Thursday, May 16, 2013
Hi all, Well this time I am really back and looking forward to posting my trades, answering question and getting the Blog back to producing winners. I am still on a BOD and have some other duties but now I am trying to make the blog a bigger part of my duties. I love the interaction and trading ideas offered here. I apologize for being absent so much but other duties have distracted me and now I am back on track.
First of all I have again changed directions. As most of you know I started trading daily around 15 years ago. I have made a fortune and lost a lot of it. I have been up and down as I tried different methods. I have settled on a method that I now feel offers some great rewards with as little risk as can be expected.
I get many request and notes asking how I started with selling puts and now do spreads. The answer isn’t simple but mostly it revolves around the ability to trade weekly options. When I started there were no weekly options. Most of the rules I suggested were pointed toward how to trade monthly options. The stocks I now use (listed below) work best with weekly options and offer a good ROI (return on investment). I try for 1% a week and will show how I bump that up some.
OK, so what do I do now, it is nearly always CONDORS. I have quit doing the longer term spreads. They work but I find that all too often the stock moves a bunch and then I’m trying to catch up and then the stock fall and I caught up for nothing. That of course is condensing it but now it is Condors pretty much total. That of course has me trading both puts and calls.
So my rules for selling puts as outlined in my book still apply and give me some basic rules and guidelines.
For those that do not know condors. Here is a simple explanation,
Say the stock is at 500. I buy the 550 put and sell the 555 put. I hope to make .05
I then or in a combination if your brokerage offer that. I will sell the 545 calls and buy the 550 calls. So this condor has 4 legs. I buy one put and sell the next put & and I sell a call and buy a call. Only one side needs maintenance as only one side can end up in the money. If your condor has strikes that are 5 points apart, as above, then the maintenance is 5 for each option. If you have an account of 10K then you can do 20 options. If you can make .04 on each side that is .08 total in two or three days for 1.6% ROI in a week.
I get request often for what stocks I am now using. Well for the current condors I use –AAPL, GOOG, NFLX., AMZN, XOM, TSLA.
These stocks offer decent premiums and have weekly options.
One golden rule for those not used to doing condors is (and this apply to most positions) open position no sooner than Wednesday. Don’t violate this rule.. you can make plenty of money waiting until Wednesday and you will avoid losing your bankroll. Example I was looking at GOOG on Monday and thinking maybe I will open a positions. Well on Tuesday goog moved a bunch and yesterday it moved 27 or so points. If I had done the Monday position I would be losing many thousand. I was thinking of doing 90 of them. But when I look today there are good positions and only a day or two left! With the politics and the rest of the world situation there is no reason to push the envelope.
Tomorrow I will write on how to correct a bad position.
Good to be back
Jerry
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264 comments:
«Oldest ‹Older 201 – 264 of 264Sai - I share the same. I setup my SPY/RUT yesterday and got .80% (Although still happy 1% would be better)
I still have some margin left over for something else to give me that late-week boost. Possibly something with high Vol - SLV, EBAY,GDX.
well wouldnt you know it - RUT is 1081 now; Tax, I'm starting to hate the call spreads like you. 19 pts away from my 1100. I'm not going to panic as I did before. But will consider moving up my 1030/1010 to 1040/1020 for extra credit. let's see how the rest of the afternoon goes.
anyone catch slim today on tastytrade on his market correlations segment? some interesting insight on why dow is tanking and russell is not. he thinks that russell actually has more strength left and thinks that it still has much room to the upside. Would reco for those who are doing index options...
Looks like this will be a win this week, albeit with crappy premium. But every little bit counts! For next week, will wait to see what happens on Monday and Tuesday with the debt ceiling fight and response to insurance premiums being unveiled...
Should be an interesting week with the BS factory starting up in our legislature again.
NDX 3060/3085 Put at .30
RUT 990/1000 Put at .09 and Call 1110/1120 at .25
SPX 1560/1580 Put at .20 and Call 1735/1755 at .15
I just cant get decent call side most of the time on NDX. Have to get too close for comfort to get 1%. NDX/RUT from last friday. SPX from today. On IB, even though SPX settles Friday PM, about 50% of the time they release my margin by friday open. So some weeks i can open SPX on fridays, some weeks wait til monday.
