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Allistah's Weekly Options Seller Journal


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Allistah's Weekly Options Seller Journal

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  #1 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Hello everyone,

I am going to start a journal on selling vertical spreads on the weekly options. I wanted to do this to force myself to write out all of the rules and follow them each week. I'll be posting all of the results as I have them in my spreadsheet. The purchase date and times as well as any sales info at the end if they're closed early. I've had some success with this already but I want to get systematic about it. I've found that I'm a systems trader and do best when I have an exact system to follow. Anyways, today and tomorrow I plan on writing out the entire trading plan and rules along with the two indicators that I use. Just until I get everything laid out in detail - the strategy is to sell bull put spreads or bear call spreads for a credit. This keeps Theta on my side and the goal is to have each spread expire worthless at the end of each week. More later!

I'm going to elaborate on these rules as time goes on but I wanted to at least get a minimum up so when I post trades they can sort of see what I'm up to and why.

-------------------------------------------------
Rules for Trading Weekly Vertical Spreads:

The Goal: Sell vertical credit spreads on weekly options and let them expire worthless at the end of the week

For Selling Bull Put Spreads:
Weekly chart (StochRSI must be up or OverSold) or show major Bullish Divergence on MACD
Daily chart StochRSI must be up and below OverBought

Additional Bullish Divergence on MACD on the StochRSI and MACD on the daily chart is just more reasons to get into this trade but the two items above are the minimum requirements on the chart.

Option Rules:
Only sell 2, 5, and 10 dollar spreads.
Sell the ATM Bull Put Spread
Must get at least $1.00 credit

If the most recent support or is broken, exit the trade.

Stay in the trade and let Theta do it's thing. Let it expire worthless if you're on the right side of your short strike.

Basically reverse these rules for bearish trades. You'll sell Bear Call Spreads instead of Bull Put Spreads.

When posting stocks that I'm looking at, I will use these abbreviations to describe why I'm looking to get into the trades:

Key:
------------------------
W=Weekly StochRSI
D=Daily StochRSI

OB = OverBought
OS = OverSold
Up = Up
Dn = Down
BullT = Bullish trade
BearT = Bearish trade

WkBearDirvMACD = There is major bearish divergence on the weekly MACD chart/indicator
WkBullDirvMACD = There is major bullish divergence on the weekly MACD chart/indicator
DayBearDirvMACD = There is major bearish divergence on the daily MACD chart/indicator
DayBullDirvMACD = There is major bullish divergence on the daily MACD chart/indicator

DayBullDirvStochRSI = There is divergence on the daily stochRSI chart/indicator
DayBearDirvStochRSI = There is divergence on the daily stochRSI chart/indicator
WkBullDirvStochRSI = There is divergence on the weekly stochRSI chart/indicator
WkBearDirvStochRSI = There is divergence on the weekly stochRSI chart/indicator

WkDblBtm = There is a double bottom pattern on the weekly chart
DayDblBtm = There is a double bottom pattern on the daily chart


If anyone has questions, please ask me so I can update the rules to make them clearer. It's easy to leave stuff out when you're writing rules as you assume certain things that other may not.

These rules will evolve over time and this is the place where I will keep my copy of them.
--------------------------------------------------

-Allistah

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 Big Mike 
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Congrats on starting the journal!

Mike

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  #4 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Thanks Mike.... ..and I would be really happy if you and others chime in and help correct me where I'm lacking. I've been trading live for about 7 years now. I've blown up one account where I lost about 14k. I seemed to lose all the time. Now it seems like I'm not losing much anymore but I'm not making much either. They say this is part of the process. You will lose a lot, you will get to the point where you don't lose but don't make anything and then finally you'll start making money once you're seasoned enough. I've tried a number of strategies primarily on futures. Twice I've made a lot of money and lost a lot of money, twice in a row. This strategy for this journal is one that I want to be an income generator. I don't expect to get rich quick off it. I want slow consistent results on a weekly basis. I want it to be robotic and boring. I'm currently working on getting the rules laid out and will be posting them at the top of this thread and I will be updating them if needed as we go along.

Thanks again, I'm pretty excited about getting this thread started.

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 Big Mike 
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Slow down, post a couple charts with your trades, and give short reasons for why you entered and why you exited where you did. Do this for a bit, and you will see clear patterns.

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  #6 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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The new weekly options open tomorrow morning for next week. Below are the stocks that I'm waiting for an entry on along with the reasons why I'm looking to get into a trade on them. I'll post the key here but I'll also post it in the rules of the first post in this thread.

Will look to enter these trades either tomorrow, Friday, or Monday:
-------------------------
CF (BearT, WkBearDirvMACD W=OB, D=OB)
FFIV (BullT, DayDblBtm, DayBullDirvMACD, DayBullDirvStochRSI, W=Up, D=Up)
GOOG (BullT, DayDblBtm, DayBullDirvMACD, DayBullDirvStochRSI, W=Up, D=Up)
MA (BearT, W=OB/Dn, D=Dn)
NFLX (BullT, WkDblBtm, DayDblBtm, WkBullDirvMACD, DayBullDirvMACD, W=OS/Up, D=Dn)
WYNN (BullT, WkBullDirvMACD, W=OB/Dn, D=OS/Dn)

Key located in the first post of this thread along with the rules for this strategy.

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  #7 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

So after all that and laying out the rules that I tried to come up with, I realized that they're too rigid for a one week time frame. The likelyhood of being able to get into trades every week will be pretty slim waiting for a weekly and daily chart to line up for an entry. In the past I've felt that I seem to do better on the average when I have about 7-10 spreads each week. Here is what I got into today. I'll explain a couple of them.. Would take too long to explain each one. They're all pretty similar.




Here is the chart with my reasoning for getting into the SPY trade. I did a 131/130 Bull Put Spread. Expires in 8 days.



Here the chart for GOOG. I did a 560/555 Bull Put Spread. Expires in 8 days.



I need to update the rules so they allow me to do what I need to do. The weekly/daily setup was too large I feel and would have kept me out for weeks at a time. I don't have weeks to wait trading weekly options.

I have a set of trades that are going to be expiring tomorrow. I've taken a loss on a couple of them but I will post the results for all of them and where that left me for the week excluding commissions, etc.

Please feel free to comment. I want this to be a learning experience for myself and others.

