Thursday 7/31 Recap

Whoa.  What happened?

Well, today was an interesting day in the markets, and I think that's an understatement.  

Four of our positions closed.  Split 50/50 on favorable/unfavorable.  In terms of dollars, however, favorable wins out and we had a net positive day.  Added bonus, all our August expirations closed out, so I don't have to worry about that next week.

I did a bit of reading tonight to see if there's consensus on what happened, and what it means going forward.  (Here, here and here.)  

Unfortunately, there is no solid concrete reason for what happened today.  Not that I'm entirely surprised by that.  Here's a few of my take-aways:

• August tends to be a slow month for the markets.  This might mean that we'll be finding more short-term down trends, and we'll be selling more call spreads.  
• The Fed might raise interest rates sooner than originally anticipated.  Guess that means I'll be keeping an eye on all our interest rates and moving cash around if I can find a higher rate somewhere.  Side-note:  I miss the 4% we were earning on some savings accounts.  Let's have that back, and better, please!  On the flip side, then we'll be paying more interest on other things.  Oh well, it's a catch 22.
• Volatility was up today.  Isn't higher volatility good for the markets?  I thought it was, but I don't remember why I thought that.  I'll have to check into that.
• One person anticipates a bear market coming within the next 12 months.  He can't say specifically when though.  

So the big questions of the day:  Was this a fluke?  Are we entering the long-anticipated pullback that we're supposed to be having?  Or will things turn around again tomorrow.

Because we don't know the future, and we don't have a clear crystal ball lying around, we've decided to hold off entering new trades tonight.  We have 2 active positions right now, and we'll look at more over the weekend for Monday.  Right now, we want to see what tomorrow is going to hold.

Closed trades (4 -- yes, that's right, 4 of them):

AAPL -- original trade, sold the 95/94.29 Put Option. -- we had a trail stop in place which kicked in and pulled us out.  Luckily, this had done very well up to this point, so the trail was already in the 'Definite Profit' category.  This closed out favorably, and we made our second highest profit of the new tracking system on this trade.  Yeah!

IWM -- We had 2 trades on, and they both closed out.  Actually, they split evenly on the favorable/unfavorable ration:

• Sold the August expiration 116.5/117 Call option -- so we wanted IWM to stay below 116.50 per share.  It definitely did that, and today's jump down put the option at our profit limit price, so we closed out with our max profit, per our rules today.  That's a good trade.
• 
  
• Sold the September expiration 119/120;107/106 Iron Condor -- Well, this changed to a trail stop last night, so we didn't lose our max loss.  We still lost money on this position, but we didn't lose the maximum we accept per our rules.  It actually only worked out to be a $3 loss. 

QQQ -- sold the 94.63/93.63 September expiration Put vertical -- well, this one closed out at our loss-side stop.  Again, though, because of our rules we didn't lose too much, and we're okay with that. 

All-in-all, we still came out net positive today.  And our trading ratio is still better than 50% favorable closes.  So far, so good.

Let's see what happens tomorrow!  Have a lovely evening!

Wednesday 7/30 Recap

Overall Summary:

We got LUCKY!  That Twitter trade we shouldn't have been in came out favorably for us.  So we realized $33 in gains today on that position.  Yeah...  The one we should have gotten out of before earnings yesterday.  It could have easily gone against us.  But yeah -- lesson learned.  I'll be paying more attention to those dates in the future.

Since we still have six positions on in our account, I'm not looking for new ones right now.  That will be changing soon though as we see how things are working.

Current Positions:

AAPL -- Apple (Sold August expiration Put vertical 95/94.29) -- Looks like it's bouncing down from yesterday's high.  It's probably going to hit our trail stop in the next couple days, but that's okay because we'll still be profitable, just not as profitable as if we had gotten out two days ago.  But, we're okay with this because it fits our rules and strategies, and we're not full-time traders.

GLD -- Hey!  Today with the trail stop we have in place, we are guaranteed that the worst we can do on this position is break-even.  Huzzah!  I like it when that happens.

IWM -- 

1. Vertical call option expires in August -- Just keeping an eye on this one.  Still not ready for a trail stop on this.  Same $0.08 "window" between current mark and our loss-side stop. 
2. September expiration Iron Condor -- We're past the $0.10 window for a trail stop, so I'm replacing the loss-side stop with a trail stop. 

QQQ -- nothing new to report tonight.  Patiently waiting on both the vertical and the iron condor (both September expirations) to move so I can put on a trail stop.

Running Record:

At the moment, with our new tracking system in place, we are running 66.67% success rate, and net gain of $31 so far.  Hurrah! (Even though the Twitter one shouldn't have happened, we're human and not infallible.  Sometime, we're going to make mistakes, and they're not all going to be pretty, but it's still counting in our totals.)

Overall, two weeks into our new strategies and rules, I'm liking them.  So far, our system seems to be working.  We'll give it at least another month before making any moves on our live money account, and we'll see what happens.

Overall a good day for us = a really short post.

Happy Wednesday all -- have a great evening!

Tuesday 7/29 Recap

Overall Summary:

Today was an overall good day for our trades.  At the moment we've got $6.50 in unrealized gains from the 7 positions we're in.  That's not too bad, I think.  We'll see how things shape up as we start closing out next week (or sooner).  

No realized gains or losses today as nothing closed out. 

New position from yesterday:

I did put on a new position last night that I didn't blog -- an Iron Condor on IWM -- Nick found this one over the weekend, but I missed it somehow.  So now that I'm all caught up, I added the stops today. 

Here's the details:

IWM -- September expiration Iron Condor -- 119/120 calls; 107/106 puts.  So far so good.  We'll see what happens.

Current positions:

Nothing new to report.  Some ups and downs depending on the underlying.  

Apple (AAPL), for examples, hit a high today, but closed lower.  As a result, some of our gains from yesterday were lost, but we're still ahead.  With the trail stop though, we'll definitely come out positive.

GLD -- had a good day for what we wanted it to do.  Essentially, price of the underlying went down.  Now there's enough of a window between mark price and our max loss rule that I'm changing the stop side to a trail stop with a $0.10 trail.  That will help further reduce our max loss.  We're not yet at break even on the trail stop, so we could still lose money.  However, if we closed the trade at the current mark, we'd be profitable.  We've got time on this one though; it is a September expiration after all.

IWM  -- with 2 trades on, I have to keep a close eye on this:

1. Our August expiration vertical -- We lost a bit of yesterday's gains here, but we're still in good shape.  At current mark, we're better than break even, so that's a good thing!  I'm not adjusting the stop yet as that's only an $0.08 window between current mark and our stop rule.  
2. September expiration Iron Condor -- Just put this on in today's trading, and it's looking good so far! 

QQQ -- Again 2 trades, both September expiration, so I have to keep these straight in my head.