So given that the vix still hasnt quite jumped to where it should be, I decided to take a chance this week. So far, I got into the RUT 1020/1010 and 1120/1130 with Oct 2nd week as expiration. I want to see if I can capture 50% of the premium within a week or so and then exit out. Love the RUT - you just cant keep it down. shutdown, schmutdown! So that's my 1 test case.
Last Friday, I got into SPX 1630/1620 and today into 1735/1745 (both expiring EOW). So far the SPX has held > 1680. let's see.
Na, I've been havign the hardest time getting any NDX fills at all. The P/L calculator on OX is giving me totally out of whack estimates. Also, I read this AM that a huge short has been placed on the NDX (17 billion?!?!?!). I still have some unallocated capital but maybe I'll stay away from the NDX this week.
I think the market's not buying any of this shutdown bs. Dow maybe, but the SPX and RUT are still holding strong, especially the RUT. It was down 10 at the open and now only ~ 3. the surprising thing is the VIX - spiked at 17 and now down to the 16s.
Let's hope the indices stay around this range!
Hello guys I am a current Nasdaq market maker with 19 years experience who has followed this blog for several years now. I average about 13-15% per year selling weeklies on a very large personal cash account. I have noticed a few of you in here talk of around 1% a week which is astounding. I am looking to bump my returns up to 20% annually and would be willing to pay a percentage of my returns to someone who can help in selling index futures which seems to be an area of success for members such as Taxman and I have yet to fully grasp. Before this blog reaches its end I thought I would leave my email for someone such as Taxman or another user that has had had good success. I can be reached at abrownsfan23@gmail.com.
Cheers,
Scott
Scott
I sell weekly index options, not futures. If I stick with plan, I can get ~1-1.5% per week.
Unfortunatley this blog is dying. Only a handful of posters.
Taxman, oops that was a typo. I actually meant options. If you are interested shoot me an email. Like I said I will give you a payout based on my returns. Thanks.
same here. unfortunately this blog's been dying a slow death. In any case, for this week, my trades are RUT IC 1010/1000 and 1125/1135 for a total of 0.78. Like last week, these go 2 weeks out with the intention of closing out end of the week and capturing ~50% of the premium. worked well last week. For SPX, i only got into the put side at 1615/1605 for this week for 0.3. I'm waiting for the seesaw on the spx to go up to the 1690s and then get into the call side. SPX been very predictable last week - when its down, it hits support at 1680s. When up, its 1700s. Incredibly range bound. Looking for an up day today.
I probably will not get into a position next week till the 17th, but also doubt there will be a default.
Scott - all you have to do is read what is being posted to see what trades we place. Most of us left place weekly index put/call spreads far enough away from the underlying to get max cush and still bring in 1%. I'm not an investment advisor nor can I/will I trade someone elses account especially for pay.
I placed the following on Fri:
ndx 3075/3050 for .42
gld 121/117 for .20
Mon was rut 1010/1000 for .16
spx 1605/1590 for .20
Since the vix has been climbibg I'm looking at a call spread in the mid 20's that expires next Wed Oct 16. Some nive premium for a week.
Sai I and Taxman,
Like to encourage you both to keep posting. Spent the last two weeks reading Jerry's book and going through all the comments on the blog and really appreciate the contributions everyone has made.
Newbee here, so will be posting the first trades later on in the month once the dust has settled.
Opened last friday
NDX put 3075/3050 for .45 Call 3350/3375 for .20
RUT put 1020/1010 for .10 Call 1110/1120 for .25
No spx this week (was golfing yesterday) Still came in at 1.75% for week.
Its funny, but I notice now that when i have to travel for work on fridays/mondays I think of not opening new positions as "lost money". Meaning any week i cant trade, i lose xxxx; simply because thats lost income even though my balance doesnt decrease.
If things arent resolved in washington by friday i'm also going to be sitting out next week.
Scott - most of the strategies we're using wouldnt work in large portfolios, there just isnt enough volume. Check out the open interest on the contracts we're using and i think you'll find it doesnt extrapulate to large portfolios.
