Posted by Martin December 27, 2017
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My Goal for 2018


Resolution

My goal is simple – continue trading mechanically, like a robot, trade more and small trades. Perfect my patience and discipline trading according to rules and strive to stay away from trades which would cause over trading or imply discomfort as sometimes I tend to jump the gun.
 

My IRA account is well on track with this and my goal is to maintain $2,000 monthly income in this account and building dividend growth portfolio. Reach $120,000 by the end of 2018.
 

My ROTH account needs improvement as I have a few bad trades in it, so I will focus on managing them and eventually remove them by the end of the year either as small winners or break even trades. I want to reach $300 monthly income in 2018 (I have only about $4,000 cash available for options trading in this account all else is in long dividend stocks).

 
My TD trading account is full of mess right now. I have too many bad trades in it, so my goal is again to manage them and eventually remove them. Also start trading small trades to start generating income. I will be happy for at least $100 monthly income in this account, preservation of the account value, and removal bad trades as either winners or break even trades. If losses are taken then they must be offset by other winning trades. My goal is to be able to remove majority of the bad trades and raise available cash to $5,000 by the end of 2018.

 
TW60 account is a new margin account and I dedicated it to Jesus Christ and our church. I am a strong believer in generating everlasting income so if I can choose whether to donate money which are spent and gone for good or invest them and generate income on that money which can be then spent forever, I would choose the latter one. So in 2018 I am starting with $300 account value (I know it is a very small one) and slowly trading it up and donate all proceeds from the account. Later on I plan on asking the church to open a tax free account and I will move this money to that account but before I do so, I want to have a track record for them to show.
 




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Posted by Martin December 27, 2017
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Robots entering Wall Street





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Posted by Martin December 26, 2017
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Our strategy for 2018 and probably beyond


It is time to review our trading strategy and update it if it no longer fits all our rules and comfort zone of our trading.

Although this strategy will still be based on the basic frame posted earlier on this blog, it is time to tweak it a bit and – update it. Another reason for update is that I no longer trade what I have said that I do…

 
Here is an updated strategy:
 

  1. Trade cash secured (in cash accounts) or naked (in margin accounts) puts to generate income.
  2.  

  3. Trade against dividend stocks only. Trade against dividend aristocrats. The list of dividend aristocrats (Champions) is here.
  4.  

  5. Update watch list every month. All stocks which are removed from the dividend aristocrats list will be removed from our watch list, all open options trades closed or expired, and all open long stock positions closed. Money will be reused for options trading.
  6.  

  7. When a trade goes against us, roll puts as much as possible.
  8.  

  9. If rolling is not possible for any reason (e.g. too deep in the money, no strikes available, a roll would result in a debit trade) accept stock assignment.
  10.  

  11. When assigned, keep the stock, collect dividends, and start selling covered calls.
  12.  

  13. Sell covered calls only when the stock is not too deep in the money. If so, and rolling covered calls (CCs) would not be possible, do not sell CCs and wait. Collect dividends only. It is OK selling CCs only if resulting assignment would sell the stock above the break even point.
  14.  

  15. When selling covered calls above the break even point and the stock starts rising, roll covered calls as much as possible. If rolling not possible, accept assignment or attempt converting calls into puts.
  16.  

  17. Create a watch list of 30 dividend aristocrats (exceptions allowed) and build a portfolio of 30 stocks (DGS).
  18.  

  19. When a monthly income reaches $1,000 dollars, use 50% to purchase DGS stocks and leave the rest to be reinvested into options trading.
  20.  

  21. If the monthly income is below $1,000 dollars, accumulate monthly incomes for 6 months and use 50% of combined 6 months income to purchase the DGS stock. For example, if monthly income is only $200 per month, use 6 months combined income of $1,200 (6 x $200) to purchase DGS stocks. However, the combined income must be more than $1,000. If less, all monthly income will be reinvested.
  22.  

  23. Limit open trades to max 50% of available buying power (BP). For example, if a BP is $90,000 only $45,000 can be used to trade options. The rest is reserves for rolling and trade repairs. If trade repairs consume more BP than allowed, no new trades can be opened until the available cash for trading is raised back to the limit.
  24.  