-Allistah

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 SeeTrader 
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Allistah,

I'm looking forward to your thread. I'm in the same boat with you as far a blowing out accounts trading futures, so I thought I would start looking at options again. I like the idea of starting with spreads. I wish you much success!

SeeTrader

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  #9 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Hey thanks a lot. Yeah, I found that if I leave everything up to my eyes, I start seeing things that aren't there in futures. Thats why I can only trade a 100% mechanical system with futures. I follow it exactly and thats it. No guesswork, nothing. It says, you do. lol With spreads the goal is to wait it out which is nice. I don't do anything with them unless I see a little ITM icon next to the position.

Another cool thing about doing weekly spreads is that you've got a limited risk and the trade only lasts 8 days max. I am very much looking forward to answering any questions you may have or any other comments. If something I've said here is not that clear, please ask. I'm so looking forward to doing this journal. I may be really embarrassed with some of my trades but that's part of the reason why I'm doing this. I need to make that stuff hurt so I stop doing it. It's too easy to brush things under the rug if nobody knows.

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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received


I just went over my spreadsheet where I keep track of every spread that I sell down to the commissions. I've sold 116 spreads so far since March and after commissions I have an 11.5% return on total risk. I don' t know what is realistic over the long term (I'd love someone to chime in here and tell me what is great, good, fair, bad, etc. on overall return rates for this type of strategy).

Thanks,

-Allistah

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  #11 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

I had a Bear Call Spread on MA from last week. It was doing ok and then this morning everything gapped up and MA was around 428 a couple minutes after open. This was past my short stirke of 425 and almost to my long strike of 430. I was lucky enough that the volatility was all wacked and was still able to close this trade with a profit. I thought for sure I was going to close it for a loss but I guess I got lucky.

I don't know if it's appropriate or not to show dollar amounts and number of contracts so I've blacked them out.


When the market closes later, I'll post the final standings for this week.

-Alli

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  #12 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Here are my results for this week. I have also posted my new trades that will expire next week as well below them.

Results for week ending 6/29/2012:



New trades for next week ending 7/6/2012. I list them all as "expired" to start because thats the goal if I don't touch them. If I end up closing a trade early then I fill in the price it was bought back and along with the date. That data would then go and update the rest of the numbers.



If anyone has any questions, please feel free to ask.

Thanks,

-Alli

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  #13 (permalink)
cwerdna
San Jose, CA
 
 
Posts: 6 since Jun 2012
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You're WAY more advanced than me so hope my questions/suggestions don't sound like dumb ones.

Allistah View Post
The Goal: Sell vertical credit spreads on weekly options and let them expire worthless at the end of the week

For Selling Bull Put Spreads:
Weekly chart (StochRSI must be up or OverSold) or show major Bullish Divergence on MACD
Daily chart StochRSI must be up and below OverBought

Do you really always want them to expire worthless at the end of the week? Sure, doing so saves on commissions but in some cases, it may not be worth the risk. Perhaps there should be criteria for certain stocks that you take profits after reach x% of profit?

For StochRSI, what parameter are you using? Are you going w/the TOS default of 14 periods and switching between the daily and weekly charts? If so, that'd mean 14 days in daily charts and 14 weeks in weekly charts, right?

I've been selling way OTM naked puts on stocks that I wouldn't mind owning. I gave a few examples to one of my friends (who is WAY more advanced than me) and he suggested filtering out ones that are below their 200 day SMA. I noticed a few of your plays are are below their 200-D SMA (e.g. SINA, GOOG and BIDU). He actually first started off saying he likes to look for stocks stronger than S&P 500, which is currently above its 200-D SMA.

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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Hi cwerdna,

Nah don't worry about asking dumb questions. In my opinion the only dumb ones are the un-asked ones. :-)

I tried to update my rules earlier last week but the post got too old and then it wouldn't let me. I'm going to be updating my rules in a post after this one to get them closer to what I want to do.

I'm sorry if I don't follow my rules exactly - I'm really going to try and get something written that I follow that doesn't make things so rigid that I can't do what I do.

I think that a rule to buy back the spread if you reach x% of the profit would probably be ok. I need to come up with a rule that takes that into account in case things just up for a huge profit within one day. Since there are only 4-6 trading days with these trades at most things tend to move fast. Right now my gut is saying that if it were more than 6-8 days then I would want to do that more than I do because it leaves more time for things to go against you. So far all the ones that I've bought back early would have expired worthless. I guess if it becomes a problem then I'll look at fixing it.

I really loved Robert Miner's book and that is where I learned about the StochRSI. He calls it something different in his book but ToS has it as StochRSI. The settings that I use most are (8, 80, 20, RSIWilder, Close, 5, 3, 3, SMA). I've found that these settings hit most of the peaks and valleys. For MACD I use 8, 17, 9.

If course everything I'm saying here is my opinion and may not match others opinions but I don't really care too much about it being over the 200sma because the trade is only open for 4-6 days at the most. For example, on Thursday I saw that there was HUGE divergence on the weekly and daily charts. The huge down move tended to match the length as the last few drops as well as far as distance it has fallen. You can use Fib lines to see this. You can also just eyeball it and see it as well. Things had a nice jump up at the end of Thursday and then Friday was the big pop. I can't say how strong the divergence from the MACD on the weekly chart. You can see that in the screenshots I've posted. As I do these I'm going to be refining the rules so I'm sorry if the rules are sort of all over the place. If I didn't answer everything or if you have other questions I encourage you to keep asking.

Going to take a moment and try to post a message with rules that are closer to what I'm doing.

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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Here is an update to my rules. These rules assume a bullish trade.

The are three charts used: Weekly, Daily, an Hourly.
There are two indicators used: StochRSI and MACD (Settings below are for ThinkOrSwim). StochRSI is used to choose direction and MACD is used to watch out for divergence.

MACD settings: 8, 17, 9
StochRSI settings: 8, 80, 20, RSIWilder, Close, 5, 3, 3, SMA

Each chart gets both indicators above with those settings.

Weekly chart:
Look at this chart to find out what the overall trend of the stock is. What is the trend? Up? Down? No trend? How do you tell? Higher highs and higher lows - that's and uptrend. Lower highs and lower lows is a downtrend. This is just going to give you more info on the larger trend. ..and remember, when things are in a downtrend with lower highs and lower lows, before it changes to higher highs and higher lows, it will often go from a downtrend state to a no-trend state before it goes to an uptrend. I can't tell you how important this is to really understand how to see what the trend is just by looking at it. Higher highs and higher lows sound simple but you need to be able to look at any stock and know what the trend is. Sorry for the rant here, I just want to explain that you don't want to overlook the trend and explain how to find out what the trend is.