1. Iron Condor -- Looking good.  I put the stops on yesterday, but forgot to change the time frame from a Day order to a GTC order (Good to close).  Oops!  I discovered that one while going through positions tonight, so there's another reason to check your positions each day!  Overall this is looking good, and I might be able to change the loss-side stop to a trail stop tomorrow.  We'll see.
2. Vertical -- current mark price of the option contract is almost at break even.  That's cool.  Not yet to the point of changing to a trail stop, but that would be my next move on this.

TWTR -- OOPS!!!!  I'm not sure how I missed this one, but Twitter had an earnings announcement and call today.  I did not have that noted on my calendar anywhere.  Ugh.  It looks like it was a good announcement though.  (Side note -- I think I might need to subscribe to WSJ Online because it took me an extraordinarily long time to find an article that wasn't WSJ that I could access the full content and find out what happened!)  

At the moment, Twitter is up a crazy amount in after hours trading as a result of this announcement.  So that should work to our favor.  However, I'm going to have to make sure to look at this position during the day tomorrow (lunch break) and make sure we get out of it appropriately.  The good news is that we should come out on our max profit side of this.  

This was super risky.  We shouldn't have been in this position at this point.  For some reason I just ignored those little icons warning me when looking at this every night.  Not a good idea!  While it seems this one is doing well, there's no way to guarantee this will happen again.  It's equally likely a company will report something that goes against expectations and the stock will tank.  Then, we'd lose a bunch.  We don't want that to happen, so I need to be really careful and make sure we get out before earnings.  Also that we don't get in too soon before earnings, which was the case here.  

Yikes -- so at least this one seems to be working out positive.  We'll know more for sure tomorrow.  I'll let you know.

Daily Take-away:

WATCH OUT FOR EARNINGS!  (I feel like I've said this before.)  

Double checking stops each night is seeming to be a good thing for me. 

1. First, it allows me to discover when I make a mistake entering closes, and allows me the soonest opportunity to fix.  
2. Second, I'm liking the idea of protecting our gains as we can.  Sure, it could mean that we get closed out earlier and potentially "lose" some further profits if there's a setback one day and a rebound the next.  However, because of where we are at in our trading lives right now, I'm okay with keeping more of what we gain.  

Happy Tuesday night!  Have a fantastic Wednesday.

Monday 7/28 Recap

Current Positions

Closed Trades:

MU -- Micron Technology Inc. -- sold the August expiration 32.50/32 Put vertical -- Well, I was hoping this would have just one down day and bounce back, but that didn't happen.  It opened today at $33.35 per share and closed at $31.98.  Straight through our strike prices.  Net result:  Loss of $6, unfavorable close.  Sigh.  Not exactly what I enjoy seeing, but you can't win them all.  Plus side -- a loss of $6 isn't going to break the bank.  

Overall running total since new tracking tool in paper money:  50/50, gross +$1, net -$3.

Not too shabby -- almost breaking even on 2 closed trades.  And I'm shooting for a better win percentage than 50/50.  Well, we'll see how it goes this week and next, as next Thursday the 7th is the absolute last day to put closing orders on the August expirations.  Though if we get out of them this week (preferably positive), I'll be happy with that too.

Current Positions:

AAPL -- Apple -- sold the August expiration 95/94.29 Put vertical -- Apple hit another new high today since the split. Seems like it's just going to keep going up. I hope.  And now, official good news.  Since I put the trail stop on, we are now at a point where we cannot lose money on this trade.  If it were to crash and burn tomorrow (I hope not!), we would still come out net positive $1.  Not too bad, if I do say so myself.  So this one worked out for us.  Now we just need to see what the market is going to do with Apple for the rest of the week.

IWM -- iShares Russell 2000 ETF -- sold the August 117/116.50 Call vertical -- IWM continued to fall today, which is good for us.  If it goes down another day or two, we might pull out with a win on this one.  not bad for being in a position 2 days.  Right now the mark price is still to close to our loss-side stop to change it to a trail stop, but I'll keep watching it.  

TWTR -- Twitter -- sol the August 36/35 Put vertical --  Unfortunately, this is getting down to our loss-side close.  Unless the stock turns around tomorrow and has a good up day, we're probably going to get closed out on it.  I do have my stop orders in, so we'll see what happens.

New Positions:

QQQ -- Powershares QQQ -- Well, after Nick's research we got into 2 trades on the QQQs today:    

1. Sold a September expiration Iron Condor with 99.63/100.63 on the call side and 92.63/91.63 on the put side.  I put the stops on per our rules tonight to go into tomorrow, and we'll see what happens.
2. Sold the September expiration Put vertical 94.63/93.63 -- Put the stops on per rules, and will patiently wait and see.

Side note:  having a split position like this is a bit harder to manage in terms of putting on the closings.  I had to do a bit of maneuvering to get it to work properly.  Luckily, it's easy to cancel an order when the markets are not open.  

So this will be interesting. 

GLD - Spider Gold ETF (shorthand name) -- Sold the September expiration 129/128 Call vertical.  As I mentioned yesterday, it's the September version of the August position that closed favorably for us.  This actually opened higher but closed lower than yesterday.  Still not close to our strikes, so that's good.  We've got a watching game on this one as well.  

Recap:

Overall unrealized gain in positions today -- $11.50.  Realized loss $6.  If things go the way we're thinking they will, we'll come up out ahead.  

As always, until tomorrow!  

Recap Friday 7/26 and prep for Monday 7/28

Recap Friday:

Closed Trades:

GLD - sold the August 14 expiration 128/129 Call vertical -- closed out today by buying it back at our new stop.  I guess this makes sense in that the price of the underlying went up on Friday.  Seems that inverse relationship with the markets and the performance of gold is holding up. 

In any case, I'm glad I adjusted this Thursday night.  We did get closed out of it, but because the underlying went up putting the prices closer to my strikes, we would have lost money on the option contract.  So, closing win 1 this week.  Minimized potential losses.  (And, actually, I noticed a minor mistake in my math that I need to correct, and we wound up closing $3 up, in paper money of course!  But hey, it's $3 more than we had before.)

Here's a cropped snapshot of the candle chart from thinkorswim paper money (a part of TD Ameritrade) -- the platform we use for these trades:

Opened trades:

IWM - sold the August 14 expiration $116.50/117 call vertical -- got into it.  This gapped down on Friday, so our conditional order was definitely met.  I put the stops on Friday night per our rules, and I'm feeling fairly confident that we'll be able to ride out the next couple weeks and make money on time decay.  As I look at the chart, it looks like there are 2 levels of resistance that this will have to break to hit our strikes -- the 30 day moving average currently at $116.42, but before that, the $115.75 level.  

Of course we'll be watching this every night and monitoring it. 