Starting to sweat my short ndx 3075
spx 1605 and rut 1010. Another Wed/Thurs like today and I might have some troubles.
Has anyone seen Jerry to start a new thread?????
tax, i'm in the 1615/1605 put spread so definitely feeling it, but i think tommorrow will be an upday with janet yellin and alcoa earnings announcements. at least I hope so!!!
Thanks guys. Yeah it seems the volume is pretty poor on those index options. I usually stick to FB, NFLX,TSLA and AAPL. I usually go 100% naked selling with no spreads. I got off a pretty good one in FB today, sold 900 contracts of next weeks 60's at .04. Using IB I actually pay almost no commission if I add liquidity and it was about 50/50. With the spike in the VXX I can actually get a decent return. It's about 5k per 10 contract margin.
Going to be taking the week off from trading (hopefully its only a week !) May do a few small strangles or something different to play on this mess in DC. I think this gets resolved on weds and no sooner. if the market doesnt sell of monday morning, i'll buy some puts and hope to catch a tuesday selloff.
last week, for protection I bought a put and call spread on the SPX; both of which are expiring this week - made some nice profit on a 1700/1705 that I closed out of when the spx hit 1702-1703 on Friday. The put spread I DIDNT close out of and is at 1620/1615 and I'm really glad that I didnt close out of that, anticipating some possible downward movement. Sure enough with the nincompoops in DC not getting to any deal, I would expect tomm to be a significant down day. On the RUT, I bought a put spread at 1020/1015 and am really glad I did. The only issue is that I bought the put spread to serve as some hedging against my short put spread at 1010/1000. SO, while I expect some downward movement, I doubt it will be a ~7% move on the RUT. But volatility will go up again, possibly till Wed.
SO my game plan is to hopefully profit off my long put spreads on the RUT and SPX and perhaps get out of my RUT 1010/1000 short spread if its not too pricy to do so. Regardless, I'm looking to my long spreads to make some semblance of profit. Might even buy a call spread, anticipating that the bozos in DC will come to some agreement at least on the debt ceiling limit, and any downward movement and high vix will make call spreads cheap.
But yeah I;m with you na, trying to limit any short positions this week!
Ok positions for the week - with SPX at 1700, 1600/1575 PS for 0.4 and 1755/1780 for 0.2 for my weekly SPX iron condor. I figre that default will just not be something that will happen. Doubt that it will lead to a 100 pt drop in the SPX over 3 days. I have a 1620/1615 put spread that I bought to give me some protection. Lets hope the DC foolishness is over in the next day.
Tax, Na and others, what are folks looking at this week? vix is deathly low - had to get some decent premiums. I'm looking at 1680/1665 and 1780/1795 on the SPX, and 1060/1050 and 1160/1170 on the RUT. Dont like premiums on any of these! Waiting for tomorrow's economic data to come out before getting into these for this week.
NDX 3425/3450 calls for .60 @ 3357
3250/3225 puts for .30 @ 3363
RUT 1080/1070 puts for .15 @ 1115
GLD 117/112 for .21
130/135 for .19 @ 124
Looking at goog in the 1060-1080 range for this week. Also waiting for the jobs report and market reaction.
SPX IC of 1685/1660 for 0.3 and 1800/1825 @ 1750 for 0.35 with next Friday's expiration. RUT IC of 1070/1060 for 0.21 and 1160/1170 for 0.21 with next Friday's expiration. Goal is to exit this Friday after capturing ~50% of premium which would equal ~1.38% ROI. Let's see how things move. Would like to see some see-sawing this week...
Sorry to see this blog die, it was once so exciting to keep up with even though I just lurked mostly. Too bad Tax and the rest of you can't keep it going.
I've been investigating all the potential for profit trading companies at:
http://www.global-autotrading.com/autotraded-newsletters.html
A few of them have very high win ratios and profits.
Jim
I'm still here. was jamed with tax extension deadlines on 9/15 & 10/15
But thats over now. Will be on a well deserved vaca next week. Because of that I'm not placing anything for next week. Still doing my weekly spx, ndx, rut, gld spreads for 1-1.5%. Gold's recent pop is making my short 129.5 calls interesting.