Daily chart:
This is the chart that I make most of the decisions from. These weekly trades are only in the market for 4-6 trading days. One week. Thats ONE candle on the weekly chart. So if the weekly is in a downtrend and ready to move up for a couple weeks on a bounce, I would take a bullish trade. Fib lines and StochRSI will help you see this. Back to the daily chart.. I like to wait until the StochRSI is oversold or turned around to the up side. If the oversold is 20, I won't jump in if it's at 19 just because, it needs to look like it's overextended and at a fib line, etc. Sometimes if the stochRSI is bottomed out at zero I'll think a lot more about getting in bullish. It's overdue for a reverse. So I'm going to try and come up with a couple rules here:

Hourly chart:
This chart is just used to help time the entry for the daily chart. I have a full time job and a lot of times I don't have the time to sit and wait for this chart to set up but it is there if I need it. My trades don't always get entered in the perfect setups but the chart is there if I have the time. Remember if you're trying to use this chart, this one will give a signal before the daily chart will, and the daily chart will give a signal before the weekly chart.


Weekly rules:
StochRSI must be pointed up or oversold
StochRSI must not be overbought
Major bullish divergence on the MACD two lines will override the StochRSI rules.
If major divergence is there, the momentum on the MACD must be turned up.

Daily rules:
StochRSI must be pointed up or oversold
StochRSI must not be overbought

Hourly rules (If you have time to wait for this to set up):
StochRSI must be pointed up or oversold
StochRSI must not be overbought

Option rules:
Weekly options become available every Thursday for the next week. I typically get into these trades Thursday-Tuesday as long as you can get the credits listed below. I suppose if I could get a signal on a Wednesday and still get a $1.30 credit for a $5 spread I would take the trade if the setup looked good.

Sell the ATM spread. You want the one that is lower in the option chain so the short strike you're selling is not ITM at the time you've sold it. Don't pick one that is above the current price.

For a $5 spread, get at least $1.30. For bullish, you will be selling a "Bull Put Spread".
For a $2.5 spread, get at least $0.70.
For a $1 spread, get at least $0.30.

Avoid selling anything if the stock is going to have an earnings announcement before expiration.

I'm going to leave them as that for now. I hope that as these weeks go by that I can update the rules and get things closer to what I'm actually doing.

Please keep in mind that I'm trying to refine these rules and get something down that I can follow without fail. If you see a problem with what I'm doing, lets talk about it. :-)

Thanks,

-Alli

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 SeeTrader 
Missouri
 
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What day do you look to enter your trades?

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  #17 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Ah, great question. I didn't even think about talking about that. The options for the next week become available every Thursday. The exception for this is on the week when the monthly options expire. You'll just use those that week.

I try to get in the trades on the Thursday, Friday, or Monday at the latest. I think I have sold some on Tuesday but it's rare. You have to get the minimum credits and those tend to dry up each day. If you can get a setup on a Tuesday or Wednesday and still get $1.30 for a $5 strike, I think I'd take it given the amount of time left until expiration. So I guess the option chain sort of dictates when you can and can't get into a trade once you have a setup. I hope this answers your question.

Edit: I added this answer to the rules I have in the above post.

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 SeeTrader 
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Allistah View Post
Ah, great question. I didn't even think about talking about that. The options for the next week become available every Thursday. The exception for this is on the week when the monthly options expire. You'll just use those that week.

I try to get in the trades on the Thursday, Friday, or Monday at the latest. I think I have sold some on Tuesday but it's rare. You have to get the minimum credits and those tend to dry up each day. If you can get a setup on a Tuesday or Wednesday and still get $1.30 for a $5 strike, I think I'd take it given the amount of time left until expiration. So I guess the option chain sort of dictates when you can and can't get into a trade once you have a setup. I hope this answers your question.

I was looking at one of last trades you put on (I think it was AAPL) and since there was such a big up day on Friday I think the credit was down to .02 and that's why I was wondering which day you like to get in. Now I understand what you're saying about the option chain dictating when it's too late to trade.

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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Thats why I was listing the date and time I got into the trade. With the swings that can happen in a given day, a spread that sells for $1.50 in the morning may only be worth $0.80 at the end of the day or the next day. When you have the date and time, you can use the "OnDemand" feature in the ThinkOrSwim platform and see exactly what the charts were at that exact second as well as the cost of the spread. I had a hard time going back to look at losing trades without the time just for this purpose.

Also keep in mind that there is a bit of "gut feeling" that I use as well and that is going to be the hardest part to document in the rules. That is what I'm going to try and get down in the rules.

-Allistah

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cwerdna
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Allistah View Post
I really loved Robert Miner's book and that is where I learned about the StochRSI. He calls it something different in his book but ToS has it as StochRSI. The settings that I use most are (8, 80, 20, RSIWilder, Close, 5, 3, 3, SMA). I've found that these settings hit most of the peaks and valleys. For MACD I use 8, 17, 9.

Ok. That fills in a lot of info for me now. At first, I couldn't find all those parameters for the Stochastic RSI study in Prophet charts. It turns out, one needs to be in the regular (?) charts for StochRSI study w/all those parameters. I normally don't use the non-Prophet charts.

Also, do you care about earnings announcements before expiration?

For me, one of my rules when selling naked puts is to almost never enter a position if earnings will be announced prior to expiration. I'm worried about the downside risk and either overpaying for the stock (if it's put to me) or having to pay WAY more than the premium received to close it out. I make exceptions to my own rule in a few circumstances, but I digress. Some people like to do directional earnings plays, but that's not me.

I'll have to spend some time to digest the rest of your posts and investigate for myself...

 
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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

I used to use the Prophet Charts all the time but I've since moved over to the ToS charts. I write thinkScript for strategies and then I can backtest it on the ToS charts. I like the Prophet charts but they don't give me the functionality that that ToS charts do. You can write your own indicators, etc as well if you like in thinkScript. The ToS charts are just have a lot more functionality. Some things aren't as good, but overall they're better IMO.