Here's the thinkorswim chart from TD Ameritrade that I'm looking at -- zoomed in to roughly the past 3 weeks:

Ongoing trades:

AAPL -- sold the August 14 expiration 95/94.29 Put vertical -- after evaluating the current mark of the contract compared to my stop, I changed the loss stop to a trailing stop with at $0.10 trail.  Assuming that the option contract mark is still at $0.20 Monday morning when this goes on, the most we will lose is the 25% max loss per our rules.  However, if my understanding is correct, as the actual price of the option contract moves in a direction favorable for me (in my case down, so I can buy the contract back cheaper), the stop trail moves with it.  So has the mark hits $0.19, the highest my stop will go if this turns against me will be $0.29.  Basically, instead of manually adjusting my closing each night, this should do it for me.   We'll see if it works!

MU -- sold the August 14 expiration 32.5/32 Put vertical -- stock went down, but I want it to go up.  Unfortunately, it means that the contract price is closer to my stop side rule.  Here's hoping Monday it turns back around.  

Sunday 7/27 for Monday 7/28:

Nick did the research tonight for me.  I've got 4 different positions to evaluate and consider based on his findings.  Should be fun!  He's looking at the September expiration now as August is only 19 days.  (Our rules state 20-50 days window.)  Technically, we're not yet in that window as September expiration is still 54 days out.  But, let's see what happens.... 

QQQ -- Nick's proposing 2 different strategies here.  Selling a put vertical  and selling an iron condor.  The trend of this underlying is definitely up, but Nick thinks that there is a level of resistance at the $97.51 since it hit that high and bounced back down to a close lower than the opening, but still higher than the previous day, and then there was a small gap down for Friday's open. 

Guess we'll try them both and see what happens.  Wish us luck.  Things could be interesting on this...  

Selling September expiration Put vertical 94.63/93.63 -- which means we want the stock to continue to rise.  Since this is a strong uptrend, it should be fine.

Next is the iron condor -- again, selling the September expiration call sides 99.63/100.63; put sides 92.63/91.63.  So we want the price to stay in that window -- 99.63 on the high side and 92.63 on the low side. 

This will be interesting, I think.  Especially since I can't file them separately as they're all grouped under the QQQ line on my position statement.  Well, we'll see what happens.

GLD -- so that call vertical that we sold and were closed out of on Friday -- we're going to try that again for September though.  Let's see what happens!

Finishing thoughts for the night:

I'm over my limit of 5 trades a night in paper money, but that's okay.  Let's see how things go.  

I have a lot on my mind for work right now, so it's going to be a busy week.  Fun, I hope, but busy.

I'm reading Think like a Freak by Steven D. Levitt & Stephen J Dubner.  A friend of mine from work loaned it to me.  It's very interesting, much like the other Freekonomics books there have been.  I'll create a page for book reviews and add that later this week when I have it all finished. 

Happy Sunday to one and all!  Wishing great weeks to all. 

Thursday 7/24/14

Recap today:

Hurrah!  Everything I'm in did what I wanted it to do today!  So right now we've got $16 in unrealized gains on our paper money account just today.  That's over $24 on these current trades.  I'm liking this!  

I got into one of the trades I put on last night (AAPL).  Need to figure out why I didn't get into BX.  But we'll get there. 

First things first -- put the closing order on AAPL.  Per usual, this is based on our rules as an OCO order.

Or not...  Apparently there's something funky in my thinkorswim paper money account, and I cannot put an OCO close order on AAPL.  Oh well.  Plan B -- put the stop order in for what I'm willing to accept on the loss side and keep an eye on it.

Now, time to look at my other positions and see if I need to make any changes.  

GLD -- I adjusted my close order tonight so that the losing side is now at breakeven, $0.09 cents lower than my loss side per rules, and it's $0.10 cents higher than the current mark price, so I shouldn't get pulled out any sooner.  Here's the second "Hurrah!" for the night -- Hurrah!  We will no longer lose any money on this position!  The worst we can do is breakeven!  (I did factor in the cost of commissions for this.  Yeah!)

MU -- I think I'll leave this one alone.  If I change it, I'm going to get too close to the current mark of the option, and I don't want to get pulled out too soon.

TWTR -- This one took a bit of thinking.  I don't want to adjust the stop too close to the current mark price, so we'll change the stop to $0.10 above current mark.  That reduces are max loss by half, but should still give us enough of a window to not wind up pulled out earlier than we'd like.  Ideally, we want to ride this all the way to our profit goal.    

Now, why didn't I get into BX?  Well, the stock did exactly the opposite of what I was wanting it to do.  It gapped down on opening, and stayed down compared to yesterday all day.  It didn't even come close to getting to the price for the condition order to fill.  

It's a good think, I think.  Without that condition in place, we might have been filled with this contract and then lost a boatload.  So those conditions seem to be really working right for us, even though it's only been 2 weeks, almost.

For tomorrow 7/25/14

REMEMBER!  WATCH OUT FOR EARNINGS.  THERE'S A BUNCH COMING UP.

Time to work down my list.

IWM looks promising.  It actually looks like it might be at the high point of a bear flag pattern.  So I sold a conditional call vertical at 116.5/117 (August expiration).  I did put a condition on that the stock price has to hit $114.14, or $0.20 below the low of the day.  We'll see what happens tomorrow.

Fingers crossed for another great day!  

Have a nice evening one and all -- off to dreamland I go.  Good night!

Recap Wednesday 7/22; Prep for Thursday 7/23

Recap Wednesday

Mixed markets today, I see.  S&P and Nasdaq closed higher, Dow closed lower. 

We're getting close to the end of the August options.  At least when it come to fitting into our rules.  There are 23 days left, I believe, and prices are getting low enough that it's becoming somewhat difficult to find positions with the returns we want with the strategies we've chosen.  (I do promise to do a long post and ongoing page with that info for you.)  It's interesting to see how things are going.

Ongoing Positions:

GLD -- Short Call vertical at 128/129, so we want the price of the underlying to continue to stay under $128/share.  It's done that nicely that last few days, and so far, we have unrealized gains of $7.  It'll be interesting to see how this plays out, and if we stay in it all the way to expiration week, or if we meet our profit goal.  I'll keep you posted. 

TWTR -- Short Put vertical at 36/35, so we want the price of a share of Twitter stock to stay above $36. So far, so good, though we've got an unrealized loss on this right now.  We do have the OCO stop orders in place, so right now I'm keeping an eye on it.  

Recap of Orders placed last night:

We tried to get into 4, but we only got into one.  I guess that's good in that the ones that didn't get in might have been problematic in the long run.  But it'd be nice to be in more positions.

MU -- that's what we got into today.  A short put vertical at 32.5/32.  August expiration.  I put the stops on tonight so we've got our profit goal and our loss stop set up, per our rules.  So far, looks okay.  We'll see what happens.  This is now a monitor and wait trade.  We'll keep an eye on it and see what happens.

And now the ones we didn't get into:

KO -- Coca-Cola:  We put a condition on this order to see if the downward direction "stuck."  Well, that did happen, but we didn't get filled.  Today there aren't any deltas in our range, so we're not getting it.  

PLUG -- our condition didn't happen, so we didn't get in.  Now, nothing fits our deltas, so we're not getting into this one at the moment.  Will keep an eye on it and see what happens though.  It's on our list.

