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Trades & Income

2019
 

We continue posting our trading and investing results in 2019. Our strategy is simple: trade options to generate income and invest 50% of that income into dividend growth stocks.

We post these trades on our Facebook page where you can follow them. You can also subscribe to our trade alerts text messages so if you want to follow our trades, you get the information faster than waiting for the Facebook post to appear. If you want details go to this post on our Facebook page to learn more.

In April 2019 we changed our trading strategy and set a new goal to actually reach Financial Freedom. Before, I was making money but then losing them again, made money, lost them again and so forth. I am fed up with this boom-bust trading.

I was thinking why was this happening, why was I making money and then losing them again. A few things came up to me:

1) Wrong strategy of rolling trades instead of closing bad trades.
2) Impatience and lack of discipline.

Last year, I made over $70,000 trading options. This year, I am losing it because all those trades I rolled instead of closing them and moving on. It was time to change the plan.

When I started learning options in 2010, I traded a strategy (see below) and I was making money. But soon, thanks to my greed, I abandoned that strategy. I thought I would do better with being more aggressive. Time to go back to that strategy and start making money again.

Here is the strategy simplified:
 

1) open a new trade on Tuesday morning only
2) open with the same week Friday expiration (3 DTE)
3) collect min. 0.30 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…
 

Then, I was thinking, how do I force myself to follow the plan? How to force myself not to break the rules? And this is where this blog may come handy. I need to be self aware of the rules and repeat them before I go and open a trade. I need to have them in front of me all the time and remove all distraction of the market trying to do more than what the plan says.

It is easy said, but difficult to do.
 

Here are the posts of my plan and progress to financial freedom:
 

April 2019 financial freedom report – May 5, 2019

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

 
You can also review our open and closed trades in our trades list.
 
 

2018
 

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)
 

 · All Accounts Trading Results

 

Weekly Results
 

Weekly Results – September 28, 2018 (September 2018 end results)
Weekly Results – September 24, 2018
Weekly Results – September 14, 2018
Weekly Results – September 08, 2018
Weekly Results – September 01, 2018 (August 2018 end results)
Weekly Results – August 25, 2018
Weekly Results – August 18, 2018
Weekly Results – August 11, 2018
Weekly Results – August 03, 2018 (July 2018 end results)
Weekly Results – July 28, 2018
Weekly Results – July 15, 2018
Weekly Results – July 07, 2018
Weekly Results – July 03, 2018 (June 2018 end results)
Weekly Results – June 24, 2018
Weekly Results – June 16, 2018
Weekly Results – June 09, 2018
Weekly Results – June 02, 2018
Weekly Results – May 31, 2018 (May 2018 end results)
Weekly Results – May 25, 2018
Weekly Results – May 12, 2018
Weekly Results – May 04, 2018
Weekly Results – Apr 27, 2018 (April 2018 end results)
Weekly Results – Apr 20, 2018
Weekly Results – Apr 14, 2018
Weekly Results – Apr 07, 2018
Weekly Results – Mar 31, 2018 (March 2018 end results)
Weekly Results – Mar 23, 2018
Weekly Results – Mar 16, 2018
Weekly Results – Mar 09, 2018
Weekly Results – Mar 02, 2018 (February 2018 end results)
Weekly Results – Feb 23, 2018
Weekly Results – Feb 16, 2018
Weekly Results – Feb 10, 2018
Weekly Results – Feb 03, 2018
Weekly Results – Jan 27, 2018 (January 2018 end results)
Weekly Results – Jan 19, 2018
Weekly Results – Jan 12, 2018
 

 · Income and balances of all accounts summary

 
Monthly Results
 

 

 · Dividend Growth Stocks Holdings

 

A part of our strategy is to use 50% of our income from trading options to purchase dividend growth stocks (dividend aristocrats) and build our portfolio of dividend stocks.

Every month, if we have profits from options trading, we purchase shares of a dividend aristocrats. Currently, we have a $500.00 minimum stock purchase limit, so if we make at least $1,000 profit per month we use $500 to purchase the stocks. If there are no profits or smaller than the limit, we keep it in the account and reinvest in options trading.
 

2018
 

September
 

IRA account
IRA account

ROTH account
ROTH account

TD account
ROTH account
 

September 2018
August 2018
July 2018
June 2018
May 2018
April 2018
March 2018
February 2018


 

 · All Accounts Individual Trades

 

 

Recent Open Options Trades
 

To see the entire history and life of each trade, go to our Facebook page!

We started a new trade log where you can follow our trades:

 
Trade Log
 



 

 · All Accounts History

I started recording all accounts progress towards financial freedom, not only our business account. Here are the results of our accounts.

 

This table is updated at the end of each month.

 



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28 responses to “Trades & Income”

  1. Luis Iglesias says:

    Interesting, are you rolling every time price touches one of the wings? Is that to rebalance, keeping it as much Beta neutral as possible? and to reduce buying power? Do you have any limitation on how far DTE should be? looking for specific deltas or the best credit amount you could get? Do you care how long the trade could last or it doesn’t matter to you as long as you are getting credit?

    thank you

    • Martin says:

      See my responses in bold:

      Interesting, are you rolling every time price touches one of the wings?