  25. Open new trades only when the old ones are closed so not to exceed the cash limit.
  26.  

  27. Trade only 1 contract of each stock at a time. The reason is if the trade goes against us and we have to accept assignment, we will purchase only 100 shares of a stock in lieu of multiple stock lots.
  28.  

  29. Sell contracts with expiration from as little as 3 days up to 45 days based on:
    • available premium (if more credit is available at shorter DTE use shorter DTE)
    • binary event (for example earnings – use shorter DTE for the trade to finish before earnings, or avoid the trade)
    • volatility (the more volatile the stock is the shorter DTE shall be used).
  30.  

  31. Sell new put contracts at 1 SD (first standard deviation).
  32.  

  33. Avoid opening new trades with earnings event. The trades can be opened so the trade ends before earnings. avoid riding a trade through the earnings.
  34.  

  35. Open a trade with minimum of $15 credit per trade.
  36.  

  37. Close the trades as follows:
    • < 7 DTE = let a trade expire worthless
    • > 7 DTE and < 30 DTE = buy the contract back for 0.05 debit.
    • > 30 DTE and 45 DTE = buy the contract back for 50% of received credit.
  38.  

  39. Purchase only stocks from DGS watch list which are in a “correction” mode. The correction mode is determine by how much the DGS stock is off of its 52 week high.
  40.  

  41. If a stock is purchased via put assignment, that stock can be sold via covered call assignment. A stock purchased via 50% reinvestment, that holding becomes a core of a portfolio and shouldn’t be sold (mainly in retirement accounts). If sold, sell a new in the money put to buy it back.
  42.  

  43. If a monthly dividend income reaches $500 a month then that income shall be used for selective reinvestment in lieu of DRIP.

The goal is to trade options and use proceeds from options to purchase high quality dividend stocks for passive income. This was my dream from day one when I started trading and later on our business. The reason was that my income wasn’t large enough to pay the bills and save enough money to invest. So I wanted to create a sufficient income from trading to invest. I am almost there as many of our accounts are now self-sustainable and can support this strategy of reinvesting options income into dividend stocks.

 

 · Why dividend stocks?

 

The reason is simple. Dividend stock (high quality stocks) are less volatile. Yes, they offer smaller premium but they also offer less risk. And as one saying says – “Small drops will make an Ocean”.

High quality dividend stocks usually raise their dividend every year and it is a well known fact that these stocks tend to grow by the rate of their dividend increase. If a stock increases a dividend by 3% annually, you may well expect the stock to go up by 3% too.

Another reason is that one day I will not be able to trade. You know, Alzheimer… or senility… or laziness, who knows what will hit me when I will be 70 or 90 years old. In that case I want a secure income and not only from the retirement accounts.

Next reason is psychological. When trading options using dividend stocks the fear of assignment is eliminated. At least this works with me. I am no longer afraid to get assigned because it is now a part of our strategy. Before, when I was trading stocks such as WYNN, X, TECK, LULU, MNK, or index STX, these were actually stock I didn’t want. Yes I traded them for greed and fat premiums but I didn’t want to be assigned. And when the stock moved against me, I was in panic trying to defend the assignment at all cost. And I still have those stocks (trades) in our trading account and still fight those trades (and I wish so much to end those trades for good, but I can’t as I would suffer losses).

 

 · Any exceptions to the strategy?

 

Yes, I allow myself an exception to the rules spelled above. But such exception must not derail me from the comfort zone! Trading is about being comfortable in the first place in order to be successful.

There are plenty of people out there boasting about their trading and how great they are, but when you talk to them you find out that they have been exposed to the market for a year or less. They are still enjoying the “beginners luck”. I was there myself too. I actually started this blog in 2008 when I felt like the greatest trader in the world. I wish that oblivious ignorance was still with me and I could trade more easily than today.

So, I allow for exceptions and trade stocks such as Amazon (AMZN) or index (SPX) but I only do it on a very small scale and only when I feel comfortable with those trades. As soon as I no longer feel OK, I stop trading those stocks or index and stop trading whatsoever. If you do not feel comfortable do not trade.