CSCO -- see above.  Condition not met, and the stock actually gapped down at opening today.  that'll be interesting.  I tested out the call option seeing that it might be at a resistance level and therefore turning down, but it doesn't fit our return rules at the moment. 

New Potential Positions for tomorrow:

QQQ -- potential short put vertical, but now outside our ranges.

SPY -- same as above, but returns don't fit our rules.

IWM -- same as SPY.

And that covers our list from yesterday to watch.  Time to attempt to find a couple new ones again.  Wish me luck!

FB -- Looking at a short put vertical, but the bid/ask spread is outside 

AAPL -- Good news on the earnings call today so the stock surged, and it fits all my rules.  So I put on the August 95/94.29 Put vertical.  I'm thinking it will continue the up trend that's been established since the split.

BX -- The Blackstone Group -- a publicly owned investment firm.  It hit a 12-month high today, so I think this is going to continue the upwards trend.  However, since the high could become a resistance level, I put a condition on the short put order that the stock has to hit $36.28 before the order is triggered.  So we'll see what happens.  I would like to get into it, and the rules and numbers all work, so hopefully the August 35/34.50 put vertical will work out for me.  

Well, I got two potential new ones to go on.  We'll see what happens next!  In the meantime, happy Wednesday.  Hope it's been a great day!

Sun., Mon., & Tues. with Wednesday Prep

Happy Tuesday Night!

The past few days have been a mish-mash of stuff.  Just stuff in general.  We've been doing the trading, but not much time for blogging until tonight.  So here we go!  A whirl-wind recap of two days and prep for a 3rd.  Whoo Hoo!

Recap Sunday 7/20

Tonight turned into me spending most of my trading and blogging time rebuilding the tool we use to evaluate possible options in Google Docs so that Nick and I can use it simultaneously.  I have to say -- Google Docs is a great tool.  I do enjoy the fact that we can edit the document together.  So far, I can do everything here that I had in our good old Excel spreadsheet.  I'll let you know if I come up with something I can't do though.  Just for future reference.

So our document currently has 5 tabs:

Tab 1 = Trade Standings

On this tab, I'm tracking the running gross and net by classification of trades, short put verticals, short call verticals and iron condors, as well as the running total.  

I'm also tracking our success rate at close.  If we make money or break even, it's a Favorable close.  Losing money is unfavorable.  (Obviously.)  Again, tracking by classification of trades, and calculating percentage of favorable closes.

Tab 2 = Rules

Ready for this?  Here you go!  Since I've been promising the rules, here's what we use:

Never risk more than 5% of account value on any one trade.  (We would really like that to be more like 2%, but due to the small size of the account that we're working with, we had to increase it, otherwise we can't do any trading!  In any case, as our account increases in size, we'll keep adjusting this so eventually we'll be at the point of only 1-2% risk on any one trade.)

Short Put Vertical
Bullish strategy -- think stock price (price of underlying) is going to go up
Delta Range	0.3	0.4
Stock Volume	1,500,000	or more
tight bid/ask spread (low/mid/max cents on the dollar)	0.01	0.05	0.1
Days to close	20	50
Return on Risk min,	30%
Option Volume approx	500
Option Open Interest	1,000
Acceptable Max Risk	5.00%
Exit rules:
% max profit	0.65
% max loss on trade	0.25

Short Call Vertical
bearish strategy -- think stock price (price of underlying) is going to go down
Delta Range	0.3	0.4
Stock Volume	1,500,000	or more
tight bid/ask spread (low/mid/max cents on the dollar)	0.01	0.05	0.1
Days to close	20	50
Return on Risk min,	30%
Option Volume approx	500
Option Open Interest	1,000
Acceptable Max Risk	5%
Exit rules:
% max profit	0.65
% max loss on trade	0.25

Iron Condor Strategy  (selling condors -- a short strategy?)
neutral strategy -- think underlying price is staying within a horizontal range
Delta Range	0.2	0.28
Stock Volume	1,500,000	or more
tight bid/ask spread (low/mid/max cents on the dollar)	0.01	0.05	0.1
Days to close	20	50
Return on Risk min,	20%
Option Volume approx	500
Option Open Interest	1,000
Acceptable Max Risk	10%
Exit rules:
% max profit	0.65
% max loss on trade	0.25

Watch trades every night.  Be prepared to cut and run if need be.

Do NOT trade over earnings.  At least not yet.  Not until we're a lot more comfortable with our skills.

There you go!  Our trading rules.  At least as they stand so far.  You'll notice several things are identical across all three strategies.  We set it up this way so that as we refine our rules, it will apply only to that category.  

Trading Tabs 3,4,5 = Short Put Vertical, Short Call Vertical, Iron Condor

Each options strategy has it's own tab to help us make sure we're following our rules. 

The tabs are mostly set up to do the work for you -- as long as you copy down the template row appropriately and enter the few pieces of data that needed for the calculations.  Basically, we enter:

• option closing month, to make sure we're within our 20-50 day rules.  
• applicable strike prices
• credit per share of the option contract.  

Once you put all that in, there are calculations programmed that help double check that our Return on Risk is above our minimum and that our total risk % is below our maximum.  Then, based on the programmed calculations, we also immediately see our potential profits and losses based on the exit rules.  

Using this tool, the only pieces in our rules that we have to manually check are:

• Volume of underlying
• Bid/Ask spread
• Volume of option
• Open interest of option

It goes SO much faster that Nick and I can both be using this tool to figure out what possibilities exist. 

Sunday night trade set-ups

Short Puts:

Nick and I both looked at Micron Technology, Inc. (MU) -- actually I think Nick found it and then we chatted about it.  We looked at the Aug 14 32/31 put spread.  Basically, we thought it was going to turn around and continue the ongoing uptrend.  But I was hesitant.  I put a condition on that the stock had to reach $33.95 or higher get in. Well, it didn't get that high, and I didn't get in.  Nick didn't put the condition on, though, and he got in.  He reports back that it's doing well do far.  (I'm attempting to get in again with tomorrow's trend.

We also looked at SPY and IWM for potential short puts.  SPY didn't fit in our rules regarding risk and return, so we passed on that one and will keep watching it.  IWM actually had better numbers on the short call, so we went and attempted that one.  

Short Calls:

IWM -- We had some back and forth on this one.  Was the call option better, or the put option?  Well, the numbers indicated that the call options had the better returns for similar risk.  We decided to go with a conditional order and sell the call, if the underlying price went down below our target.  It didn't.  It went up.  had we got in the on the put, we'd probably be net positive at the moment.  On the plus side, having the condition order on saved us from getting into a trade that was going to go against us in the short term.  So that's a good thing.  Yeah conditional orders!

GLD -- Gold seems to be on a downward trend, so we got in with a short call for the August expiration at 128/129.  We didn't do any conditions on this, and we got in.  Hurray!