Tax, I thought no one had signed on for a month as I didn't realize that the comments were over 200 and I had to got to the next grouping..
I recall Jerry saying he thought he made about 40% profits, probably in 2011. I know it's none of my business, but if you don't mind sharing, you seem to be having good trades with the occasional big loss, what would you say you averaged last 12 months (and is that in a tax advantaged account)?
Thanks for all your time on this blog..Jim
What are folks looking at this week? I got out of my 2 week SPX and RUT positions netting in ~1.5% total. so when in times of ultra low volatility, this strategy is somewhat panning out. would still prefer only front-week positions, but premiums suck if you also want the cushion.
I know there's a bunch of economic news coming out tomorrow, not to mention the fed mtg minutes on wed. Not sure what the minutes will say except that there's probably not much fed's gonna do taper-wise b/c of the shutdown that happened. Low expectations out of everyone except to basically do what they've been doing...
In any case, I'm looking at 1070/1050 (or maybe even 1060/1040) and perhaps 1160/1180 or 1150/1170 (although not ideal) for the RUT. Prob 1810/1830 and 1690/1670 for the SPX. again going out to 2 weeks for both and then exit out either on friday or by next monday.
Might just end up waiting till tomorrow to pull the trigger...
ok got into SPX 1690/1670 for 0.35 and 1810/1830 for 0.4, both expiring next week. Will look to exit on Friday or next Monday with 1/2 the premium capture.
Still scouting on the RUTs.
Opened yesterday:
RUT (1118) 1140/1150 Call for 0.24 exp on 01/11,
GLD (130.88) 125.5/121 Put for 0.20, exp 08/11
AEX (389.85) IC 380/384, 396/400 for 0.32, exp 01/11
Couldn't find anything on SPX, NDX expiring this week, still looking for 1 more position.
on the RUTs - 1150/1160 CS for 0.35 and 1060/1050 for 0.16. Both expiring next week. looking to exit on friday or next monday with atleast 1/2 of premium capture. I see the market struggling with direction, esp. the RUT...sort of hitting the wall at 1120.
Fed's expected no taper till next year is not any surprise and figure has already been baked in.
Hello guys, I'm still selling just naked puts for the most part. I see here that Jerry has stopped updating the blog; where are you guys posting and is anybody still doing puts naked or only spreads?
Interested to see what everyone is up to?
Jerry are you out there?
Thanks
nope pretty much only index iron condors. My 2 weeks out IC strategy is so far working in times of low volatility. I got out of my positions that I established last week capturing over 50% of premium for return of 1.85% which is more than acceptable to me. Due to work committments, I couldnt take advantage of the downward movement yesterday AM. If there is upward movement today (as futures suggest), then I'll get into the call spread portion, again probably out till next week's expiration and wait for downward action to get into any put spreads. Market's searching for direction, and I'd say right now its just hovering where it is. SPX not been able to break out >1770 and RUT not above 1120.
Hey guys. Was traveling and didnt have enough real time access to trade so i took 2 weeks off. Back in this week, opened the following last friday
NDX 3200/3175 for .40 3475/3500 for .30
RUT 1040/1020 for .22 and 1155/1135 for .20
1.6% for the week if things hold
Nolan - welcome. In general, those of us who are still posting all started with naked puts. Most of us have migrated to weekly's - on either the indices or individual stocks like aapl. Honestly, its just much less work, we're only in the market for a week, and the returns are a little better. Feel free to ask questions though.
Ah ok,
With my naked puts I'm aiming for 1.5% a month with lots of cushion. What kind of monthly ROI's on total account value have you guys been averaging? I'm assuming a lot higher as funds can compound weekly rather than monthly
Do you guys know of any hedge funds that primarily are selling options?
http://www.ljmpartners.com/performance-history
I found this one and they look to have done alright through the crisis with crazy volatility (they did loose over 50% in a month), and are still managing over 300mil
Nolan, when doing naked puts I usually left 40% of my margin open, which meant 60% of my money was working. So if i got a 4% return on my investments, i got 2.4% return for the month on my account.
btw...that's another reason for the weekly indexes, I dont need to leave margin room so I can have my entire account at work (or at risk depending on your view)
Got into SPX 1815/1825 and 1695/1685 last wed with this week's expiration. Both for 0.2. On RUT, 1140/1150 and 1050/1040 for 0.17 and 0.2 also expiring this week. I got out of the SPX 1815/1825 capturing 1/2 of the premium. Looking to exit out the others too, but may actually hold on till expiration b/c I'm not liking paying double commission for getting out of something. total ROI would be 2.49% for 2 weeks, which is 1.25/wk. The low volatility is not netting in great premiums, but my 2 weeks out strategy is good for that.