Yes, I do avoid selling spreads if the earnings announcement will be before expiration. Thanks for bringing up that, I completely forgot about it and it's just something I do without thinking about it.

-Alli

 
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 dellcnu 
Dallas, TX
 
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Hi,
Good to see someone trading spreads.
My long term goal is to do spreads to generate income.

I wish you good luck

The greatest danger for most of us is not that our aim too high and we miss it,
but that it is too low and we reach it.
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  #23 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Are you doing any spread trading right now? If so, I'm curious - what do you do?


-Alli

Sent from my iPhone

 
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  #24 (permalink)
 dellcnu 
Dallas, TX
 
Experience: Intermediate
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I am not doing any spreads currently.
Just long calls and puts, but day trade NQ and ES full time.

The greatest danger for most of us is not that our aim too high and we miss it,
but that it is too low and we reach it.
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  #25 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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All of the spreads for this week are doing well at this point - all except one on SINA. It's still above the short strike which is fine if it stays there. It has not moved up much since the day I opened it. It does however have bullish divergence on the MACD and a double bottom on the 1 hour chart (chart below) All the others have rocketed up and are pretty safe. With tomorrow being a holiday, I get a free day of Theta decay in my favor. :-)

Starting to take a look at where things currently are in preparation of selling more spreads for next week starting on Thursday.

-Alli


 
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  #26 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Next weeks options become available tomorrow morning. The markets look overbought on the hourly, daily, and weekly. This gives me a bearish outlook for the next week.

I'll be looking to enter bear call spreads this week.

 
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  #27 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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I've opened three new bearish positions for next weeks expiration. Here are the orders. Annotated charts to follow.




Here are the charts for these three trades:






 
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  #28 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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This is where I ended up at the end of the day today... I added two more spreads in addition to the three from this morning.

All of the spreads opened for next week are:





The charts for the two other trades are:



and

 
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  #29 (permalink)
cwerdna
San Jose, CA
 
 
Posts: 6 since Jun 2012
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Allistah View Post
When you have the date and time, you can use the "OnDemand" feature in the ThinkOrSwim platform and see exactly what the charts were at that exact second as well as the cost of the spread. I had a hard time going back to look at losing trades without the time just for this purpose.

OMG!

You'd piqued my interest and I dug up a quick tutorial thanks to some Googling (I can't post a link yet). Wow! I can't believe I didn't know about this feature.

Anyone who uses TOS and doesn't know about it should check it out.

 
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  #30 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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All of my spreads for this week are looking perfect and should expire worthless over the weekend. Once the market closes, I'll post a summary of the trades for this week.

-Allistah

 
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  #31 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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The market is now closed. All of last weeks bull put spreads expired worthless this week. Here are is the final results showing the return. 50.2% return on investment this week - after commissions.


 
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  #32 (permalink)
 SeeTrader 
Missouri
 
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Broker: AMP
Trading: ES
 
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Allistah View Post
The market is now closed. All of last weeks bull put spreads expired worthless this week. Here are is the final results showing the return. 50.2% return on investment this week - after commissions.


Very Nice Job!!

 
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  #33 (permalink)
 Vikings1 
Minneapolis, MN, USA
 
Experience: Master
Platform: ninjatrader, TOS
Trading: Weekly Options
 
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Posts: 188 since Sep 2011
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Great job!

Have a great weekend.

PS: You might want to take a quick look at some of my picks for next Monday, they maybe of interest to you.

Mike


Allistah View Post
The market is now closed. All of last weeks bull put spreads expired worthless this week. Here are is the final results showing the return. 50.2% return on investment this week - after commissions.



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  #34 (permalink)
 mongoose 
Chicago, IL
 
Experience: None
Platform: oil super computer
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Allistah View Post
The market is now closed. All of last weeks bull put spreads expired worthless this week. Here are is the final results showing the return. 50.2% return on investment this week - after commissions.

For selling options wouldnt it be return on risk or return on margin, since your not really putting any money in to begin with. Maybe im just being nitpicky , either way nice return.

 
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  #35 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Sure, that wording seems to make more sense since I didn't really invest it. :-)

 
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  #36 (permalink)
 plethora 
Los Angeles, CA
 
Experience: Intermediate
Platform: NinjaTrader
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Awesome journal. You have the gift of making the complex simple and I love how you nailed this week's direction. Could you discuss more about the Strike Spread, please? Also, I've noticed the settings on your StochRSI hourly chart are different from the Daily and Weekly though the MACD settings are the same in all three timeframes, so that is something to add to your rules. And the Miner book you mentioned is his most recent one, right?

Also, if you haven't seen this vid you will be captivated as some say the method employed was selling Vertical Credit Spreads.
Now that I understand more from your thread it surely seems that way based on clues she has given: Karen, the REAL SuperTrader, interviewed on Get Tasted - YouTube

ETA: watching the vid again and you can see how a CPA would be attracted to and feel comfortable with credit/(debit) side of vertical spreads. Very interesting.

 
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  #37 (permalink)
 Cloudy 
desert CA
 
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Plethora, I didn't think "Karen" was using bear call spreads? Thought she said she gave up on trying to figure out price direction and the "minutia" and was using strangles. And her gain was actually more like 50% a year. More of my comments on that tastytrade video:

Of course, by that measure, Allistah is doing far faster p/l% gain by being right directionally.

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  #38 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Hey guys...

I checked on the spreads today after the market closed and everything is looking good at this point. Still have four more days to go so there is still a lot of time left to make things go sour but I hope that doesn't turn out to be the case.

My current assessment of the DJI:

Weekly: Bearish, is currently making a lower high - the first part of a confirmed downtrend
Daily: Bullish, but last moves down were on higher volume which indicates market sentiment is shifting to bearish

Things are still looking good for a Friday bearish expiration at this point unless some news shifts things around a bit. We shall see... ;-)

 
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  #39 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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All of my spreads are looking perfect at this point for a Friday expiration as long as things don't rocket upward.

I've taken a run through my watch list and found that there is a bit of a discrepancy on where things are. On the weekly charts we've just left the overbought zone and heading down. The daily is very oversold and most are poised for an up day or two.

So what does that mean for tomorrow which is the first day that next weeks options are available? It means that I most likely will not be entering any trades tomorrow. I'm expecting an up day or two so if we get an up day tomorrow then I will wait to see what happens on Friday. If thats an up day as well I'll watch for an overbought condition on the hourly chart and start selling bearish spreads. I'd like to get in on Friday so I get those two free days of theta decay over the weekend.

