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Posted by Martin October 23, 2014
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Friday Weeklys Expiration SPX, GOOGL, NFLX

Friday Weeklys Expiration SPX, GOOGL, NFLX

Tomorrow is an expiration day for weekly options. We have a few trades which are set to expire tomorrow and most of them will do so.

We had an Iron Condor against SPX, but our call side of the Condor got breached and we decided to move it away in time and converted it into a bull put spread. Now that side is a bullish trade and we have a new full month to deal with it.

The put side of the Condor will expire worthless tomorrow for a full profit of that spread.

We also had a bear call spread against SPX, which may expire worthless if the market stays below 1965 strike price. During this week the market moved rapidly against us and we need to watch this trade carefully tomorrow to see if it expires or we need to adjust it.

We had a bull put spread against GOOGL, which will expire worthless tomorrow.

Our last trade set to expire tomorrow was a bull put spread against NFLX. That trade will also expire worthless for a full profit.

If those trades expire tomorrow, we will realize a full profit of $292.00 (2.04%) in 5 days.

It is nice to have such gain every week!

Do you want to see our open trades we publish in our newsletter?

You can watch all our trades on our website. All trades sent out via this newsletter are recorded at My Trades & Income page.

Next week, we will continue selling weekly options for weekly income. If you want to receive free trade alerts of every trade we put on, you can subscribe to our newsletter.

After you subscribe, make sure you place our email capital@zzcapitalmanagement.com on your white list or check your spam box so you receive the email alert whenever we are about to open a new trade. Note that all trades we publish via a newsletter a real trades we open ourselves.

Many services out there will charge you hefty fees for information what to trade and how to trade it. With our newsletter, you can get it for free. But not always. We plan to have this service free for the next three years (October 2017) and then we also will charge a fee for this newsletter.

Have a great and Happy Friday and good luck trading stocks and options.




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Posted by Martin October 19, 2014
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Last week call spread against SPX and put spread TWTR ended for a profit

Last week call spread against SPX and put spread TWTR ended for a profit

After losses I suffered a few weeks ago due to mistakes and greed overtrading my account it looks like I was able to stop the madness and turn the tables around once again. Sometimes it happens to traders that they wipe out their accounts. Of course, this wouldn’t happen to a dividend investor as that is a strategy which avoids risk of trading. That’s why I apply this strategy even in my trading account and it has saved my account from a total disaster.

But if you trade, you must be ready for potential losses. In the past three years I was able to make 45% gains in average. For this great income you have to take a greater risk. This time I mishandled the risk and was forced to give back all my gains.

 

 

Last week my newsletter subscribers received my trade alert for a call spread against S&P 500 (SPX) and we also had a put spread trade out there against Twitter (TWTR) which was placed in September. Both trades ended for a profit.

We had the following spreads last week:

1 SPX 1930/1935 bear call spread – collected $35 premium (since Tuesday, October 14th) – trade expired worthless for the full profit 7.53%

A Twitter trade was a different baby. The stock performed very well during the sell off of the market. While the entire market was panicking TWTR was actually growing. I couldn’t believe this persistence and stock’s resistance to fall.

Unfortunately, this luck didn’t endure to the end. A few days before expiration Twitter investors gave up and started selling. Twitter fell and breached the strike price $49. Although on Friday the stock rallied along with the entire market, it wasn’t enough to stay above the strike to expire worthless.

1 TWTR 49/44 bull put spread – collected $60 premium (since Thursday, September 25th) – the trade had to be closed before expiration for a partial profit of 6.83%

Although the trade was already in the money, or better say at the money, it lost value and we were able to buy it back for $32 a contract (newsletter subscribers could get a better execution price). We received $60 premium and bought the spread back for $32 a contract and that left us with a 6.83% profit.

New trades next week

A few weeks ago I decided to play my options trading a bit safer than before and shift from naked puts and calls to safer spreads. It is not because I no longer like naked puts. I do love them. But my account is small to trade them. They are expensive to trade in order of margin requirements and potential risk.

So I laid down a new plan to trade weekly spreads against S&P 500 (SPX) and stocks which show strength. For example, at this point those stocks are Google, Twitter, Netflix, Wynn, AAPL, Facebook, and some others. I will trade against those stocks as long as they show strength, good premiums and sort of a predictability in their moves.