FOXA -- We looked at this, and it looked close to our rules for a call spread, but the bid/ask spread was too far apart.  Additionally, it was a weaker trade, so we left it alone.

TWTR -- We attempted getting into the August 41/41 Call spread.  We were thinking that the $40 mark was going to be a resistance level, but we put the order on with a condition that the stock moved downwards.  It didn't.  We didn't get in.  Which also means we didn't lose anything.

Iron Condors:

We looked at a couple, but nothing was really working out for us that much.  We didn't get into our out of any today. 

We did have the condor on the QQQs going.  As I predicted on Friday, it wasn't looking good.  I probably should have closed it out for Monday, but that's okay.  (We wound up getting out of it today anyways.)

So that was Sunday!  On to Monday.

Recap Monday 7/21

Existing Option Contracts in our portfolio:

GLD -- We got in, and were at break-even by end of day.  This is a monitoring role now.  Hopefully it will keep moving the way we want it to.  

QQQ -- this condor wasn't looking great with what I wanted to happen, but had potential to go back into the channel (for lack of a better term).  I left it alone and we stayed in it.  

Finding new positions for 7/22:

This was freaking hard, and very frustrating.  I swear I spent about 3 hours or more trying to find things.  It didn't work very well.  Virtually everything I tried fell through for one reason or another.  The big reasons were that either the deltas on the options didn't fit what I was looking for, or the risk/return ratios were not within our established rules.  Not entirely sure what happened with that, but I spent a ton of time searching with not much to report back on.  

I did find ONE though.  (Just one, solitary position that fit everything.)

We got into Twitter (TWTR) with the August 36/35 Short Put Vertical.  So far, it's a bit of a wash, and as of a few minutes ago, the price of the option is just $0.01 above our sale price.  Hopefully it will go the way we want it to.

I finally got so frustrated that I just went to bed.  

And all that brings us to today! 

Recap Tuesday 7/22

Existing Option Contracts in our portfolio:

GLD -- Still looking good to stay with it.  We've got the OCO exit trades working, so this is letting time work for us now and keeping an eye on the underlying.  So far, so good though.  

QQQ -- As I suspected on Friday, this closed out at a loss for us.  $9 down based on this trade.  Yuck again.  Unfortunately, I can't say I didn't call it.  

TWTR -- We're in, and I'm thinking that it should hopefully turn back around without getting too close to our first strike.  I put on our exit trades, as the OCO order, of course, and we're all set to let this one go with daily monitoring.  Hurray!

Finding new positions for 7/23:

Wow!  Talk about a change from yesterday.  It took Nick and I all of 45 minutes to come up with 4 new positions to attempt trades on, and at least another 4 to watch for tomorrow.  If only yesterday would have been this way!  I would have been a happier lady.

Short Puts Attempted:

• MU -- 32.50/32 August expiration.  It fits our rules, and it looks like MU might continue the overall uptrend.  We're really close to the 1-year high right now, but it's been a constant uptrend.  Here's hoping it continues to go up and not stop us out.  
• 
  
• PLUG -- 5/4.5 August expiration.  PLUG had a bit of a gap up yesterday, and then the bulls came in today and drove price back down, though still higher than yesterday's open.  I think it might continue to ride the trend up, but we'll see.  On with a condition to give us a solid cue that it'll keep going up.
• 
  
• CSCO -- $25.50/25 August expiration.  This one is also using a conditional order.  We think it's going to continue the positive trend, but we want a bit more confirmation before attempting to get in.  I'm not sure we'll actually get into this based on the conditional order, but again -- we'll see!

Watch list for tomorrow:

• QQQ
• SPY
• F -- EARNINGS ON THURSDAY!  We'll be holding off until at least Thursday.
• IWM

Short Calls Attempted:

Just one of these tonight.  KO (Coca cola).  

Every time I look at the chart tonight I have to do a double check.  There's a huge gap down between close yesterday and open today.  I'm not entirely sure why that happened yet.  I didn't do much research or headline scanning to figure it out, but that's okay.  We figured we would try a conditional order here to see if the gap down is going to "stick".  If we do get in, great!  If not, we'll look at it again tomorrow.

Iron Condors Attempted:  0 We didn't find any that really fit our criteria.  So we didn't try to put anything on. 

I think we're all set for tomorrow now.  I have to say -- it's so much easier and more fun when Nick is involved too.  I do enjoy bouncing ideas off him and trying to see what works better.  One of these days we'll get this all figured out and be more successful than not, and then we'll go from there!

Happy Tuesday night -- looking forward to seeing what Wednesday has to offer!

Recap Friday 7/18.

Tonight's Trading

Tonight was an easy one.  Recording the closing of IWM (profitable!) in my spreadsheet and put on the close orders for the QQQs Iron Condor.  

IWM -- We are net positive $4 whole dollars (in paper money) on this trade.  Wow!  So it didn't offset the loss from yesterday completely, but ti's still a positive!

QQQ -- I got into the trade, so tonight was putting on my OCO stop orders per my goals/rules.  That was easy!  

Although, looking at the chart, I'm not sure a condor was quite the way to go for this one.  I might get pulled out at my max loss if QQQs continue to run higher.  We'll see what happens.  If I do get taken out on Monday, I can always come back in with another trade, I hope.  We'll see what Monday does with this. 

Overall stats for the week:

• 1/3 favorable closed trades
• Negative net of $11 off closed trades.  (Yuck!)
• Total trading we are still net positive.  

I think I need to see about our positive stop point.  I wonder if we're being too aggressive in our goal there.

Recap Thursday 7/17/14, Prep for Friday

17 July 2014

Tonight's Trading:

Current Positions:

Well, I have to say I'm not exactly pleased with how my day went today, and I don't like what I have to report.  I've been stalling and playing trying to put off writing.  But, let's dive in.

Overall stats for this week as a whole so far:

3 trades on, 2 closed.

0/2 favorable on the closed trades.

1/3 favorable on the total trades entered.

Ouch.  At least this is paper money, and I'm not losing real money at this point.  And, I think I've got at least two specific learning moments in the last day, so it's not completely all bad.

The Good:

IWM (Sold 1 contract of the Aug14 117/118 Call Vertical spread) -- overall for the day I'm up $11 on this contract!  That's pretty good.  Here's how the chart looks right now:

IWM chart as of about 9:45pm CST tonight from the TOS platform, after I put in my OCO stop order.

Definite strong down trend -- though it might be hard to see in this screenshot.

There's nothing news-wise that indicates that this will change direction in the short term.  Actually, a few headlines today seem to indicate concern and caution throughout the markets.  Here's one related to the Malaysian aircraft crash which may or may not have been shot down by terrorists -- a tragedy that shouldn't have happened.  (I'm taking an extra minute to send out thoughts, prayers, and positive energy to all the victims and their loved ones.  Here's hoping there's a way to track those responsible and bring them to justice.)