I also allow for trades using different strategy than above if I see a good trade opportunity (for example trading Iron Butterflies on earnings) but again, this must be done with enough cash in the account being traded and when feeling in a comfort zone.

The main goal is to preserve capital and not lose it with reckless trading.

 

 · What about strangles? Will we still trade them?

 

Yes, we will trade strangles but not as often as before. We cannot trade them in our retirement accounts (and other strategies such as call spreads or Jade lizards do not have enough premiums to make it worth trading and our business trading account is currently deadlocked in bad trades with we need to eliminate first. So majority of our trading is now in a personal retirement accounts. However, as soon as our trading account is relieved, we will resume strangles.

 

 · Accounts

 

On this blog we will be reporting the following accounts:
 

IRA (personal retirement account – cash account)
ROTH (personal retirement account – cash account)
TD (our business trading account – margin account)
TW60 (personal trading account – margin account)

 

 · Trades reporting

 

We will be still providing monthly reports to show our trading progress but we are also working on reporting individual trades for our followers and novice traders to follow.

We believe that it can be helpful mainly to novice traders to see the trades, follow them, and mirror them. The best way to learn trading options is by doing it.

Before you start mirroring our trades, please make sure you read and understand our strategy and how we trade options. It is important that you know the strategy before you commit your money in a trade and that you understand that trade.

To trade options successfully you must understand the initial trade and its setup, all possible outcomes of that trade, and your “repair” strategies to all those outcomes. It is not always easy to repair a trade. But you must know what to do when that happens and a trade needs a repair.

Before you commit real money, we recommend that you place those trades in you paper money account and practice trading first to understand. And of course, you can ask us any questions about the trade.

In the past, we experimented with several way on how to post the trades and keep track of them for our readers and followers to best mirror the trades. We did this manually and with the amount of trades, it became impossible to maintain our trades public. But we will keep looking for the best way to publish our trades and show its status so you can follow it the best.

As of today, it seems that the best way to publish our trades (and it still may change over time) is to use Facebook page. So we set up a page ZZ Capital 14 where you can follow the trades.

You can still visit our Trades and Income page to review our trades and accounts progress but if you want to follow our trades, visit the Facebook page.




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Posted by Martin December 26, 2017
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How to share our trades for our followers to follow?


We would like to post our trades for all to see and eventually follow. We believe that it can be helpful mainly to novice traders to see the trades, follow them, and mirror them. The best way to learn trading options is by doing it.

Before you start mirroring our trades, please make sure you read and understand our strategy and how we trade options. It is important that you know the strategy before you commit your money in a trade and that you understand that trade.

To trade options successfully you must understand the initial trade and its setup, all possible outcomes of that trade, and your “repair” strategies to all those outcomes. It is not always easy to repair a trade. But you must know what to do when that happens and a trade needs a repair.

Before you commit real money, we recommend that you place those trades in you paper money account and practice trading first to understand. And of course, you can ask us any questions about the trade.

In the past, we experimented with several way on how to post the trades and keep track of them for our readers and followers to best mirror the trades. We did this manually and with the amount of trades, it became impossible to maintain our trades public. But we will keep looking for the best way to publish our trades and show its status so you can follow it the best.

As of today, it seems that the best way to publish our trades (and it still may change over time) is to use Facebook page. So we set up a page ZZ Capital 14 where you can follow the trades.

