I just wanted to send a report a quick update about how things been going with my current position. It's officially closed and here's the outcome. I'm looking to open the next one on Thursday after the next Greece debt extension
Position: OESU5 P1700
Days Open: 40
Open Value: 5.25
Exit Value: 2.55
Raw Notes throughout the trade. There are no edits here guys so if some of this sounds like me going crazy, I kinda was since it was my first large trade. Edit: I was going crazy here because my position was so close to exit and then turned the other way.
6/24/2015 - My position is nearing exit, currently at 43%. Hopefully we'll get there in a week.
6/28/2015 - WTF Greece!?! Greece bailed on negotiations to stay in the Euro and ordered a referendum in 5 days. This happens on a Sunday night? Monday morning is going to be brutal. Also, Greece? Really? Their entire economy is about the size of Microsoft's write down for the Zune! How the hell can a communist student organizer with no leverage or governing skill hold Europe hostage?
6/29/2015 - Market gapped down big. Probably won't last but still..watching this shit go from $6,000 in the black to -$5,000 in the red suuuuucks.
7/2/2015 - position is still in the red so exiting now, ahead of the long weekend and the Greek referendum, isn't an option. I'm 29 days in so there's a good chunk of decay built in. Should have figured, my first trade with a good amount of money..of course it wouldn't go smooth.
7/7/2015 - The Greek No vote really didn't do anything on Monday. Yes the market gapped down hard but came right back. Tuesday opened lower but who knows. This position will be open for a while. I just can't keep staring at the screen and reading the same 50 articles on what the S&P will do because of xyz. Everyone is conflicting with everyone else and giving out useless information. The only thing I've read so far that makes any sense is the volatility is up and will stay that way and prices will grind down after big pieces of news.
7/12/2015 - Let's kick the can down the road again . Of course no one is going to make a decision. I'm hoping this just leads to fatigue and no one will care anymore.
7/13/2015 - Exit today. It's not exactly 50% but it's close. Normally the exit will take commissions and fees into account but this position has been hanging around for a while so I just want out. Can't get greedy....
Last edited by rsm005; July 13th, 2015 at 12:27 PM.
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Sold positions on 6/03/15. IM was 909. You should have held 909 x 3 = 2727 for each position.
The worst day was 6/29 when IM was 978 and premium was 7.50. That is only a $181.5 increase in IM and premium on the worst day from when you entered the position. The IM + Premium on 6/29 was $1,353. That was 49.6% of the $2,727 you held for the position. The position didn't even get to 50% of your account balance.
The $181.50 was 15.5% of the $1,818 cash excess held for the position. You still had $1,636.5 left of the cash excess.
Depending on your costs, your ROI should be about 3.2%-3.5%.
3.5% compounded monthly would make 51% in a year.
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All great points Ron. To add a bit more information and feedback for everyone else here.
My emotional ups and downs were one of the hardest things to deal with, especially as the absolute dollar amount went up. The percentages were the same but the total number of dollars invested went up with this trade and will probably go up again with the next one. I had in excess of $5000 per contract held this time around and will probably keep the same for the next one.
Lesson Learned: Be aware that as the number of contracts goes up you'll have to deal with bigger emotional swings just because the total number dollars goes up. It's easy to see $300 or $400 disappear in a big price swing but to see $6000 or more. This I'm sure is a bit of emotional maturity that comes with time and trades.
You're right about the news as well. During this entire fiasco everyone was simply guessing; Bloomberg, Yahoo Finance, Reuters, CNBC, MarketWatch, All the various blogs. No one had a clue even though they were all 100% certain this or that would happen. The market simply did what it did and people who guessed right said.."see I told you so." until the next day when the exact opposite happened.
Lesson Learned: Follow the plan. In the end this exercise has given me a lot more confidence. My position withstood 2 major gaps down after bad news on a Sunday and a steady decline in the market over the course of a few weeks without forcing me out. If I'm far enough out and well within the safety limits there is no reason to rush. Doing something is almost always worse then doing nothing in the method of trading. It's very easy to get caught up in the day-to-day noise of the marketplace. Especially after reading the
1000th article on how a chinese implosion will result in the US losing 30%. Patience is key....I need to spend more time on my day job, family, and hobbies rather the focus on the daily grind of the S&P.
Also, my god ignore the comments section on ANY ARTICLE. Just don't bother....
There's an excellent article about John Bogle about market volatility that I kept reading over and over..
My way of not getting emotional over account balance swings is to look only at daily percentage change in account balance. As your account grows the amount of losses on some days will get larger but the percent loss will probably be the same.
If you held $5,000 per contract the worst day was only down 2.5% from where you started.
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I wasn't implying that there is correction coming as seen by response to him a few days ago when he was considering closing his positions early and taking a loss. All I was trying to get across to him, especially when he has posted several times about how bad news is coming out, is that there will most definitely be some news or event that will effect the market much more in the future than the recent events. And if he is that worried about recent events and being down on his puts, that he might want to scale back some.
My response a few days ago:
Volatility is good for the market and trading. The US economy is hitting on full cylinders, Greece has been going on for five years, and even though the Shanghai index has fell drastically it is still positive for 2015. Will we have a correction? maybe and I am down on my puts also but long term I think there is upside to the market
Last edited by blb014; July 13th, 2015 at 03:53 PM.