-Allistah

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  #40 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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As you can see in my previous posts, I'm bullish short term. I sold some bullish spreads this morning and I plan on closing them after a couple of days after there is some movement. Do not plan on holding these for more than 3 days.

Here are the trades that I just entered:

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  #41 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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I've entered these trades into my spreadsheet. I've also added a couple columns for 1 contract numbers so people can see what the numbers are for 1 contract positions. It will also let people easily scale those numbers in their heads for whatever numbers they want to compare against. I've cut out all the other data thats not for single contract as it is not relevant for what I'm doing here.

These spreads are already up a bit so I hope that they keep going in the right direction over the next couple days. Looking to dump them on Monday at the latest.

On the spreadsheet, the term "1 C" means that those are the numbers for a 1 contract spread.

Someone asked for my spreadsheet so I hope to be posting that over the weekend. I need to remove some of my data before I post it. It's nice to help keep track of your good and bad trades so you can go back and see what the charts looked like when you opened a position.



-Alli

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  #42 (permalink)
 SeeTrader 
Missouri
 
Experience: Intermediate
Platform: NinjaTrader
Broker: AMP
Trading: ES
 
Posts: 77 since Apr 2010
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Allistah View Post
I've entered these trades into my spreadsheet. I've also added a couple columns for 1 contract numbers so people can see what the numbers are for 1 contract positions. It will also let people easily scale those numbers in their heads for whatever numbers they want to compare against. I've cut out all the other data thats not for single contract as it is not relevant for what I'm doing here.

These spreads are already up a bit so I hope that they keep going in the right direction over the next couple days. Looking to dump them on Monday at the latest.

On the spreadsheet, the term "1 C" means that those are the numbers for a 1 contract spread.

Someone asked for my spreadsheet so I hope to be posting that over the weekend. I need to remove some of my data before I post it. It's nice to help keep track of your good and bad trades so you can go back and see what the charts looked like when you opened a position.



-Alli

Very cool!

Do you have stops in place? How do you manage your trades if they move against you?

 
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  #43 (permalink)
 kulu 
Buckeye Nation
 
Experience: Intermediate
Platform: Ninja Trader
Broker: Amp/CQG, TOS
Trading: CL, 6E, YM and ES
 
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Allistah View Post
I've entered these trades into my spreadsheet. I've also added a couple columns for 1 contract numbers so people can see what the numbers are for 1 contract positions. It will also let people easily scale those numbers in their heads for whatever numbers they want to compare against. I've cut out all the other data thats not for single contract as it is not relevant for what I'm doing here.

These spreads are already up a bit so I hope that they keep going in the right direction over the next couple days. Looking to dump them on Monday at the latest.

On the spreadsheet, the term "1 C" means that those are the numbers for a 1 contract spread.

Someone asked for my spreadsheet so I hope to be posting that over the weekend. I need to remove some of my data before I post it. It's nice to help keep track of your good and bad trades so you can go back and see what the charts looked like when you opened a position.



-Alli

@Allistah

This is not a big deal, but is the Opened Time on Priceline correct? It's not even 4:48PM out here and I am New York Time. Is that 4:48 AM? I doubt it.

And thanks for sharing

 
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  #44 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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No stops in place. Typically if support is broken then I'll close the trade. Even if it's broken but at another support level I'll not close it - I'll wait a bit to see what it does. If I can't tell by looking at the chart I'll just take the loss. I also typically don't close the trade unless its past the long strike. If it passes the short strike I still wait it out. With the high credit and selling ATM spreads, this does indeed happen. If it goes against you it doesn't hurt that bad like it would if you sold an OTM spread. If those go against you they hurt bad. I'm banking on nailing the direction of the stock over the next week. If one of these goes WAY against me, so what. Even if it went to zero, I wouldn't care that much. The loss is limited and the loss is not that much because of the amount of credit I got up front.

For example, the ISRG trade I just opened. All I would lose would be $301 per contract. Even if the stock went from 530 to 5. Not too bad for one. Now if the entire market went bad on me and they all went south I'd be in a bit of trouble.

Lets say that did happen. You'd lose $1400 per contract. That better be less than 3% or so of your account size, or you're over extending yourself if you know what I mean... ;-) I think of each batch of spreads collectively as one trade for the week. These bullish ones are all one trade in my mind. In a couple days when I open the bear spreads, those collectively will be one trade. It's the averaging that I need and care about. Usually I have 1-3 go bad on me each week and usually end up with about half of what the total profit would have been. Those are the numbers that I look at.

Hope that shines some light on things...

-Allistah

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  #45 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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kulu View Post
@Allistah

This is not a big deal, but is the Opened Time on Priceline correct? It's not even 4:48PM out here and I am New York Time. Is that 4:48 AM? I doubt it.

And thanks for sharing


haha, sorry about that. Good catch. The time is 8:48:20! Not 4:48:20. hehe Just a little typo there. Thats why I post the picture from ToS so you can see the exact, real data on the spreads in case I make a mistake in my spreadsheet.

 
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  #46 (permalink)
 kulu 
Buckeye Nation
 
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Allistah View Post
haha, sorry about that. Good catch. The time is 8:48:20! Not 4:48:20. hehe Just a little typo there. Thats why I post the picture from ToS so you can see the exact, real data on the spreads in case I make a mistake in my spreadsheet.

I just saw that on the previous page. Like I said, not a biggie, but I figured I should le you know just for your record keeping purposes. When you look at that a month from now, you would have been "what the heck" and probably figured out it was 8:48 instead of 4:48 anyways.

Cheers

 
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  #47 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Heh yeah... You're right. I would have been "WTF?". lol

Since I'm posting I figured I'd update. The spreads opened this morning have made some progress in the right direction but then the market slumped back down near closing. They ended the day still profitable. I'm hoping for a good up day tomorrow and if we get that and some overbought conditions, I'll buy them all back.

 
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  #48 (permalink)
delanth
Detroit, MI
 
 
Posts: 7 since Jul 2012
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Good job Alli.

I am looking to get into the weeklies and this is an excellent blog you have going. I've traded Option spreads before so I know a ting or two and will be staying plugged in.