      Pretty much yes, sometimes earlier. I watch how much the position is losing when one side is challenged and then check how much buying power could be released if I roll it. If a BP release is substantial I usually roll it.

      Is that to rebalance?

      not necessarily rebalance but keep the price in the middle of the strangle,

      keeping it as much Beta neutral as possible?

      yes

      and to reduce buying power?

      definitely yes.

      Do you have any limitations on how far DTE should be?

      No, I am willing to roll it as far as possible. I usually go into the next monthly expiration but if credit cannot be achieved I go farther. Also if one side is already in the money, I usually go 90 DTE to avoid early assignment

      looking for specific deltas when rolling?

      deltas do not play a role in my decision, it is credit and how far I am. I try to go as low deltas as possible but if credit is an issue I go closer to the money and skew the strangle to the endangered side, for example, if the stock rallied up, I roll puts closer to the money and calls far, far away

      or the best credit amount you could get? Do you care how long the trade could last or it doesn’t matter to you as long as you are getting credit?

      No, I do not care. I am willing to roll indefinitely as long as rolls bring in money

  2. Luis Simon says:

    Hi, Are our doing Covered short strangles?

    • Martin says:

      Yes, I do. I either have 100 shares of stock thus covering the call side, or both, 100 shares and cash to cover the calls and puts. For example, my trades against AFL are fully covered.

      • blsimon says:

        Thank you, It is what you are planing to do with the 100 to 75k challenge?, I’m there, following with a little more amount monthly from my other wheel account account.

        • Martin says:

          Yes, it will be the same strategy. But at the beginning, we will be doing naked trades and work on covering them. At first, it will be a slow process but it will speed up significantly.

          • blsimon says:

            Thank you, I Have a question in relation to your current trading record, for example in Apple I see you have many rolled trades with at least 30 DTE since you opened it, but it is the same traded rolled when met certain limits or price movement or you have more for example 200 o more shares and have trades CC and CSP for every 100 shares?.

            thank you again

            • Martin says:

              Only a few of the strangles are fully covered. AAPL is not so I keep rolling it to prevent assignment and build a position in AAPL to be covered. But as of now, it is naked. What you see is the same trade rolled to keep it safe. It is still the same trade but rolled higher or lower to keep the price in between the strikes. When I see AAPL rallying and getting closer to the call side I also look at buying requirements. If I see that rolling the strangle up would release $2,000 in buying power, I roll it. If it is only $80 (for example) I leave it and do nothing, and wait.

              • Luis SImon says:

                great, are you building your position with this credits you obtain with naked strangles from this underlying or coming from other underlying credits and you prioritize apple over others?

                • Martin says:

                  I prioritize. I use all dividends and all credits received to buy stock I want to accumulate and do it as long as I finish accumulation. Once accumulated I move into another stock. Soo all goes to one stock.

  3. Travis says:

    Your income consistency is impressive and I love your 401K comments :) Sadly, most aren’t aware of the fess nor do that pay attention to the tax trap nature of them. I wish you much more success and I look forward to reading more from you.

  4. Vivianne says:

    I see you didn’t max out your 401K, are you the invest up to the matching % camp, then invest the rest in the taxable account or Roth IRA camp? My husband is like that, he doesn’t trust the government will keep the taxing the same by the time he’s retired.

    I see that your montly option income can be a living wage with so little money involved, compare to me having to pour everything in real estate to generate a little more. Do you have posts on how to do option? I still don’t fully understand it, I just know people can lose everything if the wind blow the wrong way, but optionhunting.com, you and a lot of other blogger seem to make tons of money on option.

    • Martin says:

      Vivianne, that is the same reason here and why I do not invest in 401k. Not only you will get taxed heavily when you start withdrawing money (because in 20 years taxes will go up for sure, your deductions down for sure, so you end up in a higher tax bracket) but the hidden fees is what drives me crazy. Out of every 100,000 dollars in your 401k you only see approx. $35,000!!! The rest is swallowed by fees! and that is not a number I sucked out of my finger. Jon Boggle (a founder of Vanguard funds) is the one who was exposing 401k robbery (which he never intended to participate)…

  5. […] How do you track your trades and P&L? Where can we follow your results? I post the results in “My trades &Income” section.  I also post monthly results in “My goal…” category at my blog. 2016 trading results and […]

  6. Hailey says:

    Hi Martin, I am a beginner and I have an account on TD Ameritrade , I have been reading and browsing the web until my friend recommended me this site. I read the articles that you have posted and the strategies that you have recommended. But, since I’m a beginner I would love if you could give me some advice and strategies for what to do to continue to reproduce my money. I recently bought a stock (RAI) and it has been doing well. Can you help me?

