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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
 
 





2 responses to “June 2019 financial freedom report”

  1. JW says:

    Your trades indicate you sold 20 Iron Condors against the SPX 2675 / 2680 / 2860 / 2865, on June4 with a June 7 Expiration. With a $0 close value I assume it went to expiration. It appears the Call side was breached at 2865 for the full $5 spread at market close on June 7. How did you not lose on this trade the full $5 for all 20 contracts?

    Just a newb here looking for understanding.

    • Martin says:

      That was because as the market got higher I started unloading the calls (closing those positions) while rolling put side higher which offset the cost.

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