I will trade weekly options (or strive to trade weekly options) to collect minimum of $30 premium per trade every week. Select options beyond the 1st standard deviation and compound results every week.

As of this writing, I am able to generate 1.5% gain in average. Imagine how well this would compound in 5 years! Well, of course, the key here will be not to make mistakes and defend the trades.

There was one step to this goal I just learned a week ago – take partial gains wherever the trade is turning against me.

In my September results post I laid out a new plan:

 

  1. Trade weekly options against SPX – spreads and condors (later maybe touch butterflies).
  2. Risk no more than $500 per trade (I would rather take two different trades than multiple contracts of one trade) – 3% per account.
  3. Increase risk per trade (number of contracts) once the account starts growing again – keep it at 3% however.
  4. Collect minimum $30 per trade. This would equal to 6% gain weekly per trade.
  5. Reach 2% weekly gain of the account (as of this report I have 1.6% weekly gains.
  6. All trades shall be set up to be out of 1 standard deviation as close as possible to the 2 SD.

 

Today, I am adding:

 

  1. Use mental stop for each trade. If it turns against me, buy the spread back for max. 50% of the received premium, keeping min. 50% gain.

 

Let’s see how this new plan would work next week against new trades I will be opening tomorrow against (GOOGL), (SPX), and (TSLA).

If you want to follow my trades and get an alert into your email before I open, adjust or close a trade, subscribe to my newsletter.

Have a successful next week in your pursue to your financial freedom.

Good luck!
 




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Posted by Martin October 19, 2014
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I do not trade stocks but couldn’t help trading BABA


BABAIf you follow my blog, you know that I use two strategies –

1) I invest into dividend growth stocks
and
2) I trade options.
 

When speaking about stocks, I invest into stocks. I do not trade them. In the past I chose dividend stocks for two reasons:

  1. Dividend income
  2. Long term investment

In the past I tried to trade stocks and apply a buy low sell high strategy. I always ended up with buy high and sell low result. I must admit I sucked in trading stocks. I remember once I wanted to get a better price of Johnson & Johnson (JNJ) stock. So I sold it at a lower price than I originally bought it hoping the stock would fall lower and I buy it back at a much lower price. The exact opposite happened. I sold it cheaper than I bought it originally and bought it back higher than I bought if in the first place. Bummer.

After I successfully repeated this silly strategy adding to my losses I realized that I act like an idiot and put a halt to it. It was a time to change strategy.

Dividend stocks strategy

When thinking about a buy and hold strategy I wasn’t comfortable with it. I wanted action, but safety at the same time. I wanted safety and income at the same time. A dividend growth strategy was the answer.

So, where is the action in dividend growth strategy? It is considered a boring investing. I saw action in building a portfolio adding to positions, little by little and see my income growing. Picking stocks, evaluating them and most importantly looking for the best buy point.

I substituted trading stocks with trying to get the best entry point into a stock. It provided me with the desired action.

Some investors take a certain amount of cash every month and invest it in a regular manner without a regards to a current price of a stock. They cost average their positions. Although it is a legit strategy, it wasn’t for me.

In my heart I am a trader, not investor. Analyzing charts, looking for supports and resistances to find the price I wanted to buy a stock. This satisfied my trader’s desire.

Getting a better price of BABA

Two weeks ago I saw an opportunity to repeat that silly strategy I tried so many times in the past and failed. I saw an opportunity to sell my position in Alibaba (BABA), wait a bit and buy it back cheaper.

In my post about a new trade against BABA I described my reasons why I bought this stock. Now I saw the stock falling. It is not a dividend growth stock at all. It is a speculative, growth play.

I originally bought the stock for $89.9 a share. I could sell it for $88 a share and immediately I placed a limit order to buy it back for $86 a share. A few days later, the trade executed and I bought BABA back for cheaper.

This is not to say that I am going to do this on a regular basis, not at all. I still do not trade stocks. It is just a humble report to my readers about my swap trade, which ended successful.

I hope you had a great last week and be able to spot good stock opportunities.

Good luck!
 




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Posted by Martin October 15, 2014
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S&P 500 down almost 50 points, DOW down more than 400 points! Time to buy? Not yet.

S&P 500 down almost 50 points, DOW down more than 400 points! Time to buy? Not yet.