Nolan, I totally echo what NA said. I started out with naked puts as well, but always got into the issue of leaving margin on the table to cover volatility spikes. with index spreads, dont have to worry about that at all and now all my capital is being put to work, which obviously increases ROI. I started getting into the index condors starting in July. other reason for index options is the preferable tax treatment for 1256 style contracts, which are taxed 60% lng term and 40% short. My ROI for the year has been 50% as of now. I expect to be at ~66% by the time the year is done. My goal is income replacement and I'm looking to double my money on an annual basis (at the very least). A weekly ROI of 1.5% compounded should be able to hit that. Let's see...
Thanks for the feedback!
I understand with the margin and maximizing returns, but what about a 2011 AAA downgrade situation or a 2008 Lehman case; the major indexes dropped over 5% in a day and up to 10% over the week. In a case like that wouldn't it wipe out the majority of the account or make it very difficult to buyback the spread?
I'm going to start paper trading some monthly spreads on some indexes and spreads and see what kind of cushion and results I can get.
Nolan - you're right of course. There are probably 15 weeks a year i stay out of the market because there is some potential big news.
The stocks that give decent returns on naked puts - give those returns for a reason. They are highly volatile or have huge short interest. If the market indices drop 5%, those stocks will drop 15%. TSLA, GMCR, SHLD, etc.. they make some major swings. Its tough to trade actively if you are always guarding against a black swan event.
Not to harangue about the weekly drop issue, but how can you know which weeks to avoid ect? Like the US could easily be downgraded again in the coming months if brinkmanship does play out in Washington, which it most likely will.
I'm selling puts on larger companies such as aapl, grmn, bidu, jpm, cvx and many etfs slv, fxi, epi, eww. If I hit around 1-2% a month, smaller returns I know, but I don't have to worry about weekly losses or even downgrades and would fair alright in 'black swan' events from my back testing. I also try to sell calls at times when I think the market is near a top, but at much lower premium than puts of course.
I agree that selling naked puts on volatile stocks such as GMCR, TSLA ect would come and bite you hard if there is a bad news or early earnings guidance ect
I aim for around 15-20% a year which is still plenty of returns and don't spend too much time watching my account. I put on trades maybe once a week for a few hrs and then just check my daily cushions after market close briefly.
Nolan - if you are happy with your return level and the corresponding level of risk and work involved, then that's all that really matters. I guess alot of this discussion in the blogs is figuring out what works for each of us.
For me personally, I do this trading in a "play account" that repesents only a small percent of my total holdings. I use this account to try strategies that i hope will one day lead to enough annual income that i could trade for a living and give up my current day job. The majority of my holdings are in various debt/equity funds and if(when) i take a major hit in my trading acct it does not impact me materially.
Good luck in whatever strategy you use and please post your trades and experiences so we can all learn !
Hi Sai - Can you explain your 2 weeks strategy again?
Do you have any general guidelines?
(From what I can see - setup about 12-14 days in advance,setup for 3-4% credit, cash out when you hit 50% max profit -i.e. half of 3-4%, and reload)
I have been watching TT the last 2 months and have been doing alright, but last month got burned bad by GOOGL and CMG. I decided to finally face the music and close out my deep under water position instead of rolling it. So need to make up some cash now.