I am shock that you trade these things ATM strike price. But I saw that your technical analysis is a big part. Most will trades these far from the strike price and pick up between 25 to 40 cents on the Wednesday or Thursday just before expiration.

I think that trading them ATM will require big enough move to be out of danger because been too close to the price and way the Gama jumps around close to expiration time I get scared. Not to mention that you also trade them for 7-8 days.

knowing these thing and then reading your blog I am thinking that if you trade few strikes OTM by looking to collect 1/2 of the premium that you are currently looking for (like a 25 Delta), this could increase the winning % of trades immensely. The ROI will be lower, but most importantly your risk exposure will be way lower as well. But because you will have less losing trades it will make up for the ROI. This extra wiggle room is the cushion for the 3 out of 10 time that the stock price will violate your tech analysis.


I am not trying to change your plan. I realize that you are open to ideas so I feel good adding my two cents.


Del

 
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  #49 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Hey there...

Thanks for the post. You're right, I am open to hearing everyone's ideas about things. There are many ways to trade the same thing just as you described. You can't learn from others if you don listen to others views. :-)

When I first got into trading I paid for education through Investools. My coach was awesome and always pounded it in my head to sell ATM spreads but you need to get the direction right. If it goes against you it doesn't hurt as bad and if you're right you get more profit. You get two out of three directions when doing spreads. Up and sideways or down and sideways.

I was doing the whole selling OTM spreads when I started doing weeklies back in March and I was trying to follow a different system for choosing direction. It didn't work so well for me so I just started doing what was comfortable to me and what I knew. At the same time I started doing ATM spreads as well and things have been going ok so far. We will see how I'm doing in six months.

-Allistah


-Alli

Sent from my iPhone

 
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  #50 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

One other thing, yes, my technical analysis is everything to me. No way I could get into even one spread without it. I'm also looking at the overall profit for the week, not one individual trade so that helps keep the emotion down. Also if I take max loss on all spreads for the week it better not be more than ~3% of your total balance. I actually run mine a bit heavy at around 3.2%. That's if every spread took a max loss. If there was a huge disaster tomorrow like the 1987 crash, I'd be at a max loss of 3%. That happens so infrequently. A regular loss week for me is about a 0.5% loss and it takes about 3-4 trades to be closed as losers to get that. That's why it's important to have about 6-10 on every week so you get the averaging thing working in your favor. If I only did 3 and one wet bad that's 33% of my trades.

I could talk about this stuff forever. lol

-Allistah


Sent from my iPhone

 
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  #51 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Ok, the Dow is up 144 right now, got the decent pop I was looking for. I closed out the long positions I opened yesterday morning. Could it continue to run up? Who knows, sure it could.. But on the longer term charts things are bearish and I'm not interested in playing that game. It could turn around at any time and continue downward. I'm not going to argue with 14% overnight.

Here is the actual data from ToS:



...and here is the data in the spreadsheet that shows more details.



All of the spreads from last week are still looking perfect for expiring worthless at the end of the day. Once the market is closed I will post the results from them.

-Allistah

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  #52 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Here is a copy of my trade log for my spreads. I've changed all of the contracts to 1. You have to manually manipulate some of the totals for each week as you don't know how many trades you'll have. There is also a P/L chart off to the bottom right.

Let me know if anyone has any questions.

Attached Files
Register to download File Type: xlsx SpreadsLog.xlsx (70.4 KB, 25 views)
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  #53 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Where are the weekly options list in ToS? Here is where you can find it.

This is the watch list that shows all the stocks that have weekly options. This is maintained by ToS. I go through this list and see which ones give me good credits and then I make my own watch list out of the ones I pick from this list.

Here is a screenshot on where to find this list:




Let me know if you have any questions..

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  #54 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

So there were a number of trades that I wanted to get into but they have earnings next week so I decided to just stay away from those stocks. I'm not so sure about these spreads this week. It's not my usual setup of 6-10 and things are sort of mixed on the signals.

So, if this week doesn't play out well, I think I'll just avoid earnings week all together and not trade anything until it's done with.

The trade in red was a trade I got in but got back out of because I realized earnings are next week. Took a tiny loss.

The trades listed here are everything so far for next week, including the ones I've already closed this morning.


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  #55 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Welp, it's Friday and the markets have closed. All spreads from last week will be expiring worthless tomorrow. 55% return against risk not including commissions. I think I ended up at 54.3% after my commissions were taken out.

Ok! On to next week... So far the spreads are really weak because things are in the middle and the picks that I did have had earnings so I'm staying away from them. We will see what happens.




-Allistah

 
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  #56 (permalink)
delanth
Detroit, MI
 
 
Posts: 7 since Jul 2012
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Allistah View Post
Here is a copy of my trade log for my spreads. I've changed all of the contracts to 1. You have to manually manipulate some of the totals for each week as you don't know how many trades you'll have. There is also a P/L chart off to the bottom right.

Let me know if anyone has any questions.




These results rocks!!!

 
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  #57 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Hey, thanks a lot! :-) I appreciate that.

 
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  #58 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Here is my analysis for next week on the dow for the weekly and daily charts.

Dow Jones Week Chart



Dow Jones Day Chart



If anyone has any questions about any of this please speak up. This thread is all about learning. Not just myself but everyone else that reads it.

-Allistah

 
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  #59 (permalink)
delanth
Detroit, MI
 
 
Posts: 7 since Jul 2012
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dellcnu View Post
I am not doing any spreads currently.
Just long calls and puts, but day trade NQ and ES full time.

A full time trader!!! Awesome! My goal is to become a full time trader like you, but not necessarily a 'day trader'.

Cheers.

 
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  #60 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Just looked over my charts and things are really a mixed bag at this point. Not too much is clear at this point so I need another day of action to change things up a bit so I can re-evaluate.

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  #61 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Opened three more bear spreads this morning. Here they are...



Most showed as being over extended and up against Fib lines.

 
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  #62 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

I just opened another bear call spread on CF. Got a great credit on it. I got a $2.98 credit on a $5 spread. This means that if I'm right and it expires worthless, I will gain $298 per contract. If I'm 100% wrong and take a max loss I will lose $202 per contract. We will see where this ends up...

Since the return on risk was so high, I couldn't not take it - especially with only a few more days to expiration.