I think we are hitting a true bear market here. For more than 5 years we haven’t seen such selling. Some even say that they do not remember such volatility and drops, so that must have happened long time ago.

It is not usual to see markets falling this much. Look at it from a perspective of a standard technical analysis we are taught in every book or by every trader. It goes that trends move in steps, creating higher highs and higher lows in uptrend and lower highs and lower lows in downtrends.

In a 5 year chart this is still true, but if you look at 6 months daily chart the market falls down as a rock.

When did you see last time markets falling by 30 – 50 points (S&P 500) or 200 – 400 points (DOW) every day?

Well some traders I know off and talking heads are mentioning “capitulation”. Are we really seeing it? If so, we will see a slump and bottom of the market soon.

Is this a time to buy stocks?

As a dividend investor, this is a great opportunity to buy stocks cheaper as now they are on sale. There are two ways you can deal with the market.
 

  1. Dollar cost averaging.
  2. Market timing.

Dollar cost averaging

If you do not have to deal with every day market fluctuations and panics, you already use this strategy and buying regularly every month (or any other period of time) your stocks. Now you will definitely be enjoying lower prices and benefit from the future growth.

Market timing

Here I am not referring to “fishing” for bottoms trying to buy low and later sell high. Dividend investors and long term investors do not do this anyway. I am referring to a strategy when you time your purchase of the stock and wait for your price.

I do this strategy all the time and I like it. I watch a few stocks and when I see them falling that’s the time when I start tracking them down with a contingency order. I place my buy order above the previous day high (high enough not to be triggered by day-by-day fluctuations) and track the price down. When the stock stops falling and reverses high enough to trigger your order you get in.

Sometimes it happens and the stock turns back down and continue falling. In that case I do not use all the money I plan to spend on the stock. I split it into two or three sums and repeat the process on the way down. Worked well for me so far.

Markets look ugly with a dash of ugly

Looking at the chart made the market look ugly in the morning. However, there is one thing which caught my eye and which was different from the other days.

In previous sessions we could see markets rallying in the morning and then fail heavily the last hour of the trading session. Today was different. We saw a heavy selling – ugly and very ugly selling in the morning until about noon. Then a sudden rally!

SPX Ugly

Does this mean we are bottoming? We will see in the coming days if this is just a trap, bounce, return to the mean, or a reversal. Nevertheless, markets are still in a downtrend – clear downward moving trend with no sign of reversal (although today’s trading may be a clue for a change).

If you plan buying stocks, I would still wait for a clear sign that we are really reversing. If you plan shorting stocks, wait for some bounce to add more short positions.

And what about options? I am selling call spreads towards SPX. I have two call spreads out there. One spread at 1940/1945 level and a second spread at 1930/1935 strikes. Both are set to expire worthless this Friday unless the market continues heavily rallying up to breach those levels, which is very unlikely.

Another trade I have is a put spread against Twitter (TWTR), which held ranks extremely well during this market slump. Although I am not a fan of the company and its business model, I must admit that the stock performed brilliantly.
This spread is also set to expire this Friday. It was volatile a lot the last three days and the expiration may be jeopardized. If so, I may roll the spread into the next week.
 
Have a great day and happy trading!




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Posted by Martin October 09, 2014
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The worst market results in 2014 so far

The worst market results in 2014 so far

Wow, the market had the worst time ever. It looks like we are at the top of the trend and reversing. I do not remember seeing such swings of 300 points (Dow Jones) in just three days. At least for a few last years, this behavior didn’t happen.

I watch weekly, daily, and intraday charts to see how the markets do and what would be the next outcome (see below). I am not an expert in it, but learning. And I have learned a few things so far.

The weekly chart held the trend until today. The large sell off pushed the trend into a reversal. When the market closes below 21 EMA, it is a warning sign to me. On Wednesday, FOMC meeting provided a relief to the markets and we saw a huge rally up.

This also provided a great relief to my positions, mainly to my Iron Condors which are supposed to expire tomorrow.

I though, all is good.

Although, the markets were in a downturn as was clear from the daily charts, today’s trading changed the wheel of fate again. I expected the markets sliding down or moving in a normal matter. I haven’t expected a panic sell off which was even larger than the one in Tuesday.

As I felt “all is good” yesterday, I am back nervous today.