What has been your success rate? How do you handle a Vol Spike? or get tested? Just ask cause of these super low Vols
Thanks
Ed
NA, that's pretty much exactly it. When volatility is high, then obviously premiums are juicy enough to just do current week positions. When they're low as its been over th e past several weeks, then I've found that if you want to capture any decent premium then you have to increase your duration. I've found that doing this still nets me a good 1.5-2% AND gives the benefit of cushion, which you wont get in a front week position when volatility is low. I shoot for roughly double of what I would normally get (3-4%) and then take 1/2 of that in 4-5 days, or whenever the opportunity arises (ie, sharp movement in either direction). You do have to pay that extra commission and so I try to factor that in. In some cases (as was this week), I didnt bother with exiting, since directionally nothing was happening and I figured to just stay in my positions and let them expire, which will happen today (my positions are RUT 1050/1040 and 1145/1155 and SPX 1695/1685; I did exit my 1815/1825 on Monday or so since I had reached my target on that). My inspiration for this was from michael benklifa's trading iron condors book in which he lays out a similar strategy but does so on a monthly basis. his entry criteria are also a lot more strict, which make a ton of sense, but I dont think function well if you want to a weekly consistent income strategy, which is what I'm shooting for. SO far I've had all winners on this strategy - no complaints at all. Best thing about this is that by going out the extra week, you get the added cushion and can go farther out in strikes and still get decent premium. But my baseline position will always be the front week options - I crunch the premiums on both the front week and 2 weeks out to see which is more lucrative, look at volatility and if there are any major events and then make the decision. To me though, cushion sort of always wins.
To add to what NA was saying @Nolan, I totally echo that. You have to comfy with what you're trading and your style. We all have different risk tolerances. I prefer index options due to the better tax treatment. There's always great liquidity in the RUT and SPX. The NDX swings are too volatile for me to handle, but others on here have done well with them and have a different tolerance level with it. So you have to trade what you're comfortable with. I do think you'll easily hit your target of 15-20% ROI annually.
These are all good discussions. Let's keep them going and learn from each other. As mentioned before, i do recommend michael's benklifa's book. makes you consider all the different factors when getting into index options.
@na - ya makes sense to trade some money in different styles and accounts. I'm trading the majority of my money in naked puts and so I'm aiming for more conservative returns, but I can't handle a big drawdown like I've had in the past with other more aggressive ways. If I can hit 15-20 a year consistently then I'm more than happy to grow my nest-egg through this method.
@Sai l - I agree, everyone must find which way is best for the time and comfort level they want. I might look at some monthly spreads to further diversify. I think spreads are nice on the call side especially as its hard to find good naked calls that offer enough cushion. I think the market is a bit over extended right now, so wouldn't mind selling some spreads on the call side.
Gd Luck all!
It's harder and harder to get decent premiums nowadays, probably because more and more people have learned your strategy and are selling weekly options the same way as you are doing. Any good strategy, if used by all the people, will definitely become ineffective. So if you have found any good working strategy, you'd better keep it a secret and don't share it with anyone. Stock market is a place for people to take money from the others, not a place for sharing.
Sai - What did you setup this week?
I was unable to do anything on Friday but first thing I Monday I did the following:
SPX - 1850/ 1860 C ; 1725 /1715P for 3%.
SPY - 184/185C; 172.5/171.50 P for 2.5%
My buy-backs are already set at 50%.
Some of my lessons learned so far are - stick with the SPX, SPY will kill in commission. Right now both show a Lose on a P/L but I assume that will get better as the days go on. When I setup the trade it was roughly about 3.8% cushion. Seems kinda close (understand low Volatility)
Anything else I should keep in mind? Or any other feedback?
actually got some decent premiums by legging my way in.
All are 2 weeks out expiring Nov wk5
SPX - 1845/1860 for 0.35 CS; 1715/1700 PS for 0.25
RUT - 1150/1160 CS for 0.49; 1050/1040 for 0.53. I already exited tthe 1150 call position capturing 72% of the premium. Will keep the 1160 around for potential upward movement with Yellen's approval and tomorrow's economic news.
Btw, legging into iron condors is when you get into a call or put position when either there is an upward or downward movement respectively. When movement is upward, calls will rise correspondingly; when its downward, puts will do so. So one way of juicing up the premium is to get into a far OTM call position when the underlying is rising and then waiting for downward movement to get into the put spread leg of the iron condor.