I put my automatic stops on as an OCO order (one-cancels-other).  Stop one is our profit goal.  Nick and I have a pretty aggressive profit goal.  We figure we're young and can take the risk -- so when we actually close out a trade at this point, it's usually really good.  However, that doesn't really always happen.  It might be time to rethink this setup a bit and see what happens if we adjust.  I'll talk more about this over the weekend when I post our goals and rules.  

Stop 2 is our stop loss side.  We've decided that we're okay taking up to a 25% loss on any one trade.  I've got a spreadsheet set up that does the calculations for us, and then we enter it as either a plain old stop, or a trail stop.  

For this IWM trade, and actually any one we have enough "room" in, we try to do a trail stop.  Our though process is that we've already got some profit, let's not lose that while the trade goes on.  In this case, the mark of the closing order set up is $0.19, well below the $0.37 "acceptable" loss we calculate.  Since there's more than a $0.10 difference, we go with the trail stop.  

But, I played with my spreadsheet a bit more and calculated what our net profit/loss would be based on different close prices.  For example, we need the price of the option contract to stay at or below $0.28 in order to break-even (I do calculate commissions in our break-even calculations).  If we close this out at $0.27, we'll make a net positive of $1 on this trade.  $0.27 is $0.08 higher than the current mark, so I put the trail stop on with an $0.08 "window," for lack of a better term.  

Barring any major changes between now and tomorrow's open, the trail stop will start at whatever price the order is submitted at and adjust in the favorable direction from there.  If the underlying moves the "wrong" way, in our case if IWM goes up, the trail stop will remain at $0.08 above the mark at open.  Hopefully that is enough to protect our profits so far.

     (Note on the above section:  I haven't had any training on trail stops at this point.  I only know what Nick and I have figured out together, so hopefully I'm not saying anything completely incorrectly or flat our wrong.  However, if I do have something about this wrong, please feel free to comment and correct me.  I DEFINITELY want to earn more and become better at this!)

The Bad:

AAPL (Sold 1 contract of the Aug14 98.57/99.29 Call vertical spread) -- It looked good yesterday when it got in, but today it closed out at my max acceptable loss point.  The worst part is, I cannot figure out why!

The chart looks good for the call vertical.  I want the price to stay below $98.57, and it certainly did that.  It actually had a lower open and a lower close.  So color me confused.  I honestly don't have a clue what happened, but the overall result is that we lost $6 on this trade, net.

I wish I knew what was going on!  I would like to have made money off this particular trade.

Here's the current chart:

AAPL chart, zoomed in, as of about 10:30 on 7/17/14.

Help?  I'd appreciate any thoughts and feedback.

Learnings from this trade:

• Don't forget about earnings.  See yesterday's post for more discussion.  So I'm kind of glad this trade closed out, even though I don't understand why.  Now I don't have to think about what's going on with earnings.
• Need to do some more work and figure out what happened.

The Ugly

MU (Sold 1 contract of the Aug14 32/31 Put Vertical spread) -- this was looking real good yesterday, and I was debating leaving the stop as is or changing it to protect our profits.  Well, I changed the stop to a trail stop with a 10-cent trail.  

Bad idea.

Should have followed the rules and stuck to it.

Of course, the new high this stock hit yesterday turned into a very strong resistance level.  And there was actually a big gap down, which according to one analyst at the Motley Fool, was in sympathy with the disappointing SanDisk earnings announcement.  Sigh.  That gap down really hurt.

MU at about 10:50pm tonight.  Zoomed in to show the gap down that happened before opening today.

I had originally put the stop in according to our rules.  The max loss on any trade that we're willing to accept is 25%.  That worked out be buying back the contract at a mark of $0.30.  But, because I put the trail stop on, we actually got called out at $0.31 meaning a bigger loss than we should have accepted.

Sigh.

It turns out that I didn't take into consideration what a change in the underlying would do to the option before opening when my new trail stop was added.  Because it goes in at +$0.10 above the price of the option at the moment of entry, it seems as though the option price at entry was at $0.21 instead of the $0.19 or whatever it was when I was figuring out pricing last night, and I didn't see what that would do to me.  Well, another couple learning points on this one for me.

So, learnings from this trade:

• Stick with and follow the rules.
• Remember after hours trading can change things between when I'm looking at them and at market open tomorrow.  Try to account for that in plans and strategies.
• Check out major competitors and know when their earnings reports are going to be.  
• Pay attention to where the trail stop is at and remember to adjust if needed.

Final recap complete:  2 trades closed, net loss $15.  Yuck.

New Positions for tomorrow:

Unfortunately, it's getting really late, and I'm getting really tired.  So this was a short one for me tonight.  I only added one thing.  I sold an Iron Condor on QQQs.  Details to follow when I'm not so tired.

It looked like a good trade, and it fit our rules.  We'll see what happens.

Total number of working trades at end of night:  2

Today's Take-aways:

• Follow the rules.
• Stick with the rules
• Remember to keep in mind after hours trading can impact what I'm doing.  
• Check out major competitors for earnings reports (if any)
• Pay attention to trail stop and adjust as needed.
• Don't forget about earnings!
• Do my research and figure out trailing stop and how to properly calculate this along with the the impact of delta and gamma on the price of an option when the price of the underlying moves.

Until next time!  Thanks in advance for sharing any thoughts and ideas.

Good night!

Recap Wednesday 7/16/14, Prep for Thursday

16 July 2014

Tonight's Trading:

The first thing I did was pull up Yahoo finance and Google finance to see how the day went.  I like Google's chart right off the bat that shows you what happened on all three major indices in a glance.  Then scanned the headlines.  Things that jumped out at me:

• All three major U.S. indices are up.  Great news for my positions!
• Interesting headlines with Tesla (TSLA), Bank of America (BAC) and Fox/Time Warner (FOXA/TWX).  I think I'll be keeping an eye on those.  (And the entertainment industry is an interest of mine, so I try to keep on it, at least a bit.)
• Interesting article on Ms. Yellen's comments to the Senate today.  I found myself thinking that I really should keep better tabs on what's going on with the Fed, as that can impact everything.

Overall, I'd say seems like a pretty good day.

Current Positions:

Next, I pulled up my TOS platform and checked how our paper-trades did throughout the day.  