Now we have the weekly chart flashing a red light of a trend turning point, and the daily chart in deep downtrend. No sign of strength at all.

Our rigged market in its 5 year history makes shorting this trend difficult. Is this really a trend reversal or just a dip to buy?
 
SPX
 

My Iron Condors are in danger again today. The lower, put legs are in jeopardy to get ITM. Calls side is okay and the calls will expire worthless for a full profit tomorrow. I need to pay attention to my puts side.

If the market bumps up a bit tomorrow, I will be safe and all my Condors expire worthless. If it, however, continues in a dramatic sell off, I will have a problem.

Today, I could roll down one of the spreads to a lower strike (from 1925 to 1920), but if we see another wild selling tomorrow, even this rollover will not help.

I will have to watch tomorrow’s trading carefully and if the market slides bellow 1920 and there will be no sign of it going back above it, I will have to roll those puts again.

I am hoping for the best. I hope, my puts will not get breached tomorrow and all my spreads expire.

What do you think? Will the market bounce up or continue sliding tomorrow?




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Posted by Martin October 06, 2014
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New Trade – SPX Iron Condor

New Trade - SPX Iron Condor

As I described in my monthly report, I am slowly building my damaged account back up taking small trades and small income every week.

Last week, I opened a few trades against SPX – one bear call spread, and two Iron Condors. All expired worthless and I could keep all premium I received.

I will try to replicate such trades this week as well.

First, I need to assess what the market would do this week.

By looking at weekly and daily charts, I can see that on a weekly chart we are still bullish. But the daily chart tells a different story. The markets dropped the last few days. On Friday and today the markets tried to rally back.

Will this rally continue or is it just a return to the mean and we will see more selling coming?

Difficult question with even more difficult answer.

SPX

There are not too many events happening this week. We will see a FOMC meeting minutes on Wednesday and Jobless Claims on Thursday which may move the market either way (I would suspect up). I do not think that those moves will be that dramatic to breach my trade I put on today.

If so, I will move the leg of the trade or close it and sell a new one. Time will show.

Trade Detail

Today I entered the following trade (Iron Condor):

 

BTO 1 SPX Oct2 14 2020 call

STO 1 SPX Oct2 14 2015 call

STO 1 SPX Oct2 14 1920 put

BTO 1 SPX Oct2 14 1915 put

 
@ 0.45 LIMIT GTC
 

Typically, Iron Condor is a high probability trade, but its risk/reward is bad. With a high probability, it is OK to take such trade.

This trade will expire this Friday, October 10th, 2014. I collected a premium of $45.00 which translates into 9.78% gain if it expires worthless on Friday.

The max risk of this trade is $460.00 per contract and my margin requirement was $471.00 which will be blocked until Friday.

I believe, this trade will end up successful. I will hold it until expiration. Only if any leg of the Condor gets breached or endangered, I might roll it further away in time or roll it up by buying that leg and selling a new one. To do so, a sufficient cash reserves need to be sitting in a trader’s account (and that means mine too).

Let’s see how this trade ends up.

You can watch that trade on My Trades & Income page.

Happy Trading!
 
 




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Posted by Martin October 06, 2014
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September 2014 results

September 2014 results

September 2014 was a very bad month to me. It was a month when I destroyed my account once again. I did it back in 2011 and I thought I learned my lesson. Apparently I didn’t.

This is what happens when you do not follow rules or have none in your investing/trading. Trading options can be very beneficial and rewarding unless you break rules you set up. Then it can hurt a lot.

Long story short – I blew off almost $15,000 of profits this month.

How could that happen?

If you are subscribed to my options trading newsletter, in the “welcome letter” and at the bottom of each letter, I have an advice for all my readers about money management. I advise trading only 50% – 70% of your available cash in options. Then keep the rest in reserves in case the trade goes against you and you need adjustment.

I broke that rule. After I made almost $5,000 in a single month trading options I became greedy and overinvested my account. September was a very volatile month and that broke my ability managing my account. I suddenly run out of cash and was forced closing my positions due to margin calls. I was closing with a loss. A huge loss.

That was a painful slap into my face from Mr. Market. A painful reminder that the rules are here to protect me and not to be broken.

