Lots of adjusting but not…

Lots of adjusting but not making anything, just staying flat. Brutal market, I am officially only 2 k above where I was Feb 2018 after the SVXY losses. Obviously need to change what I am doing, need more directional trading as income investing cannot keep up with 10-20% moves. 2018 is going down as a worse year than 2015. Hope everyone else is doing better than surviving. Even the increased volatility is making it hard to roll.

#pietrades
SQ STO the 56.5 8 DTE put for 1.11. CB 55.38 if assigned but I am most likely going to roll it. Actually it is now down 3+ and will roll it now. Moved to 55.5 15 DTE for 0.22 credit. Break even now 52.52.
LNG 61 cc rolled out to 15 DTE for 0.61 credit. Cb 58.10
TQQQ lot 1 60 cc rolled down to 50 cc 43 DTE for 0.80 credit. Cb 58.10
TQQQ lot 2 60 cc rolled down to 50 cc and 43 DTE for 0.70 credit cb 57.60
LNG lot 2 15 DTE 61 cc cb 59.27

#fuzzy
EXPE 125/126 rolled 43 DTE for 0.55 credit. cb now 12.23
EOG 110/110 rolled out 43 DTE for 0.4 credit. cb 11.44
GILD 67.5/69 rolled out 43 dTE for 0.69 credit cb now 8.90

May plan going forward. The now deep ITM #fuzzy will roll the short options out to 43 dte then reset after every 3 weeks. Hope to keep chipping away and if the delta/gamma becomes too large to roll for credits will either close or roll up/down. As long as I can gain 0.4 every 3 weeks will run them to expiration. Still have 108 weeks on most.

For the #pietrades that are below cost basis will aggressively roll up at any sign of rebound to avoid being run over and locking in a loss.

As cash builds from the rolls may either sit on it or add to weekly #pietrades depending on what the market is doing. However I think getting short here is stupid. Any progress on a trade deal with China and I think we rebound big time. Not to get political, but I think the GOP is starting to see how bad tariffs are (layoffs, increased costs, and now crashing market) and to keep their jobs will pressure to get a deal done.

Trade smart or sitting on the sidelines for a while is also a viable option. Wish I had just kept my hedges on, I would be pulling out huge amounts of cash now. Another expensive lesson learned.

#s

Researching an Idea

Hi gang, I thought some of you might be interested in a method I am testing.  ‘Have a friend who took his TOS sim account from $100k to $1.3 million in a couple months using this idea the last few months.  If you are like me you don’t trust sim prices, but eventually i had to look into it.  One week of trading real time in sim, and adding significant friction to overcome the sim pricing and the results are encouraging, +35% in my first week.  We will begin live trading this Friday.

The model is simple and uses spx/es next expiration options.

model: sell the atm iron fly, set stops for each vertical spread at 1.3x the vertical spread credit.

once a stop takes place: lower the stop for the other side to break even, look for a cross of the short term ma on 1 min bars and set up another iron fly, set stops at 1.3x again.

rinse and repeat, once the 4th iron fly is established, take profits on the leg remaining from the first iron fly.  Keep taking profits as iron flys are established.

this is a ton of work, but it made 12 spx points today after slippage and commission, with 33 trades.

 

#s

Done sitting on my hands,…

Done sitting on my hands, theta did it’s thing.

#pietrades
MAR 139 put expires tomorrow rolled out to next week for 0.81 credit. Cb now 137.08 if assigned.
GM CC expires in 3 weeks 37.5 cb 37.72 but if ITM good bye finally. That will be 22 weeks in the trade to almost scratch it. The money will be put to better use somewhere else!
BTC MU 52.5 put for 0.04 sold for 0.63
STO LABU 85 put at 1.45. cb 83.55 if assigned 8 DTE
STO LABU 85 put at 1.2. Cb 83.8 if assigned 8 DTE
AMAT 55 put should be assigned tomorrow at 54.02 cost basis. Will flip to CC on Monday.
BTC AAL 42 put at 0.04 sold for 0.53
AMAT 52.5 put should expire tomorrow, cost basis 50.80 even if assigned. Reload monday.

#spycraft 22 DTE PCS at 265/262 was sold for 0.24. Just waiting another 1-2 weeks for some decay to erode it then will roll it.

Will only have 2 trades for Monday, then sit on my hands again until Thurs or Fri depending on what the market gives us.

Raining here but still going out to bike, have a good expiration!

#pietrade, #s

Good Morning

It looks like CELG is getting crushed again.

#s

#VXX game I have been…

#VXX game

I have been dissecting the XIV/VXX system marketed by one of the option companies and think I have a better version for the bistroers which many of you are already doing. As I clear out some margin I will start it with a few contracts and keep it rolling TT style. Sell 45 DTE delta 16 or so options and roll as they decay.

So when the VIX heads into backwardization like today, this service goes long VXX when it reverts to contango they close VXX and go long XIV. We can do the same with SVXY and UVXY but with a turbo because of the options.

Sell puts on SVXY and calls on UVXY after a volatility spike or both for the turbo effect. Then when we hit backwardization can sell puts on VXX or go long UVXY stock and get called out on the sold calls. As short as the spikes seem to be I would use short dated options, especially on the VXX. Or if you sold puts on SVXY just take delivery of the stock and then you are long on the reverse anyway.

I know most of you are doing this and I am preaching to the choir but thanks to all of you I am learning how to play VXX game as well and just thinking out loud about ways to keep it rolling long term and make more profits along the way.

Looks like everyone did well today, once I fixed my margin issue I had no problems and should come out ahead in a few weeks.

Cheers, Chris

#s

Efficiency of capital

I did a mini study last year that was an extension of some of the tastytrade strangle work. I was trying to figure out what was the most efficient use of capital on both a percentage basis and ROC. I only did it with a few tickers and specifically was looking at use of margin and buying power reduction selling various options. I looked at uso, spy, dia, qqq, gld, and iwm against the futures or the index. It was fairly extensive so to keep it simple will just show /es/spy/spx. Here is the quick summary and it was true for the others with the exception of qqq, the futures options were not liquid enough in that.

Selling delta 8 options 45 DTE. Keep in mind spy was under 200 and the vix was around 14-15 so the #s are different today.
I looked at how much money it would require to actually cover the position or at least avoid a margin call.
SPY needs about $6000 per contract to cover a large move without a margin call
SPX needs about $40,000 per contract to cover
/ES needs about $6000 per contract to cover
What this means. From a percentage standpoint SPY actually wins but from a ROC /ES is the more efficient product because you are selling higher premiums. From a strangle standpoint SPX is the worst and tastytrade also did a study that found spy is more efficient than spx because of the tighter bid/ask spreads. However, there is a tax advantage and volume advantage to spx or /es.

What I take from this is if you have a smaller account stick with spy, medium account move up to /es and if you have a private jet trade spx or /es.
For those that do not know the ratio 10 SPY = 1 SPX = 2 /ES contracts.

Interestingly the most efficient market from a percentage basis was /CL oil futures requiring only about $4000 per contract. Just watch the leverage on any of them, that is the only thing that has ever cost me on trades gone bad. Now I always keep enough cash to cover the position in a black swan event.

Hope that helps, cheers, Chris