The great thing about these ATM spreads, you can get such high credits that if they go against you they don't hurt no where nearly as much. You just need the key. The key is picking the direction correctly. I hope I'm right... ;-)


 
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  #63 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

If this week bombs out for a loss I'll have to make some adjustments to earnings weeks and Fed reporting weeks. Only time will tell if I'm right on my bearish direction. lol

Current outlook for the Dow:

Monthly: Bearish, just entering oversold area, bearish divergence on MACD
Weekly: Bearish
Daily: Bullish, up against resistance of a 62% retrace fib and 62% alternate price projection fib, starting to show signs of weakness
Hourly: Bearish, up against resistance with a 78% retrace fib

I think I'll stick with my bearish stance still. Tomorrow and Wednesday's Fed announcements could jack everything all up.

-Allistah

 
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  #64 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

So my MA bear call spread is in trouble. My short strike is at 430. When I looked at the market first thing this morning, it had gapped up to around 445 putting the spread very close to max loss.

Ok, first reaction may be to close it down. But think about it, if you're close to max loss, why close it and lock in that loss? Give it that time to move the other direction in your favor. If it keeps going up so be it - then I'll take max loss on it. It happens - especially with a gap. It's part of the game and I'm not sweating it. Good thing I got a $2.07 credit on it. The max loss is not that bad considering the big picture. This is why it's important to have 7-10 trades on every week. It's the average that I care about. There will be times where I have 3-4 losers and the week will be a loss overall. It happens... <shrug>

Reason's why I didn't close it down:
  1. Stocks have a tendency to close the gap so that was in my favor.
  2. 445 is resistance from July 5-6.
  3. Couldn't maintain above the 100% alternate price projection fib or the 78% retrace fib on the 1 hour chart (not shown)



Any comments or thoughts?

-Allistah

 
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  #65 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Markets were up today a bit. Down about $150 per contract for all trades combined. Not much at all. Tomorrow will be interesting for sure. :-) I'm still bearish!

I'll look at the charts later and post my assessment.

-Allistah


-Alli

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  #66 (permalink)
delanth
Detroit, MI
 
 
Posts: 7 since Jul 2012
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Allistah View Post
Markets were up today a bit. Down about $150 per contract for all trades combined. Not much at all. Tomorrow will be interesting for sure. :-) I'm still bearish!

I'll look at the charts later and post my assessment.

-Allistah


-Alli

Sent from my iPhone


I think you are in a good position being bearish. Stochastic is showing overbought plus bloomberg dot com news seem to be telling what market will be like tomorrow; Goldman Sachs revenue drop and Intel misses forecast....


Del

 
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  #67 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Here is my assessment of the Dow as of this evening:

Monthly: Bearish - Just barely reaching into over sold territory
Weekly: Bearish - Almost touched the 78% fib, heading down
Daily: Bearish - At resistance of 62% retrace fib and 62% alternate price projection fib, also in over bought territory,
Hourly: Bearish - At resistance of 62% alternate price projection fib, rolled over in over bought territory

When so many things line up like this, my bet is that tomorrow will be a down day. The weight is there to tip it over so we will see what happens.

Delanth, I agree with you on your assessment. :-) Tomorrow should be interesting for sure!

-Allistah

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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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At a loss of about $300 for all open spreads combined for 1 contract each. I'm still bearish, things are very overbought right now and I still have two days left for these spreads to pull themselves out of the fire.



-Alli

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  #69 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Ok, lets go trough all the spreads that are losing - four out of seven.

CF, CMG, MA, PCLN are all losing pretty good at the moment. Now is where I think I need some feedback from those who are very experienced. Let me talk about each one and what I think I should do or should have done.

I looked at all four. No clue what the hell I was thinking when I got into those. The daily charts are almost all OVER SOLD, not over bought. Well, this is why I'm doing this journal, so I learn from my mistakes and I have some sort of public accountability.

I'll post a couple of the charts back when I opened them - they all look about the same. Epic fail on these entries this week. I'll be a lot more attentive to when things are ripe for entry or not. If I have to wait a week on the sidelines then so be it.





-Allistah

 
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  #70 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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I'm still in these trades for this week... I've been really busy with work and I got into a few others today...

I made a couple mistakes today as well. Got into two trades that have earnings at the end of the day so I got out of them right away. I'll update my spreadsheet later tonight.

Here are the trades...


 
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cwerdna
San Jose, CA
 
 
Posts: 6 since Jun 2012
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Allistah View Post
I made a couple mistakes today as well. Got into two trades that have earnings at the end of the day so I got out of them right away. I'll update my spreadsheet later tonight.

I definitely can't help w/technical analysis, but I also try to be careful about earnings too. I've made some mistakes as well.

Sometimes the earnings date info on Thinkorswim and finviz.com is wrong. I usually have do some some Googling. It's always preferable (not always possible) to see it in a press release or something on the company's investor relations page.

WYNN is particularly bad as sometimes, TOS and various sites will have a date, it come and goes w/no report. I got bit by this before when trying to a strangle or straddle on it. WYNN tends to announce the date only a few days before the actual announcement.

If anyone knows of other good earnings date sites, I'd love to hear them.

 
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delanth
Detroit, MI
 
 
Posts: 7 since Jul 2012
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i should be able to post a link after this.. my 5th post.

 
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delanth
Detroit, MI
 
 
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cwerdna View Post
I definitely can't help w/technical analysis, but I also try to be careful about earnings too. I've made some mistakes as well.

Sometimes the earnings date info on Thinkorswim and finviz.com is wrong. I usually have do some some Googling. It's always preferable (not always possible) to see it in a press release or something on the company's investor relations page.

WYNN is particularly bad as sometimes, TOS and various sites will have a date, it come and goes w/no report. I got bit by this before when trying to a strangle or straddle on it. WYNN tends to announce the date only a few days before the actual announcement.

If anyone knows of other good earnings date sites, I'd love to hear them.

Always use at least one more earnings calendar along with TOS. Here are two:

U.S. Earnings: Company Earnings Calendar - Bloomberg

Earnings Calendar - 2012 Economic Events Calendar - TheStreet

 
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  #74 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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cwerdna View Post
I definitely can't help w/technical analysis, but I also try to be careful about earnings too. I've made some mistakes as well.

Sometimes the earnings date info on Thinkorswim and finviz.com is wrong. I usually have do some some Googling. It's always preferable (not always possible) to see it in a press release or something on the company's investor relations page.