New trading plan

This experience made me think again how I want to trade options. I was thinking start trading indexes only. Start trading SPX only. But always I was telling myself that I will start trading SPX after “this trade ends and then that trade ends, and this or that one”; and I have never ended any trade. As soon as one trade ended, I immediately opened a new one. My cash reserves were close to zero.

I deserved the blow.

But it was good for one thing. I closed all risky and volatile trades, increased my reserves and decided to trade SPX indexes only with a few exceptions of strong stocks showing a good opportunity. I also was thinking that if I take small trades, risking no more than $500 a trade and collect $30 – $100 per trade premium, it will one day compound into a robust money making machine. I also wanted to shorten my waiting time and decided to go with weekly options.

It would be very rewarding if I can trade and collect $30 – $100 a week. One day, as my account starts growing again, this can easily grow into #300 – $1000 a week or even more. That would be a sufficient income.

I will also gain a better control over my margin requirements than when sitting in a long term trade.

So what my trade plan would look like?

 

  1. Trade weekly options against SPX – spreads and condors (later maybe touch butterflies).
  2. Risk no more than $500 per trade (I would rather take two different trades than multiple contracts of one trade) – 3% per account.
  3. Increase risk per trade (number of contracts) once the account starts growing again – keep it at 3% however.
  4. Collect minimum $30 per trade. This would equal to 6% gain weekly per trade.
  5. Reach 2% weekly gain of the account (as of this report I have 1.6% weekly gains.
  6. All trades shall be set up to be out of 1 standard deviation as close as possible to the 2 SD.

 

Newsletter

Do you want to follow those trades? I decided to start a newsletter in which I would place a new trade idea whenever I am going to open a trade as described above. What that means for you if you subscribe?

Any time I am about to open a new trade, you will receive a newsletter in which I describe the trade. I explain why I am taking the trade and show all legs of the trade and how it should be entered. I will show probability of success, risk, and reward, so you will see what you will be risking and what you can make. The good thing is that each trade is a real trade I open myself, so I watch it carefully and send out a newsletter any time adjustment or exit is needed to protect four (and my money). And as a subscriber, you can ask me anytime, if you need explanation in regards to that trade.

And the best thing is that the subscription to the newsletter will be free for the next three years (until the end of 2017). Then I will start charging a fee.

But by then, you will already learn well trading on your own and making money without the newsletter.

Sounds good? Then subscribe here.

 

September 2014 results

And now let’s proceed to those miserable results I am ashamed of:

 

January 2014 premiums: $156.10 (1.55%)
February 2014 premiums: $139.26 (1.38%)
March 2014 premiums: $746.62 (7.41%)
April 2014 premiums: $421.63 (4.19%)
May 2014 premiums: $803.32 (7.98%)
June 2014 premiums: $230.21 (2.29%)
July 2014 premiums: $4,602.44 (45.69%)
August 2014 premiums: -$172.58 (-1.71%)
September 2014 premiums: -$14,399.60 (-142.96%)
   
January 2014 dividends: $25.87 (0.26%)
February 2014 dividends: $167.02 (1.66%)
March 2014 dividends: $68.77 (0.68%)
April 2014 dividends: $25.91 (0.26%)
May 2014 dividends: $168.51 (1.67%)
June 2014 dividends: $68.81 (0.68%)
July 2014 dividends: $25.96 (0.26%)
August 2014 dividends: $150.49 (1.49%)
September 2014 dividends: $68.86 (0.68%)
   
Total 2014 income: $8,283.15 (82.24%)
2014 unrealized premiums: $-6885.98 (-68.85%)
   
Account Equity: $17,329.61 (00.00%)
Account Net-Liq: $15,555.66 (-31.83%)
December 2013 balance: $10,072.25

You can see my dividend and options income on My Trades & Income page.

What about you? How was your September 2014 and the entire year so far? I hope better than mine! Post a link to your website or write down your results to encourage other investors!

Have a great October 2014!!
 
 




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Posted by Martin October 03, 2014
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My trades against SPX, TWTR, expired for full profit today, VMW got filled

My trades against SPX, TWTR, expired for full profit today, VMW got filled

During last week and the week before I opened a few new trades against SPX, TWTR, and VMW. All of the trades against SPX & TWTR expired today for a full profit.

After losses I generated during September 2014 I had to go back down from the “heavens” of my pride and basically start over. Slowly rebuild the account I once again destroyed by not following my rules and being greedy.