This requires some patience and doesnt necessarily work all the time. Some folks will advocate that you should get into both positions at the same time, since the market could make a major directional move and either leg then serves as a hedge vs the directional movement. But sometimes if you have a strong enough hunch that there will be reversal, then you could wait for that to occur before getting into the opposing spread. So I got into my call spreads when the market was upward yesterday AM. I was expecting some kind of downward movement, since the indices are hitting up against resistance and tops. sure enough it happened by the end of the day with icahn mouthing off and that's when i got into the put spread leg. Nice thing there was that the downward movement also deflated the 1150 RUT call allowing me to exit capturing a bulk of the premium in a day. So not bad. HOWEVER, this kind of legging may NOT always work, especially with short duration weekly condors that we're trying to do here. I do think that its a lot more possible with condors that are longer duration like monthlies and beyond. With the weeklies, it could still work, but you just have to be glued to your account and watching the minute by minute action. I can fortunately do that with my job - have a window open while I'm doing all my other stuff, but for a lot of other folks, it may not be possible. So its however you want to do it.
Ed, in my experience (which has only been a few weeks of doing biweeklies), you cant pay too much mind to the P/L b/c that is fluctuating constantly. I just keep an eye on the cushion. For the most part, you wont see the time decay unless you're into or approaching the 2nd week. If your premiums are small, then likely the decays are not going to be observable. If large position, then you might see it. also keep in mind that the underlying has to either stay where it is or go the opposite way for the decay to be noticeable. If it moves towards you, then probably not going to see it, since any decay will be dwarfed by the gain in the positions due to the movement in its favor.
I have to reiterate that this is what works for me and what I plan to tinker with. You have to do what's best for you and your comfort. I do stick to one rule and that's to take profit whenever I can. I dont care if I'm hitting 30% or 60% of premium. If I think I've captured enough to satisfy my take for the week, then i dont care if I'm leaving 60-70% of the premium on the table. Something I learned from tastytrade - you have to manage your winners just as much as your losers. And of course you never take a loss when you're taking profits! Other thing that I've found in my experience is that activetly managing your positions and keeping an eye on them has resulted in a successful outcome (for me). As I mentioned before, many folks may not be able to monitor constantly and this happens to me as well when I have travel or day-long client meetings where I have to pay attention to the meetings. Have definitely lost out on volatility spikes and opportunities when that happens.
best of luck.
Exited all my positions out today capturing ~75-80% of premium resulting in 3.15%. This week was a good exercise in actively managing winners with the 2 weeks out strategy and with legging.
Might sit the next week out since I'm out on vacation till the 3rd. But might still try to sneak in a trade if possible!
Hey Sai nice work! I am still monitoring your posts and I am going to start paying more attention to see if I can get the kind of volume I need to do the indexes. With this low VIX the equity side does not have the room I feel comfortable with.
Thanks guys for posting especially to whoever posted tastytrade info originally. they have lots of research and back test videos under market measures game changers etc. all free. new site called dough, i signed up...supposed to have ways to test differently but i haven't seen anything remarkable but haven't been through whole site. Rihan has a book volume 2, re TT guys' methods.
I am finally a barely but profitable trader or haha atleast over a 2 month period and hmm maybe 500-1k trades..a belated Happy Thanksgiving!
I'm back from vacay and time to get into positions. So far, I'm in the SPX (expiring THIS week on friday) - 1730/1720 for 0.25 @ 1782 and 1825/1825 for 0.1 @ 1789 or so. I figure that good jobs report might move the market down 40 but unlikely to go 60+ points (I hope!) in 2 days. As for upward movement, dont think it'll move upward 30 points, since immediate reaction to good reports seem to be downward. As for my RUTs, couldnt get decent current week positions so will do 2 weeks out or next week's expiration.
Got into RUTs expiring next week: 1060/1050 for 0.2 @ 1121 and 1170/1180 for 0.15. These are fairly far apart, so if there's a large downward movement after NFPs tomorrow, I expect it to rebound next week after market realizes that jobs picking up is a good thing.
Not seeing much postings - anyone still out there?
My SPXs expired worthless and i closed out of my RUTs last week pocketing ~50% of the premium, for a 1.66% take.