• Micron Technology Inc (MU) is doing what we wanted it to do.  It hit a high today that you have to go back to 2002 and earlier to surpass.  Definite uptrend!  Which is very good for me because I have a bullish position on.  I've got my stops on from yesterday, and now I'm wondering if I should adjust the stop-side of the OCO.  
• At the current mark price of the vertical, I would make a small profit if it closed out tomorrow.  
• If something changes in the market and the price falls, I would lose all that gain and could potentially wind up with the max loss I'm comfortable taking, per our rules (coming soon!)
• So now I have to decide:
• Leave the stop as is, per our rules. -- This option gives more room for flexibility in terms of price fluctuation.  Downside, if underlying price falls, I could wind up in my max acceptable loss.  (Note that is different the actual max loss on the trade.  We use a formula to figure these out.)
• Adjust down to protect profits.  -- The downside to this choice is that if there's too much price fluctuation, and the stock bumps too close to the new stop, I could get out sooner than I want and miss riding the trend to greater profit on this trade.
• Nick's suggestion:  change stop order to a trail stop with a 10-cent window. -- (I'm not sure on the terminology, but that's how we think of it.)  
• Decision:  go with Nick's suggestion.  I cancelled my stops from yesterday and replaced them with a 10-cent trail stop, and then the OCO incorporating our profit target.  
• I think that worked... now to see what happens.
• 
  
• Apple (AAPL) closed down today with a lower low, but also a higher high.  I did get into this position, but I'm kicking myself for it a bit.  Earnings are next Tuesday....  Not only did I not double check that before putting the trade on, but I actually knew that already from looking at Apple last week.  I had a note on my calendar about it and everything!  It was big and red saying get out of any Apple positions by tomorrow so as to ensure out by earnings.
• Ugh.  now what?  
• Well, I'm going to put the stops on as fits our rules, and we'll go from there.  I'll leave it alone this week and see what happens. 
• At least I would put the stops on as normally, but there's a weird error on TOS right now.  Sigh.  So I put the stop to minimize any potential loss, and we'll go from there.  Nick and I will chat again tomorrow to see if we just close out or wait and see.  
• And, now I'm going to add "Check earnings" to my checklist.  Our general rule is to be out of any position at least 4 days before earnings.  But since I just put this one on, we're going to bend that rule a bit, and maybe even break it....
• 
  
• Gold (GLD) -- the price never hit my condition today to put on yesterday's trade, so I'm trying it again.  Same trade (selling the August 127/128 call vertical) with the condition that the underlying comes down to $124.68.  We'll see what happens.

Tonight's New Trades for tomorrow:

I'm going through the list of stocks and ETFs that have become our go-to over list over the last few months looking for opportunities.  These are based on those goals and rules we've developed, which I was going to talk about tonight.  However it's rapidly becoming late (and I should run tomorrow morning), so that topic will be covered this coming weekend.  Are you looking forward to it?  ;)

On to today's options that we're attempting in paper money, and my/our thought process going on in the background.  

• iShares Russel 2000 ETF (IWM) -- this looks like it's going to keep going down.  I don't feel the need to put a condition on it, though I am wishing I attempted to get into it on Monday instead of today.  Oh well!  It still fits our rules (again, will explain more this weekend), so we're going to attempt to get into it.
• Action taken:  Selling the Aug 14 117/118 Call vertical.  
• 1 contract
• Goal:  Price of underlying continues to fall (or just stay enough below 117 that we don't get stopped out), and we make money on time decay.  
• Absolute latest to be in the trade -- August 7.
• 
  
• Microsoft (MSFT) -- caught my attention because of the big jump in stock price today.  However, I'm not sure what to do with it.  There's a bunch of headlines about the company cutting thousands of jobs tomorrow.  I think I'm going to hold off and see what happens tomorrow.
• 
  
• Oracle Corp (ORCL) -- long term growth looks like an uptrend until about a month ago.  Then there was a gap down at earnings followed by a mostly sideways pattern.  I was thinking about either selling a put vertical or an iron condor on this.  However, there are no put verticals or iron condors that fit our delta rules.  So this one is a bust tonight.
• 
  
• Pfizer Inc. (PFE) -- 
• Intermediate Trend (last 2 months anyways) -- upwards
• Short term trend -- definitely upwards.  However, this looks like it could be right at the top of a bull flag pattern and possibly turning around to come back down the flag portion.  Either that, or it's going to keep going up until it creates a new resistance or hits the $32/per share resistance.  
• None of the options fit my rules, so I'm not trading on this tonight.  
• I will keep an eye on it and see what happens with that might-be-bull-flag-downside-set-up.  If I'm right, maybe I can get in on the upside next cycle.
• 
  
• Plug Power Inc. (PLUG) -- This looked interesting. There was a relatively big gap up yesterday, but then the bearish traders drove the price back down.  I think it might be a Dark Cloud Cover pattern, so I'll watch it again tomorrow to see if I could be right.  
• In terms of the options available, nothing fits my rules this time either.  Thought I was close on selling a call vertical, but not so much.  Not enough Return on Risk to justify the Risk.

Concluding thoughts for the night:

1.  It's way too late for me right now.  Good morning!  I need to get off to bed.

2.  I now have 4 active positions -- 2 entered into and 2 waiting for markets to open.

3.  Remember the rules, and check earning dates!  

Nick and I generally try to have 5 positions on at one time.  Currently, we're talking about 1 contract in each of the 5.  Right now I've got 2 on and 2 possibilities.  One short, but I can't do any more tonight. 

Good night all!  

Resources

15 July 2014

Some questions to start the night:

• What are your go-to resources for trading?  
• Do you follow anything with unfailing devotion?  
• What keeps you up-to-date on the markets, the economy and everything else?
• What books are your currently reading?

Aside from the charts in TOS (thinkorswim - the trading platform - not to be confused with Star Trek: The Original Series), I'm a fan of Yahoo finance.  It works to give me a snapshot of what is happening, decent headlines and such.  I don't just trade on the charts in a vacuum.  Rather, I try to temper with what's happening in the outside world as well. 

Since I'm still in the learning phase, I'm attempting to absorb and learn as much as possible.  It can be very overwhelming.  I've been trying to read Bill Johnson's Options Trading 101: from theory to application.  Nick, my husband, started it a while ago, and I stole it, but never finished it.  I've reserved it from the library again, so once I get it, I'll try to read it again.  Maybe I'll get more out of it this time since I actually have a bit more training and have been doing it for a tiny bit.  Have you read this?  Is it worth it?  What do you think?

In the meantime, a coworker has loaned me Think Like a Freak by the Freakonomics gurus, Steven d. Levitt and Stephen J. Dubner.  I enjoyed Freakonomics, and I'm looking forward to finishing this one.  Then there's the reading I'm doing to stay on top of my profession.   I'm working on some new skills and attempting to improve existing programs,  so I am trying to read everything I can get my hands on with relevant material.  It keeps life interesting.  I wish I had more time to read!  

For fun, I'm reading Nichelle Nichols autobiography Beyond Uhura: Star Trek and Other Memories.  I got to meet her at the Creation Entertainment Chicago Convention this year.  Just for a few moments while she signed my book.  She was so nice and genuine, and she said that she hopes I enjoy reading it as much as she enjoyed writing it.  So far, if she had half as much fun writing as I'm having reading, she must have had a GREAT time!  But I digress...

Other sources I review when I have a chance related to trading, news and market conditions (in no particular order, and some do cross into many reasons to read including application to my professional life as well!):
Wall Street Journal
New York Times
The Economist
Financial Times
Money Magazine
Fortune
Google finance
tastytrade
dough 
TD Ameritrade
Scottrade
Investopedia

The Motley Fool

And I think that's it.  I don't read them all every day or even every week, but I do glance at them every now and again.  Especially when I'm confused about something, or looking for some specific information.  