WYNN is particularly bad as sometimes, TOS and various sites will have a date, it come and goes w/no report. I got bit by this before when trying to a strangle or straddle on it. WYNN tends to announce the date only a few days before the actual announcement.

If anyone knows of other good earnings date sites, I'd love to hear them.

Yeah I just noticed that. I was in a bearish CMG spread that expires today and I'm pretty sure there weren't any earnings posted. Today it is down 90 points. I'm glad I was on the correct side of that trade...

I wish ToS had the ability to code earnings dates. So you could have access to the date in thinkScript so you could say flag if it's within x number of days or something.

The Dow is down 82 points currently so I have a couple of spreads that are still hurting really bad but I've gained a lot back and am now in the green for the week. At the end of the day I will post where this week ended up after I update the spreadsheet. It was for sure a rough week for my trades. Hoping next week is a lot better.

-Allistah

 
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delanth
Detroit, MI
 
 
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I used this site years ago. Didn't realize its still existed: https://www.earnings.com

 
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  #76 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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I ended up closing out a few losing spreads before the market closed. I bought back the shorts on the TLT trade as it was looking to close too close to the short strike of 130. It ended up closing at 130.02 which would have put that strike ITM.

My results for the week are listed below. After commissions, I ended up with 13.8%. The numbers show in the sheet below don't show commissions of course. Just based off a gross 1 contract position so the numbers are slightly different.

13.8% is not bad considering it was a horrible week... :-) That was a normal week when they'd all expire worthless when I was selling those OTM spreads. Now you can see that when selling ATM or slightly ITM spreads that you have a much better return of risk. I had TWO spreads this week that I took a MAX LOSS on.. Your strategy is everything..



-Allistah

 
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  #77 (permalink)
 SeeTrader 
Missouri
 
Experience: Intermediate
Platform: NinjaTrader
Broker: AMP
Trading: ES
 
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Allistah View Post
Ok, lets go trough all the spreads that are losing - four out of seven.

CF, CMG, MA, PCLN are all losing pretty good at the moment. Now is where I think I need some feedback from those who are very experienced. Let me talk about each one and what I think I should do or should have done.

I looked at all four. No clue what the hell I was thinking when I got into those. The daily charts are almost all OVER SOLD, not over bought. Well, this is why I'm doing this journal, so I learn from my mistakes and I have some sort of public accountability.

I'll post a couple of the charts back when I opened them - they all look about the same. Epic fail on these entries this week. I'll be a lot more attentive to when things are ripe for entry or not. If I have to wait a week on the sidelines then so be it.





-Allistah


It's nice to know you can have a few "No clue what the hell I was thinking when I got into those" trades and still be profitable at the end of the week. GOOD JOB!

 
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Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Thanks! I looked at my spreadsheet and I'm at 15% ROR since I started back in March.

When I first started I was selling OTM spreads for about 20% ROR. My problem with them was that if they went against me they hurt.. A lot! That's why I like the ATM spreads. You just need to get the direction right.

So what did I learn this week?

I learned that I need to pay a lot more attention to what trades I get into. I also learned that's should be exiting these spreads if they go against me and break support or resistance. I need to have those areas marked on the chart so if they're broken I just get out. There should be no question.

We will see what next week brings..






-Alli

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  #79 (permalink)
 kulu 
Buckeye Nation
 
Experience: Intermediate
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Broker: Amp/CQG, TOS
Trading: CL, 6E, YM and ES
 
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Allistah View Post
I just opened another bear call spread on CF. Got a great credit on it. I got a $2.98 credit on a $5 spread. This means that if I'm right and it expires worthless, I will gain $298 per contract. If I'm 100% wrong and take a max loss I will lose $202 per contract. We will see where this ends up...

Since the return on risk was so high, I couldn't not take it - especially with only a few more days to expiration.

The great thing about these ATM spreads, you can get such high credits that if they go against you they don't hurt no where nearly as much. You just need the key. The key is picking the direction correctly. I hope I'm right... ;-)


Alli,

So when you say that your spread is ATM, is that just in reference to the Short Strike being ATM?

I enjoy reading your journal.

Kulu

 
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  #80 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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kulu View Post
Alli,

So when you say that your spread is ATM, is that just in reference to the Short Strike being ATM?

I enjoy reading your journal.

Kulu

Hey thanks, I'm glad that you're enjoying my journal. :-)

Yes, that means the short strike. That is the one that you're on the hook for if it expires ITM. When I say ATM, it's as close to ATM as I can get. Sometimes it is slightly ITM and sometimes it is slightly OTM. But it is never a full strike away from ATM if that makes any sense. If I can get a good enough credit and sell it slightly OTM, I'll do that of course. Sometimes if I think it won't have any trouble moving a long ways down I'll lean toward selling the one thats slightly ITM so that I get a nice big credit. But let me repeat that again, it will never be a full strike ITM or OTM.

Thanks for the question, if you have any others, please let me know.

-Allistah

 
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  #81 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
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Hey all --

It looks like we are set up for a bearish week. Thats my assessment. Bearish on the weekly, daily, and hourly. The arrows are point to key fib lines and divergences.

I read a book by Robert Miner. He teaches you how to use multiple fib lines from different data on the chart and helps you pick the areas that are most likely to be support or resistance. When they group up, they're a lot stronger. The arrows are pointing out these groups. Some of the other areas with single lines can still be strong, but when you have groups, it's sort of confirmation that those are strong areas.

I'll be looking for more entries in the next two days and thats it for the week. I won't take any trades after Tuesday. It will be hard to do on Tuesday but if I get the credit I'll do it. Most likely the credits aren't there on Tuesday. Too much theta has decayed at that point.

So we will see if anything shows an entry tomorrow. I will work hard to only take good entries and pay attention to not take entries that don't make sense.

Here is my chart for the Dow. We will see what tomorrow brings! :-)


 
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  #82 (permalink)
Allistah
Bay Area, CA
 
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Back when we had only monthly options it was common practice to say to close down the trade if you were able to capture 80% of the max profit. Now that we have weekly options I don't know what I should be doing. Right now I wait until almost expiration to close them but only if there is a problem with it.

I was thinking of maybe putting in sell orders to close the spread early but just wanted to hear what others opinions were on the matter. If I sell a spread for $2.25, at what would a good number be to buy it back at? 0.05? 0.01?

-Allistah

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