If it ever happened to you finding yourself saying to yourself “That cannot and won’t happen to me.” then make sure it really won’t happen by following your own rules.

Part of my trading plan adjustment was to get into trades which would generate income in shorter time frame although I will be taking smaller premiums at first. I started that way myself about three years ago taking small profits and slowly growing up to large profits. Until I overextended myself.

Back to basics. I will focus more on trading index rather than volatile stocks which are influenced by earnings and all sorts of hype, pump and dump and which can make you ton of cash, but also blow up your entire account.

During last week I opened the following trades:

1 SPX 2000/2005 bear call spread – collected $85 premium (since Tuesday, September 30th) – trade expired worthless for the full profit 9.7%

1 SPX 2020/2015/1910/1905 iron condor – collected $30 premium (since Tuesday, September 30th) – trade expired worthless for the full profit 6%

1 SPX 2020/2015/1910/1905 iron condor – collected $35 premium (since Wednesday, October 1st) – trade expired worthless for the full profit 7%

2 TWTR 51/49 bull put spread – collected $50 premium (since Wednesday, October 1st) – trade expired worthless for the full profit 28%

Totally I collected $250 during the last week (since Tuesday). Not bad. The plan would be repeating such trades every week.

Also this morning a trade against VMW I sent out via a newsletter got executed. I collected $180 premium with a total potential profit of 22%. This trade has time until expiration and I may actually take more trades over time or next week.

Also next week, I will repeat some trades against SPX by selling more spreads.

Happy trading next week!
 




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Posted by Martin September 27, 2014
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New Trade – Bull Put Spreads against Twitter (TWTR)

New Trade - Bull Put Spreads against Twitter (TWTR)

Twitter (TWTR) – a stock I have always looked at with disrespect, because it does nothing, it creates nothing, it delivers nothing. It is worthless. It only allows people to waste their time online.

That was what I thought about this stock and many times I told myself that I would never invest in a company like this.

Although everything I said about Twitter above hold water in my opinion, I changed my mind about investing into this stock. Why?

This stock showed resilience in today’s market and continues growing. It is considered one of the strong, bullish stocks. Although it fluctuates, it continues trending up.

How is that possible? Let’s take a look at a few things – business model and expectations.

How Twitter Makes Money?

How Twitter makes money when it makes nothing, builds nothing and the only thing it does is allowing users to waste their time online messaging about everything and nothing? Advertising.

Yes, that is the only income stream this social media giant can offer to investors.

I still feel disrespect to this stock, what about you?

What Makes Twitter a strong stock in this market?

It is expectations of investors and a massive growth of the company. Yes you have heard me correctly – a massive growth. It will not last forever, but until it ends, let’s take advantage of it.

Let’s take a look at a few numbers. When Twitter started in 2006 it hosted approx. 20,000 tweets per day. In 2010 it was 50 million tweets per day, and today, just FIFA World Cup caused users to send more than 650 million tweets. Enormous growth in user base and a revenue potential.

This growth in user base and revenue potential paid off itself. In the second quarter of 2014 Twitter reported $277 million in revenue – a 129% increase in growth.

Twitter is becoming a more international company than domestic. 77% of all users reside outside the United States. Recently Twitter announced that it had doubled their advertising in Europe itself.

All these news and efforts are pushing the stock resiliently higher in today’s market. I still wouldn’t invest in Twitter for a long haul. I still am not convinced that I would ever fall in love with the business model of the company. But from a short term perspective, Twitter presents a great short term option trading opportunity.

Trade Detail

To take advantage of this opportunity I opened two trades recently. Both were bull put spreads speculating that Twitter would stay above my short strike in upcoming three weeks.

The first trade is a short one. It will expire next Friday (October 3rd, 2014) and the second trade will expire on a regular option expiration day – a third Friday in October.

The first trade was selling a bull put spread made of weeklys options.

Twitter

When creating a spread, you sell a short put (or call) and buy a lower put (or higher call) for protection. If the stock stays above the lower short strike (or below the short call), the spread expires worthless for a full profit.

If the stock drops below your short put strike but stays above the lower long put strike, you will see a partial loss or partial gain (it depends where the stock lands, if still above your breakeven point or below it).