As of today we will be posting all trades in our four separate accounts:

IRA (personal retirement account – cash account)
ROTH (personal retirement account – cash account)
TD (our business trading account – margin account)
TW60 (personal trading account – margin account)
 




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Posted by Guest December 21, 2017
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How Will a Tax Overhaul Impact Business Activity?


pic1
 

Current proposals between the House and the Senate to provide much-needed relief to middle-class Americans have gained traction in recent weeks after the Senate voted in favor of tax reform. It’s important appreciate the importance of tax reform in the US – the world #1 biggest economy. According to the Republicans, tax savings will amount to $1,200 per household of 4, with a median income of around $59,000. Based on proposals, the standard deduction will rise to $12,000, meaning that tax will not have to be paid on the first $12,000 if itemized deductions are not made. Additionally, the child tax credit will be raised to $1,600, as well as a provision for elderly parents valued at up to $300.
However, the biggest changes in the current proposals come in the form of corporate taxes. The Federal tax rate is currently 35% for corporations, and if the House and Senate can agree, that rate will be dramatically reduced to around 20% – 22%. A big part of President Trump’s campaign promise was to get US companies to repatriate foreign-based earnings to the US. It is estimated that trillions of dollars are ‘parked’ offshore, and Trump is trying to get these companies to bring it back to the US for a once off tax rate of 12%. The question as to whether these tax proposals will generate increased employment prospects in the United States, and help to drive up wages remains to be seen.

 

 · Tax Stimulus May Translate into Higher Employment Figures

 

According to Republicans, there is no doubt that a decreased tax burden on US companies will allow them to pay more in wages, hire more American workers, and increase their profitability and investment in the US economy. Across the aisle, opponents of these tax proposals do not believe that all the repatriated earnings will filter through the US economy. They believe that shareholders will benefit by way of increased dividends and companies will use that money for share buybacks. The tax reform proposals are not without their bugbears. The three thorniest issues include rules regarding property taxes, mortgage interest deductions, local and state tax deductions.
All the state and local tax deductions will be eliminated according to the new tax proposals, but property taxes can be deducted up to a value of $10,000. Existing mortgages are grandfathered into the tax proposals, but new mortgages will be subject to interest-rate deductions that will have a limit of $500,000. All the hullabaloo currently taking place around tax reform is only just getting started. Lobbyists, tax preparers, legislators and opponents/proponents will be going head-to-head to ensure that everybody gets a little bit of what they want before it is signed into law.

 

 · What Experts Are Saying

 

Olsson Capital finance analyst, Montgomery P. Bellwether Sr., is expecting windfall trading activity on financial stocks in 2018,

‘Since 2015, there has been a degree of cautious optimism about financial stocks in the markets. This was driven in part by quantitative tightening at the Fed. The Fed FOMC (Federal Open Market Committee) has bumped up interest rates by 25-basis point several times, allowing the federal funds rate to steadily rise to its current level. Increasing interest rates bode well for banks and financial institutions that typically generate their profits through loaning out money. Every 25-basis point increase is effectively an additional guarantee that bank stocks like Bank of America, Wells Fargo & Company, Citigroup, Goldman Sachs, and Morgan Stanley will be strong contenders in 2018. Now, we have the dual benefit of added momentum from deregulation of the banking sector (reduced capital cushions), and lower corporate taxes to as low as 20%. If all these measures come to pass, it will be the perfect storm for investors waiting to cash in on bank stocks in the New Year’




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Posted by Mark Pokorny December 20, 2017
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5 Reasons a Degree in Accounting Provides the Most Versatile Career

5 Reasons a Degree in Accounting Provides the Most Versatile Career

There was a time when people viewed accountants with disdain, often making jokes about the high school nerds growing up to become accountants with their thick-framed eyeglasses and pocket protectors. That’s no longer the case. Today, the world recognizes the need for qualified accountants, and that has opened up a whole world of opportunities who choose to pursue an education in accounting. Here are just a few reasons you may want to consider this career move.

Everyone Needs an Accountant

There will never be a shortage of accounting jobs because every single business needs an accountant. From Hollywood film studios to east coast hospitals, everyone needs accounting staff. As more complex laws regulate how businesses record their financial transactions, the field of accounting will continue to grow. Even if your true passion lies elsewhere, accounting skills relate to multiple careers, so your early accounting jobs can be used as stepping stones to something greater. You can branch out and even select jobs based on your geographical preferences.

Analytical Minds are Prized

More than ever, those skilled in math, logic, and statistics are highly sought after in the business world. Certainly, balancing the books is the most widely known function of an accountant, but accountants also manage pay for employees and ensure all of the company’s taxes are paid on time. In this way, the accountant is vital to keeping any business solvent and operating.

