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Allistah's Weekly Options Seller Journal
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Allistah's Weekly Options Seller Journal

  #1 (permalink)
Trading for Fun
Bay Area, CA
 
Futures Experience: Intermediate
Platform: Think or Swim
Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

Allistah's Weekly Options Seller Journal

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


Last edited by Allistah; June 28th, 2012 at 10:36 AM.
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  #2 (permalink)
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  #3 (permalink)
Site Administrator
Manta, Ecuador
 
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Big Mike's Avatar
 
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Congrats on starting the journal!

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

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  #4 (permalink)
Trading for Fun
Bay Area, CA
 
Futures Experience: Intermediate
Platform: Think or Swim
Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

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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  #5 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,238 since Jun 2009
Thanks: 29,350 given, 83,214 received

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.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

The following user says Thank You to Big Mike for this post:
 
  #6 (permalink)
Trading for Fun
Bay Area, CA
 
Futures Experience: Intermediate
Platform: Think or Swim
Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

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.


Last edited by Allistah; June 28th, 2012 at 10:27 AM.
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  #7 (permalink)
Trading for Fun
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Futures Experience: Intermediate
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Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
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.

Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



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.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



Here the chart for GOOG. I did a 560/555 Bull Put Spread. Expires in 8 days.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).



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


Last edited by Big Mike; July 23rd, 2012 at 03:34 AM. Reason: Attachments removed by request of original poster
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  #8 (permalink)
Elite Member
Missouri
 
Futures Experience: Intermediate
Platform: NinjaTrader
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Posts: 76 since Apr 2010
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Looking forward to this thread

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)
Trading for Fun
Bay Area, CA
 
Futures Experience: Intermediate
Platform: Think or Swim
Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
Posts: 136 since Jun 2010
Thanks: 5 given, 64 received

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.

The following 2 users say Thank You to Allistah for this post:
 
  #10 (permalink)
Trading for Fun
Bay Area, CA
 
Futures Experience: Intermediate
Platform: Think or Swim
Favorite Futures: YM, ES, 6E Futures, Weekly Vertical Spreads
 
Allistah's Avatar
 
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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