Tonight's Trading for tomorrow:

And now for the purpose of this blog -- what I'm doing in my trading today.  

First off -- I'm really excited that I finally figured out how to put a conditional order on!  Hurray!  (Thanks training class this past weekend!)  I can now set up my order contingent on the stock movement, which will hopefully give some confirmation that the stock is actually going to do what I think it will before getting into a trade.  I've got to do a bit more finessing on it, but I've got the basics, I think.

The first thing I did tonight was check my active trades.  

•     MU

I only have a vertical on MU right now.  I sold the August 31/32 put spread, and it went on today.  (It was my experiment yesterday with actually figuring out conditional orders and getting the technical actions correct.  It worked!  It's on!)  I put the stops on using a GTC, OCO order to close.  

For everyone like me who was utterly confused by the alphabet soup that comes with trading, and there's a lot of it, here's my quick translation:

     GTC = Good To Close (always important with stop orders so that they continue beyond the one day until conditions are met and they actually close.)

     OCO = One Cancels Other (again always important)

I'll talk more about the rules Nick and I have in place for stops in my next post, but briefly, we set up one stop at our profit goal and one at the max loss we're willing to accept on this trade.  

Next, I started looking at our list of go-to stocks/ETFs, etc. that we've been using the last three months in an attempt to find positions that fit our rules and let me practice the conditional examples. Here's my thoughts as I reviewed these:

• YHOO -- Earning were reported today after market close.  I haven't studied them, but there seems to be a bit of a mixed bag in there with some good and some bad news, at least according to the news headlines.  It looks like this has been sideways trending stock over the intermediate term with short terms ups and downs.  Initial thoughts include perhaps a wide Iron Condor to capitalize on the sideways nature of the stock, or selling a call vertical thinking that the stock will continue it's short term downward motion.  However, I'm not sure what the earnings report are going to to the stock and the options overnight, so I'm going to hold off on doing anything with this one for tonight.  Maybe something tomorrow.
• 
  
• GLD -- Nick thinks that this is going to continue to go down, so we're looking at selling a call vertical.  I ran my checks through Yahoo finance, and google searching, and I think he's right.  Plus, according to the limited technical analysis I have, the last two days of candles looks like bearish engulfing to me.  So we're going to go with it.  
• Is there a call option that fits our rules?  YES -- the August 14 127/128 Call Vertical.
• We put a condition on that the price of the underlying itself must be at or below $124.16 before the trade will go on.  This, we think, will confirm the bearish engulfing candle pattern I think I'm seeing.  I'm viewing this as adding another layer of safety to our trading.  If the underlying doesn't get that low, we don't get in.  Which is great!
• I adjusted the option price that we're willing to sell at down.  As the price changes in the downward direction we want, the option price will change.  Based on my experience yesterday, I adjusted it down by $0.05 from the current mark of the option vertical.  I know there's a more scientific way to do this involving delta and gamma and all that, but I don't understand it yet, and my nickel theory worked once before.  So we'll see.  I have to work on this more and get it figured out for certain, but this is more of a practice trade for me to see what happens.  (At least it's paper money!)
• 
  
• VZ -- Looks like it broke a sideways trend into a definite upwards trend.  But the question is do I want to get in now?  
• There's only one put option available that fits our delta rules, and that is the one right outside the money.  That's too close for our comfort, so we're passing on this trade tonight.
• 
  
• ZNGA -- There's not enough volume in these options, which breaks one of our rules.  No trading on this one tonight.
• 
  
• AAPL -- Looks like that resistance ceiling is hard to break, and that they're going to have a short-term pull back.  So let's see what happens if we can get in on that by selling a short call vertical for August with $98.57 and $99.29 strike prices.  I did put a condition on that the underlying stock price must be at or below  $94.83 before entering the trade.  Again, I adjusted the price we're willing to sell the contract at down slightly, and we'll see what happens!

That's what we've done tonight.  I'm calling it quits right now because my eyes are blurring and I've got an early run tomorrow calling my name.  

For tomorrow's trading:

1.  Check what we got into and put on stops.

2.  Adjust stops on existing positions, if necessary.

3.  Look at this list from tonight and see how things are looking with these.

4.  Try to figure a bit more about the delta and conditional orders.

Happy Tuesday Night!

Getting Started

14 July 2014

Hello!

Since this is my first blog entry, I figure I'd better start at the beginning.

On a cold night in December a few decades plus ago, I was born....  Oh wait.  I don't need to start at the beginning of my life.  Let's start at the trading-relevant part.

I've been trading for about three months now.  Paper trading only though. Nothing yet with real money...

(Pause) Strike that and reverse it....

My husband and I did a bit with stocks several years ago, attempting to actively trade, but we (read me) wound up choosing poorly and losing probably more than 1/2 the value of that account (which was relatively small to begin with).  That was demoralizing, let me tell you, which made it easier and easier to just quit doing it.  About the same time, we set up a second account specifically for options trading, but we really haven't done too much beyond that.  

Then grad school happened, and then I worked towards and completed a professional certification, and then a kiddo joined our family.  :)  And, you know, life in general.  The account I was actively attempting to use to build wealth and all those kinds of things stagnated from lack of attention.  We sold off all our positions, and it's been sitting relatively useless except as a holding account for a relatively small pool of money that we figured, eventually, we'd get back to and figure out the whole investing thing when we had time.

My husband has been interested in options trading for a while and has been paper trading a lot longer than I have.  My parents have also been trading options and stocks, and talking about what they've been learning and doing has been interesting.

I finally dove in about 3 months ago and went as a guest of my parents to a basic options class.

It was overwhelming and exciting all at the same time.  I'm definitely intrigued by the potential.  Now we just need to figure it out.

Three months later, and I'm actually somewhat cool with our status of breaking even.  We're just barely net positive in my paper money account, though I have factored out some paper trades that went inexplicably good.  One trade was an Iron Condor on JCP that somehow netted us over $800 (paper money).  It was only one contract as well!  We can't quite figure out what happened, let alone try to duplicate it, so I'm just chalking that up to a fluke and not counting it.  However, breakeven isn't good enough yet for me.  I want to be doing better.  Then, when I have a positive track record, I want to be doing well in our real, albeit small, money account.  Eventually, that account will grow, and we'll have more money than we do today!

And that brings us to today.  Today, we're still learning.  I've got some paper trades going on right now, which I'll talk about in another post.  I've started this blog as a way to track what we're doing, what we're learning, what's working for us, and what's not working.  Hopefully people will find things I'm saying and doing interesting and maybe even insightful -- even if it's in a "what not to do" kind of way.  Maybe people will even want to discuss more fully what's going on.

So basic options trading and the Confessions of a Novice Trader.  Here's to the upcoming adventure!

Thanks for joining!
Dani