Work Part-Time, Earn Full-Time

Typically, a CPA (Certified Public Accountant) worked hardest during tax season, which is just January through April. This is a high-pressure period, but, for many in this line of work, it does come with benefits. The remaining eight months of the year can be spent working fewer hours or even taking extended time off altogether. The free time can be used to relax or to pursue another area of interest. Tax season usually can earn an accountant a full year’s salary, so that gives him or her the financial backing to pursue a hobby or a passion for the arts.

Career Flexibility

If you want to have a lot of options in your career path, accounting is a good fit. As mentioned earlier, almost every industry needs accountants, but you can even move beyond that. While earning your accounting degree, you will have also learned business management principles. This will allow you to branch into a variety of other careers in business if you find that accounting isn’t what you want to be doing. There are also a variety of functions that accountants can be involved in, from investments to financial projections, to bookkeeping.

Opens Up a Host of Opportunities

From lateral transfers to promotions, starting out in accounting can open more doors for you within your company. While your skills allow you to branch out into other areas, performing well as an accountant can promote you to other business positions naturally. Many accountants who have moved up to Chief Financial Officer were later promoted to CEO (Chief Executive Officer), proving that an accounting degree provides a vast potential for advancement.

Whether you choose to make a career out of accounting or use it to launch a career in a related field, getting started with a degree in accounting can provide anyone with a high level of career diversity. As you gain experience and establish your career, you may be able to choose your hours, the type of industry in which you work, or your geographical location. The nature of an accounting career provides opportunities that are only limited by your personal preferences and desires. This may be just the opportunity you need to advance in your life.




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Posted by Mark Pokorny December 15, 2017
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How Does Today’s Politics Affect My Investments?

How Does Today's Politics Affect My Investments?

When New York billionaire Donald Trump was surprisingly elected President of the United States in 2016, major stock exchanges around the world immediately reacted to the news. Wall Street was not in session when the first reports of a major election upset were broadcast; however after-hours trading declined sharply that night. Across the Atlantic, European stock markets plummeted, and a similar situation was observed in Tokyo; however, by the time most of the votes were counted the next morning, the overnight losses were reversed, and Wall Street had a bullish trading session.

The investment lessons from November 2016 underscored an important aspect of financial markets: they are clearly subject to political sentiment and behavioral economics. The initial tanking of the markets on election night was likely due to a feeling of uncertainty among traders; after all, statistical modeling predicted a landslide victory for Hillary Clinton. The bullish run on Wall Street the next day could be explained by traders feeling relieved that the controversial campaigning had come to an end; moreover, traders were likely “buying on the dip,” which means taking advantage of lower overnight prices.

 

 · Political Feelings and Stock Portfolios

 

In 2010, economists from the University of Texas and the University of Southern Mississippi published the results of a longitudinal study that looked into how political sentiment and optimism impact investment decisions. One interesting result gleaned from the study is directly related to risk tolerance: if you keep up with local news while your political party holds the White House or a Congressional majority, you are more likely to load up your portfolio with riskier stocks, and you will prefer shares from American companies.

 

 · The Herd Instinct

 

In times of political instability, global markets tend to react negatively, but these situations involve more than just reasoning. Let’s say your stock portfolio is loaded with shares of major oil companies; if you learn about a government corruption scandal in Saudi Arabia, you will probably think about selling some of these stocks and reducing your risk, and you will hardly be the only one doing so. Even if political analysts determine the scandal to be nothing to worry about, institutional investors may see an opportunity to take short positions, and seasoned traders will do the same. This is known as the “herd instinct;” not everyone will believe that the scandal will interfere with oil production, but they will certainly follow the actions of the majority.

 

 · What Should You Do?

 

But knowing what how the political situation affects your investments doesn’t mean you know how to act. It does give you the tools to anticipate changes and can help you figure out what you need to do. It is important to establish your goals for your investments so that you know what you should do if there is another upheaval like the one in November of 2016. Once you know what your goals are, make sure you keep up on the news at all levels, from local to international. Being aware of what is going on can inform your financial decisions and help you figure out the best time to buy or sell your investments.




