S&P 500  2,760.17 +22.41(+0.82%)  Dow 30  25,538.46 +199.62(+0.79%)  Nasdaq  7,330.54 +7.88(+0.52%)
 

2018 is going to an end and it is turning out to be a bad year for us. the entire year was volatile and we saw two wild corrections, one in January and the second in October. Both had a significant impact on our accounts.

And both corrections once again proved the significance of “staying small”. And I violated that rule again. In all accounts.

Too much optimism on the bullish side and believe the US economy is doing so well that nothing bad can happen and that I can overcome any pullbacks. I kept opening more and more trades. And now I am in trouble.

I am not losing money extremely (not yet, but it still may happen) as I am still able to manage the trades, roll them, and adjust them. But I can see a danger of being overextended. My smaller accounts such as trading account and ROTH are showing a distress. I have trades deep in the money but no means to roll them as I am overextended. And that forces me to close the trades for a loss.

So, it is time to adjust my strategy on money management. I pretty much stopped trading these two accounts and will be saving more money until I reach a level when trading is easy and comfortable. On the IRA account I need to stick to my rules harder and keep eliminating over trading.
 

What I will be doing from now on?
 

In the IRA account:
 

1) We open only one weekly trade at a time with Friday expiration. A new trade can be opened only when the old trade closes. If the old trade is rolled into the next expiration and not closed a new trade will not be opened. You can follow the trades in our Facebook page.

2) We open up to two 45 DTE trades but with different time to expiration. We will be creating a ladder. This was our old theory we started doing a few years ago but abandoned and never finished. This means, we will open a 45 DTE expiration trade one week and then a second 45 DTE next week.

3) After a trade is open we immediately place a closing GTC (good till cancelled) trade for 50% profit.

4) We open a new 45 DTE trade only when the old trade is closed. If an old trade is rolled or otherwise kept open no new trade can be opened.

5) A new additional 45 DTE (above 2 contracts mentioned above) trade can be added only when BP is higher than the cash management limit allowed.

6) We will keep managing old open trades already in the account to close them successfully as winners.

 

In the ROTH account:
 

1) There will be no new trading in this account. Only managing old open trades. and saving more cash for trading.

 

In the TD account:
 

1) There will be no new trading in this account. Only managing old open trades. and saving more cash for trading.
 

It is really time to stop the madness and reckless trading I did sometimes in my accounts and bring it back to boring strategy and discipline.
 

The stock market has been volatile as it was sending a message to FED to ease the rates amid global economy (and the US among it) slowdown. and Powell seemed to deliver that message last week. The market rallied and broke the downtrend.

It created a double bottom also. That provided the needed boost to break the pessimism:

 

 

But we are heading toward a strong resistance at 2800 – 2820 level. We are not there yet so we may see some more buying conviction pushing this market up – unless Trump destroys it all at the G20 meeting with the Chinese President. If Trump escalates his trade war which is already damaging the US economy – farmers, automakers and others as exports to China dropped significantly when Chinese decided to stop buying from the US and looking at another sources such as Canada, India, Russia, or South American countries.
 

There is more to all this mess Trump has created and many decided to either ignore it or even foolishly defend it. But let’s see how all this ends.

A positive note can be that history shows that whenever FED stopped raising interest rates, the market rallied. Let’s hope it will play that way too this time despite a lot of damage from Trump.
 

In November, we were mostly adjusting our trades to make sure majority of them would be positioned well for their upcoming expiration. We had many Iron Condors on SPX with puts deep in the money. Thus we rolled those Condors lower to be not too deep in the money. We are still bullish, so we didn’t want to roll those Condors too low to avoid calls being in trouble once the market really rebounds and start rallying.

We also had many spreads and Iron Condors using stocks as underlying but in this volatile market with a lot of whipsaw price action we needed to avoid getting our stock positions in the money and have them early assigned. We had SPY early assigned last week and lost money. We didn’t want that to happen to all of our stock options trades.

In November our income was however small, smaller than expected, as we mostly waited and didn’t trade too much. We expect this trend to continue in December trading only a few trades and managing the old ones. a large portion of income was also consumed by closing the old trades earlier than what we normally do.

 

 

in November 2018 we lost $502.89 and our Net-liq of all accounts dropped by $2,044.05.

We post our trades on our Facebook page.

 
 

Here are the entire 2018 year trading results:

 

 

 

 · Dividend stock investing

 

Dividend investing is doing great on both accounts – ROTH and IRA. We keep using 50% of all options income and buy dividend stocks. IRA account keeps growing fast with new stocks being purchased every month. ROTH is more or less stagnant.