If the stock lands below both of your strikes, you will end up with max. loss.

The first trade I entered was as follow:

STO 2 TWTR OCT1 14 51 put
BTO 2 TWTR OCT1 14 49 put

@ 0.50 LIMIT GTC

The trade executed on Thursday last week and I collected $100 in premium. The trade is set to expire next Friday.

The second trade I entered was as follow:

STO 1 TWTR OCT1 14 49 put
BTO 1 TWTR OCT1 14 44 put

@ 0.60 LIMIT GTC

The trade also executed on Thursday last week and I collected $60 in premium. The trade is set to expire the regular third Friday in October.

If any of the trade turns against me, I will most likely exit it. I will not be rolling those trades.

If you are interested in receiving an alert for the trades I am about to open myself, you can subscribe to a newsletter to receive a trade alert prior to entering it myself.
 

Happy Trading!




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Posted by Martin September 26, 2014
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10 Billion hedge fund liquidation forced me to review my portfolio


If you wondered what spurred such hasty sell-off yesterday, we may have an answer to it. According to Wall Street Journal a “$10.6 billion BlueCrest Capital Management LLP, one of Europe’s largest hedge-funds (and best known for its credit market expertise), laid off several stock traders in the U.S. Thursday and began liquidating their investments, according to people familiar with the matter, not long after it aggressively expanded into equities.”

So here we go. The selloff caused Nasdaq to fall by 2% and it also had a very negative impact to my portfolio.

If one hedge fund could almost destroy the market’s bull trend, then it is an evidence that the market is vulnerable, pumped, unstable, and definitely not “contained” as Janet Yellen is trying to convince us.

I made a scary discovery that my own portfolio wasn’t stable either. After I was forced to liquidate some volatile and overextended positions in my portfolio which caused me taking large losses at the beginning of September, I once again could see that I still hold risky and volatile positions on a very low cash reserves.

Michael Platt of BlueCrest, which has done worse than many competitors. BlueCrest Capital Management/Bloomberg News
Michael Platt BlueCrest Capital

As sometimes a farmer must take drastic measures in his vineyard, prone and cultivate his crops before he could reap juicy fruits, I too decided to take some further drastic and painful measures to get rid of rotten portion of my portfolio.

At the beginning of the month I liquidates too volatile position against Taser Int. (TASR) and yesterday I decided to liquidate a second risky position against Cliffs Natural Resources (CLF). Both positions had severe impact to my portfolio, but I decided to take it to be able to start fresh again.

Not only I can sleep better now, I also could raise my cash reserve closer to my target (30% or more). I can also shift to more safe instruments such as indexes (SPX, RUT, and others).

With indexes you will not be exposed to hypes, pump and dumps, or earnings.

I cut bad branches of my money tree and wrote this month off. Sometimes it happens to traders (newbies like me) that they wipe out their accounts. Fortunately, in my case, my dividend stocks saved my butt. I only wiped out my options earnings, not stocks nor dividends.

Next month, I will be starting fresh

Today’s trading was a bit better than yesterday. Bears were excited to jump on the wagon and load up. Today, they were chopped into small pieces. But the battle is not over. The next week will renew the battle for the power in the market. Will bears win, or bulls? I do not know and the next week will reveal it.

Nevertheless, I will continue trading options adding weekly money making trades into my portfolio trading weekly options against SPX plus long term options to increase income.

For example, just yesterday, I opened a new trade against Twitter (TWTR) which showed continuation in trend, unlike the rest of the stocks (along with GoPro (GPRO) which also refused to drop yesterday). I opened two different contracts expiring next week and in October. Both trades are short term weekly money making trades.

Next week I will look for opening another trade against SPX, which also is a part of my weekly strategy.

Let me post an offer to all of you interested in trading options. If you wish to follow my trades and get an alert of a trade I am about to open, you can subscribe to a free newsletter.

You will receive an alert whenever I am going to open a new trade, trade adjustments, or trade exit. I not always publish all my trades here on this blog before I place the trades with my broker. On this blog, I post the trades after they happen and sometimes I do not post them at all. I just publish them in “My Holdings” and “My Trades & Income” where you can see results of those trades.

With a newsletter, you will receive a trade alert with explanation before I place it myself. If you like the trade, you can follow it and place it too.
 

 
Happy Trading!
 
 




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