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Posted by Mark Pokorny December 14, 2017
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What Will The Stock Market Look Like in 20 Years?

What Will The Stock Market Look Like in 20 Years?

If anyone could completely predict what the stock market will look like in twenty years, you might as well name them Nostradamus and hand them all the money in the world right now. Every market investor knows that it is not possible to predict the movements or changes in the market with one-hundred percent accuracy. The best that we can hope for is to make informed and educated guesses and just wait to see what happens.

 

 · What The Greatest Investor In The World Thinks

 

There is no reason to be concerned about the markets says the Oracle of Omaha (aka Warren Buffet). In a September article on CNN Money, he predicted that the Dow Jones Industrial Index will hit one million within the next one-hundred years. This is a bold statement given that the market currently fluctuates between roughly twenty and twenty-five thousand. All of this goes to show that Buffet believes in world capitalism, and he does not see it going away anytime soon.

 

 · China Will Continue To Shine

 

It happened without much fanfare, but China took over the top of the list for the world’s largest economy in 2014. It was something that had been predicted for some time, but many still feel as though they live in a reality that no longer exists. It is simply not the case that the United States is the world’s largest economy. With this dynamic shift, the United States has to take a back seat so to speak to some of the economic agenda setting and policy making of China.

The two countries are very much tied to each other economically, so what happens in one will likely be mirrored in the other. This could make for an interesting dynamic that keeps investors guessing.

 

 · Are We In A Bubble?

 

Perhaps we are in a bubble in the market right now. There are certainly more signs that we are in a bubble than not. Still, twenty years is a long time frame to take a look at. The market increases in value through most ten year periods, let alone twenty years.

It is reasonable to assume that in twenty years the stock market will be higher than it is today. This year or next year may be a down year (perhaps even a big one!), but the overall trajectory of the market is to continue to climb. All investors, particularly those with a long time horizon for their investments should consider what kind of returns they may see after twenty years.

 

Resources

Stock Market on Verge of a Melt-Up

Top 9 Economic Predictions for the Next 10 Years

Beco Life Insurance Settlements

DOW Will Hit 1 Million in 100 Years




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Posted by Martin December 12, 2017
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Trade with no emotions


People keep asking me how I trade, how do I set up trades what do I look for to create a trade. So here is my view reposted:
 

I try to keep it very simple and with no studies behind it. I have a certain set of rules or steps and I execute them pretty much without thinking. I want my trading as automated and brainless as possible, trade like a robot to eliminate guessing, worrying, fear, double guessing, predicting, searching for reasons, and so on.
 

So I start with how much I can trade per account, usually 50% of the available cash for trading or buying power (BP). So any trade I plan to open, I check what it would do to my BP, if it falls below limit, I do not open a trade, if I have plenty of cash to trade I may take it.

 
Next I have a watch list of about 30 stocks I selected before on a set of criteria such as – must be a dividend stock (I have two exceptions – AMZN and SPX), must be optionable, must offer credit of $15 or more for 7 DTE or more, etc.

 
Then I create a trade around 1SD or more or expected move (EM). So, for example, I look at 10 DTE trade bid price. If the bid is 0.02 then that’s not tradeable. So I change DTE to 45 and see bid price 0.20. That’s acceptable (must be a price at 1SD (or +/- 0.15 delta).

 
I check the chart where the stock is, where the supports are, resistances are and what a trend is. If bullish trend I may change my strike and go higher (20 or 30 delta, also depends on the stock). If the stock is neutral or going sideways I tend to be wider as the stock may move in a sudden rally or selloff which is unpredictable and I do not want to get busted. So with a trending stock I can choose a skew, without a trend I want to be wider on both sides (call or put side; e.g. strangles, or omit one side whatsoever).

 
I always try to select as short DTE as possible.
 