 

Here is a review of our accounts stock holdings:

 
Traditional IRA

 

ROTH IRA

 

TD account

 

In August we purchased the following shares:

 
IRA purchases:

 

We haven’t purchase any shares in ROTH or TD this month.
 

We keep spending 50% of our options trading proceeds to buy good dividend growth stocks using our screener to get a better entry into the stocks. Although capital appreciation is not our goal but a secondary target, timing the entry creates good results as our positions are mostly up. However, do not be too excited, any large selloff can temporarily send those stocks down again. It is a dividend income what matters to our portfolios, not the portfolio value and capital appreciation. It seems to be evident that using options to grow the portfolio is the right way to do.

 

 · Dividend Income

 

IRA dividend income

 

ROTH IRA dividend income

 

We all want to hear your opinion on the article above: No Comments

S&P 500  2,723.06 -17.31(-0.63%)  Dow 30  25,270.83 -109.91(-0.43%)  Nasdaq  7,356.99 -77.06(-1.04%)
 

October was a terrific as well as horrible month! Tons of volatility, negativity, pessimism and losses. At some point, it became depressive. The markets kept falling and falling with no retreat, no relief rallies. Any attempt to have a rally was immediately sold off and it faded.

Is this the beginning of an end?

Many have asked this question and many predicted more selling more bear market to come.

But we do not know what is going to happen. if you see all the predictors predicting this market to rally to the moon, others predicting gloom and doom, do not trust either of them. They do not know. They are just guessing.

No one knows where the markets will go. There is a lot of uncertainty and we may really crash into a bear market or resume a rally.

Last week the markets rebounded from the October selloff but we created a gap up. Most gaps, if not all, get closed at some point:

 

 

There are runaway gaps but these are fairly rare. Thus next week we may expect the market to actually go lower to close the gap.

We also have election on Tuesday and the results may also affect the market behavior next week.

Historically, the markets rallied after the midterm election. We may see the same happening this year too. But we will know for sure once the market reveals its direction.
 

In October, we were mostly adjusting our trades to make sure majority of them would be positioned well for their upcoming expiration. We had many Iron Condors on SPX with puts deep in the money. Thus we rolled those Condors lower to be not too deep in the money. We are still bullish, so we didn’t want to roll those Condors too low to avoid calls being in trouble once and IF the market really rebounds and start rallying.

We also had many spreads and Iron Condors using stocks as underlying but in this volatile market with a lot of whipsaw price action we needed to avoid getting our stock positions in the money and have them early assigned. We had SPY early assigned last week and lost money. We didn’t want that to happen to all of our stock options trades.

Thus we rolled most of our stock options into SPX options. The reason behind is that with SPX there is no risk of early assignment and in this zig-zag price action I can let either side of any Condor to get in the money without a fear of early assignment. And with any breached side I can wait until literally five minutes before end of a trading session to see if the breached side recovers or I need to roll it into another expiration. You won’t be able to do this with stock options.

Rolling our trades delivered nice premiums income, unfortunately, it didn’t end those trades and thus they stay open and consume net-liq of our accounts. And due to October selloff and many puts still in the money, our net-liq got smashed hard in October. But we see this as not the end of the world. I am optimistic and I will keep rolling those puts as long as they end up out of the money and expire worthless.

 
This is reflected in our end of the month trading results. As you can see, our net-liq ended down a lot while our income jumped up by more than $15,000 dollars in October:

 

 

We made $1,207.00 income last week and the Net-liq of all accounts increased by $4,368.16. But overall, October ended with a nice $15,510.06 dollars premiums while Net-liq finished down by $31,040.98 dollars.

We post our trades on our Facebook page and we also post (or try to post when I have time to do so) our end of day trading results.

 
 

Here are the entire 2018 year trading results:

 

 

 

 · Dividend stock investing

 

Dividend investing is doing great on both accounts – ROTH and IRA. I keep using 50% of all options income and buy dividend stocks. IRA account keeps growing fast with new stocks being purchased every month. ROTH is more or less stagnant.

 

Here is a review of our accounts stock holdings:

 
Traditional IRA

 

ROTH IRA

 

TD account

 

In August we purchased the following shares:

 
IRA purchases:

 

We haven’t purchase any shares in ROTH or TD this month.
 

We keep spending 50% of our options trading proceeds to buy good dividend growth stocks using our screener to get a better entry into the stocks. Although capital appreciation is not our goal but a secondary target, timing the entry creates good results as our positions are mostly up. However, do not be too excited, any large selloff can temporarily send those stocks down again. It is a dividend income what matters to our portfolios, not the portfolio value and capital appreciation. It seems to be evident that using options to grow the portfolio is the right way to do.

 

 · Dividend Income

 

IRA dividend income

 

ROTH IRA dividend income

 

We all want to hear your opinion on the article above: No Comments