This week - back to the 2-week ICs, due to the relatively quiet periods coming up. No major economic news this week and next week is the fed mtg. But I think market's shrugged off the taper talk.
so:
SPX - 1740/1730 PS for 0.4 and 1860/1870 CS for 0.2
RUT - 1070/1060 PS for 0.28 and 1175/1185 CS for 0.23
Gotta say i got some decent fills on some of my orders. I expect some downward movement with taper fears over the next few days, but for the most part, expect indices to be very tightly range-bound in the absence of any major scheduled events. Hope to get out with 50% premium capture.
Hey Sai I am still around.... I started getting aggressive today in the SPX that expire tomorrow. I sold a ton of bear call spreads today. Mostly 1810/1820 some at.10 and .05. Still a great return for expiring tomorrow. Keep on publishing I am watching. I also sold 60 IEP 150's for .10 between yesterday and today. They expire next week.
I can't find any new blogs ---nothing since last MAY. Are you still communicating? rphoff
Help me out here--who is Sai and where did Jerry Lee go? I'm just trying to get to his blog if there is such a thing but not familiar with this blogging stuff ---after last message I suddenly got blogs from May all the way up to Dec 12 above. ??? rph
Paul the people here were people who used to comment on Jerry's posts and use this blog as a means to share ideas. Reality is I'm afraid is that Jerry strayed from his crumbs method played around with Apple spreads etc and got burned..he tried a few times to come back explaining his absences being due to golf etc but the reality is he kinda blew up.
Paul,
Taxman and Sai kept this blog going since Jerry Lee bailed, for reasons unknown to me.
I have moved on the paying for my advice from Frank Grossman who writes for Seekingalpha.com and has a web site http://www.logical-invest.com/.
I also follow Peter F. Way on SA. He will be adding the public to his site sometime next year which I will subscribe to: http://www.blockdesk.com/. Peter is AMAZING!
All the best to all traders..Jim
Hi all, happy new year. looks like some of you folks are still around. My year ended with me sweating out a 1170/1180 RUT position. while I had to take a minor loss, all in all, I ended the year with 50% ROI. I was up 65% trhough the 3rd week of december, till my careless disregard of the santa rally causing me to give back some of my profit. In any case, I had to do a flurry of other trades in order to cap my loss and so ended the year at 50% ROI, which still aint too bad.
How did the rest of you fare? one thing for me is that the weekly index ICs worked fairly decently. So I will continue with that as my basic primary strategy. Look to enter on a friday or monday for front week expiration on the SPX and RUT. according to the tastytrade guys, 2014 is bound to have more volatility, given the ridiculously low volatility of 2013. So normalization of this to some extent means higher IV, which is good for us option sellers.
I dramatically increased my portfolio size this year and hope to make 1-1.5% per week.
I know this has been discussed before but anyone here using tradeking? I'm on optionsxpress but I got turned down for level 5 trading (you need lv 5 to trade naked index strangles or ratio spreads). Also TK seems to have better commissions.
Anyone else looking to scale up their accounts/position sizes? Defintely listen to the TT best practices segments on scaling...very educational!
Tax, NA - any of you guys out there?
Thanks for posting Jim. I'll take a look. If anyone cares...TT has a graph of decay based on distance from ITM...and DTE....
see
Market Measures
January 13, 2014: Premium Erosion Rate
See Slide 9
wow Sai Congratulations on a Great Year! is that like normal return for a slow year for you?
Well, since this was my 2nd year of selling put options, I'd say 50% is decent. My take the previous year was 30%, but I had just started out and made many mistakes.
For YTD, I'm averaging ~1.4%/wk so far. This week was 1.46%. So not a bad start. I'm sticking with just RUT and SPX weekly ICs.
For next week, would love to take advantage of the holiday on Monday, but 3 days is too long and makes me nervous to be exposed that long. I might just wait till Tuesday AM. Although next week is quiet economic news-wise with only Thursday have any major economic reports. of course, earnings will be active through out which might move markets.
has anyone heard from Jerry? i've tried emailing him;no response. He likely blew up his account but just curious if anyone can confirm.
Thats awesome Sai! Congrats. I'm still struggling but small P....too chicken to play weeklies.
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