the market goes up, but in a choppy market the next few days it sells off again on a higher volatility than when I was opening a trade and the net liq will drop like a rock (although my trade is still deep OTM).

          Currently, my trades are still slightly bullish (bullish to neutral) so yes, my net-liq will get hurt anytime volatility goes up and the market down. But I cannot reverse the trades into bearish as I still think this bull has legs. If you were 100% stocks, your net-liq would do the exact same thing as with options. It will never go up only and always. There will be days when you will see a drawdown in your account value. So I still do not understand the obsession about net-liq going down while the market is going up (which is temporary and when I recorded the net-liq, the market was down, If I recorded it today, my net-liq would be up again – heck I may add my net-liq values live to my website so I stop keep hearing this net-liq thing every day). No trading is bulletproof and open trades will impact net-liq. Most of my closed trades are winners.

          Here are my open trades and closed trades log, check it out, (the very newest trades are not recorded in it as I wasn’t able to do so but I might back fill them from the historical records):

          https://docs.google.com/spreadsheets/d/e/2PACX-1vQRI7crf-tGmUODZGLLo5HFgH0Y_vbsATe9pkYL8xCGcEC5v3inulQLBhI-mSJ3dBhoF98C9J4NuZDq/pubhtml?gid=38869322&single=true

          Thanks for stopping by

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