So, when 1SD is OK, credit is OK, DTE is OK,overall BP is OK, I take a trade. There is nothing much you can do about it anyway. Any search for reasoning analysis or whatever will do nothing to you. It will ruin your mindset and convince you about something which is not true. And on top of that any analysis you ever make will be invalidated the moment you take the trade as it will become a past. The goal is not in a setting a trade based on your expectation, the goal is not to be stuck in that expectation. Your mind must be free to judge two things once you take a trade: – the trade works, – the trade doesn’t work. So when all those four steps/rules are met, I place the trade and then my focus is on managing the trade.

 
I watch the trade carefully – I immediately place a buy back order – for longer DTE at 50% of creidt, for short DTE 15 days or shorter at 0.05 debit, for 5 days or shorter I let them expire (unless there is a strong move against me and I need to react). For example, I open AMZN 4 DTE, collect 0.75 credit, block $2,000 BP; and in 2 days I can close it for 0.05 debit, then I do that, close it, release cash and end up with 0.70 credit profit. If however I have SPX trade, block $500 cash, collected 0.30 credit and have 4 DTE, then most likely I let it run until expiration unless there is a strong move in one direction – for example I have a Condor then I place a separate closing on puts and separate buy back on calls, so if the stock runs up, the puts get close early and I will have free hands (no additional margin required) to roll or convert the calls.

 
If I start feeling uncomfortable with a trade I proceed to manage it – close it, roll it, convert it. Sometimes you get stuck in a trade longer than you wanted or you will have to accept assignment. If nothing works, close it, take a loss, and move on.

 
Over time you get in tune with the market and “your” stocks. But “your stocks” shouldn’t be a love until the death departs you or “fomo” thing. The goal is to be completely unemotional and cold headed (probably the hardest part) and not looking for reasons is what will help you. That’s why generally I do not want to know which company invented what, who is buying who, who made money, who didn’t, what the crowd thinks, what you think, or what I think in that matter. Once you make your mind and become a believer of a stock doing something you will have a hard time to change your belief and mind set and change your trade. We are in a strong bull market with 8.5 years of bullish move. It is very easy to get caught in this market as “what can go wrong?” mind set and when the trend changes many will be caught in disbelief and paralysis. I may sound like I have mastered this but I am afraid myself that I may be in this trap too. I am saying myself all the time, “don’t worry, if the market reverses, you start trading bearish trades such as call spreads or naked calls” but I still have a doubt whether I will be able to manage it once this comes. I have been through 2000 and 2008 crisis but not as involved as today… The big test is coming and no one knows when. We just need to be prepared for it with a proper money management and trade management.

 
Hope this helps.




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Posted by Martin December 11, 2017
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November 2017 results


November 2017 is over and it is time once again to review my accounts and performance.
 

As of today, I manage four accounts (my own) and one client account. Here is a list of accounts I manage and review in my monthly reviews her on this blog:
 

TD Ameritrade – trading account, taxable
IRA – retirement account, pre-tax deferred, former 401k account
ROTH IRA – trading account, after-tax deferred
Lending Club – P2P lending, taxable

November 2017 was extremely good month and I made good income trading options. Let’s take a look at each account individually:

 

 · ROTH IRA account:

 

I am polishing this account to bring it up to follow my 2018 options strategy I published yesterday. That means that I am bringing my options trading in line with the strategy, stop trading options against stocks not in my watch list and I also will be removing non-compliant stocks from the portfolio.

I started doing this by removing PSEC, and LGCY. Other stocks I plan on keeping for now, but only a few will be used for further accumulating (only those which are in my watch list).

My options trading in the ROTH was limited to available cash and I only made $125 dollars in premiums and $87.09 in dividends. It is in line with my previous performance and in the coming months I expect this to improve and grow my income which will be used to purchase new shares or accumulate and re-invest in options trading as per my strategy.

 

November 2017 net-liq: $23,020.51  ▲ (up by $161.64   0.71%)
November 2017 dividends: $87.09   (down from previous $88.60)
November 2017 options: $125.00   ▲ (up from previous -$4.04)
XIRR: 9.01%    

 


 


 
Monthly dividend Income:

 


 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · TD account:

 

Trading account was very successful in November 2017 and we generated nice income from options. We continue cleaning the account from bad trades and use the income proceeds to do so (for example in December we may use November income to close some bad positions and offset the loss). We will also bring this account up to our strategy rules but it will take longer to do it. We are taking only a few trades, mostly rolling or adjusting the trades as needed. No active trading as of now.