    • Martin says:

      Hello Hailey, thank you for stopping by and commenting. Of course I can help you your investing/trading. RAI is a fairly good dividend stock and it is definitely a good addition to your portfolio. That brings one very important thing you need to do before you commit any money – define your strategy and stick to it. If you are investing for a long haul and your target horizon is next 25 – 30 years, then you choose around 20 high quality dividend growth stocks (create a watch list of those stocks) and then invest in each one by one and use DRIP program to reinvest those dividends. If you stick to this simple strategy, accumulate into 20 high quality dividend stocks, reinvest dividends, you will experience a compounding return on those stock and you will be surprised how quickly and fast your portfolio will grow over time. It will not be visible at first, but 10 years from now you will see a huge progress. The goal is to save and invest regularly and stick to the plan. Ignore any noise in the market, any panic, sell offs or euphoria and stick to the plan. It will pay off.
      Thanks for stopping by. M

  7. Mac Jt says:

    We must be twins :)

    I am using the very same strategy cash secured Naked Puts to (touchwood) very profitable end since the implosion earlier this year.
    In addition I am playing large defensive Covered calls as well CC ITM for 2 weeks expiry and getting assigned every expiry, this is also profitable but completely safe.
    (BTW you can call TDA and have them change your commission structure. I pay 75c an option contract thats it and 7.95 for a stock trade)

    • Martin says:

      Hi Mac, Yes I guess so, LOL

      I am not trading those puts cash secured but naked. Well, sort of. I use margin but make sure I have capital for assignment, but margin capital, so I do not have to hold the entire cash.

      Thanks for stopping by.

  8. Mike JT says:

    Interesting blog.

    I am looking for optimal entry and exits, I have to disagree with your spread analysis.

    Though I do agree that breakevens are deeper with wider spreads, you have to take time value into account.
    So say a +1950/-1960 Put is in play on Monday , expiring Friday , SPX is at 1958, intrinsic is 2$ whereas extrinsic can easily be another 2$. This most likely will be more than credit received.
    Your analysis of breakeven is at the time of expiry, and no one knows what the spread performance is at expiry especially since the short 1960 has already been breached on Monday itself. Only closer to expiration will delta equal 1.
    Rather you go farther and play shorter widths, return on Margin is much better. A 5$ wide spread means 500$ of margin hold whereas 10$ is 1000$. If you decide to exit consistently on 50% profit then 5$ spreads will win with the additional advantage of risk mitigation.

    Another point is with your 7 step ladder, after looking at the performance you lost 96% during the Aug/Sept market implosion. Your trades are 77% successful but the losses easily outweighed the gains.
    I have to say this is the biggest disadvantage of farther DTE trades.
    What I’ve noticed is that macro factors are just too dangerous to ignore, like this week. You would never have known it 7 weeks ago.
    I think 2 week intervals are better – though premiums are lower the ability to quickly exit a trade or place a trade is better.
    Here is an e.g. you place the 7 wk ladder trade, wk 5 6 and 7 are now approaching and a breach occurs during wk 5 , there is now a higher probability that weeks 6 and 7 are also under threat, compounding your Buy back premiums. So should you decide to exit, your loss is compounded for 3 weeks.

    To be honest I dont even think 2 week rotation is a better strategy but I find that it can be better controlled especially if consistent winners is the key.

    • Martin says:

      One more thing, my losses recently are not related to the spread width but my attempts to save losing trades by rolling them or converting into a different trade. Instead of taking a small loss I rolled the trade, increased the risk, and it worked at some trades but some didn’t and instead of taking a small loss I was forced to take a large one.

    • Martin says:

      Mike, thank you for your comment. Some things you mentioned I learned myself the last August, so as of now I am not applying the ladder trades until I sort it out. I realized I was trapped with 6 trades with losses and had to decide whether to close them roll them or wait them out. Basically none worked. So as of now I am limiting myself to only one trade at a time. As the width goes, I am also comparing it with number of contracts = what is better? (2) $500 contracts or (1) $1000 contract? At both occasions you risk $1000, your commission is higher when selling (2) contracts and the break even point is better for larger spread. True, I was comparing it with at expiration situation, but still, it seems working well to me and allows me to get farther away from the current market than if I do only 5 dollars spread.
      Thanks for commenting.

  9. DivHut says:

    I appreciate the tips about options. I know writing contracts can really juice a portfolio but just not educated enough to jump into it yet.

    • Martin says:

      That’s something you must do at all cost – educate yourself. If you fail to educate yourself, you will lose money. I recommend opening a paper money account and try to trade options there. It helped me a lot before I committed a real cash.

  10. DivHut says:

    I have always wanted to get into options trading and wondered what sites/books you have read to learn more about it. The idea of covered call writing sounds appealing but I wonder about being exercised and having to give up my shares for the premiun collected. Have you ever had to sell your stock because an option contract was exercised?

    • Martin says:

      Hi DH,
      that was the reason why I never or very rarely used covered calls against my core stocks, but always was looking for stocks which I didn’t mind to be called away. I was doing the total return or buy-write covered calls – I bought the stock and wrote a call against it. In My Trades & Income the previous year and use links for covered call trades where I explain them.
      As far as put selling, which I consider far better than covered call strategy, you can read Selling put options my way by Jerry Lee and read that one. It is very nice and simply explained way of selling puts. I think it will help you the best.

      Thanks for stopping by

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