 

November 2017 net liq: $25,067.45   (down by $115.43;  -0.46%)
November 2017 options: $2,094.64   ▲ (up from previous $523.34;   8.36%)
XIRR: -22.81%%    

 

Month-to-moth trading results

Trading results
 

(The red dots on the chart indicate income estimate, blue bars actual earnings.)
 

 

 

We are presenting you our month-to-month business performance review:

 

 · Lending Club

 

Lending Club is still showing one note delinquent which still keeps me annoyed. But I decided to give it a try so I will continue the course and see if it really makes any sense to invest in P2P. But I am refusing to put more money against this vehicle. I deposited $500 dollars and that’s all I am willing to play with as of now unless proven that it makes sense. If even after losses from delinquent borrowers the account resumes its growth then I might consider adding more money to it.

As of today, I consider it a lost case. Still.

 

November 2017 net liq: $499.41   ▲ (up by $2.17   0.44%)
November 2017 interest: $8.89   ▲ (up from previous $5.17)
XIRR: -7.94%  

 

 

 · IRA Account

 

I started trading this account in October 2017 and I am already trading it according to my rules mentioned in my yesterday’s post. So trading is smooth and profitable.

I want to reach the growth rate of my former 401k account and grow faster than that. I hope, I will be able to do it. As of now, after two months of trading, my former 401k CAGR was 24.84% after 9 years in the plan, and the rolled IRA’s CAGR is 16.72% after two months in the account. I consider it a not bad result so far. Let’s see how next month will do.

 

November 2017 net liq: $88,574.19   ▲ (up by $979.33   1.12%)
November 2017 options: $2,567.00   ▲ (up from previous $313.00)
CAGR: 16.72%    

 

 

 

 

 

 

 · Conclusion

 

My outlook for December 2017 is still bullish (in fact, I think the whole year 2018 will be a strong bullish rally, unless the economic expansion changes).

Lately, I had a discussion at Stocktwits… Sometimes very “interesting” and fiery with all the crystal ball owners.

They drive me crazy.

And I think, I am becoming and old fart, grumpy one (the picture in my profile is about 10 years old, that’s when I was young and handsome). Sometimes I like to tease them for their art (which I call a coloring book for kindergarten kids – that makes them furious as they spent hours and hours creating their charts and I downgrade it to a coloring book). But lately it makes me allergic to all sort of predictions. They are in fact worthless.

It took me two years to grasp the psychology of trading (and I still think I am not there as it is an evolving process), and by the way, watch the recent Bitcoin mania closely as you are witnessing craziness and idiocy live right in front of you, you no longer need books to read about a crash in 1932, 1987, 2003, 2008… it is all happening again, so watch it closely and learn from it.

So, what matters in the market?

It doesn’t matter what the market does or wants to do and what the so called gurus think the market will do tomorrow or in the next five years.
What matters is that you know what you will do when Mr. Market throws at you any of his/her obstacles. Always have a plan what to do and minimize a loss or avoid it whatsoever.
Trade what you see and not what you think may happen (some go even further and say what “will” happen). It doesn’t matter how long we are in a bullish trend, it doesn’t matter what the PE of the market is, or what the current valuation is (because what is expensive today, can become even more expensive tomorrow – again, just look at Bitcoin), or if a trend lasts 2 years or 20 years – it all means absolutely nothing.

What means/matters a lot is that you know what to do when the music stops… And this is the hardest part of trading! You see it happening and you stop believing what you see, you get frozen and paralyzed and you lose it.

Many spend hours drafting their charts predicting reversals and when the reversal happen they still miss it. Don’t be one of them.
 

Chicken Little
 

As long as we see this improvement there is no need to be selling your stocks on valuation. Instead, buy every dip you can.

 
What do you expect from the stock market in December? What is your strategy for the rest of the month/year?
 




TastyWorks

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