2011: Rebuilding My Battered Account

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Weekly Update for week 9/50 ended 3/12/2011

Nice week, up 27K (9%). Week of steady gains (14 of 20).

The two stand-out trades were FNSR on Wed, and GMCR on Thurs. Got in with PUTS on FNSR following a dead cat bounce on Wed sometime after it opened, and closed that with a gain of 14K. Unfortunatley dabbled on the short side on GMCR on Thurs. That cost 13K. The GMCR trade should fall under the fade trades to be avoided, but seems my program needs some tweaking to recognise that.


Code: 
Opening Balance:                	282,269
Net gain for the week 		         26,936
------------------------------------------------
Net Balance:                   		309,205

Number of Trades	            	 20
Number of Profitable Trades    	    	 14


Since Inception of Thread   01/8/2011 - 3/12/2011

Opening Balance:                   	335,899
Net loss(Less Margin Interest)		 26,694 (Down 8%)
------------------------------------------------
Net Balance				309,205

Number of Trades	           	 144
Number of Profitable Trades        	 81


TOP/BOTTOM DISCRETIONARY TRADES

TICKER			ENTRY DATE/TIME		EXIT DATE/TIME		QTY	PURCHASE AMT	SOLD AMT	GAIN/LOSS	TYPE

FNSRMAR19201128.0PUT	2011-03-09-09-53-29	2011-03-09-15-09-19	15000	35250		49500		14040		FNSR PUT
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GMCR			2011-03-10-11-54-03	2011-03-10-12-53-59	4000	246817		233960		-12897		SHORT

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Quote from leonarda:

Neke, you obviously have some "mental" stop you use as you obviously have got out of some of the recent big losing trades for a loss, so what is your "mental" get out method?
I understand your view on not using automated stops.
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I wish I have it laid out with a defined rule. But I don't. Normally I have a holding time-frame (intraday for the most part). If I hold for an hour or two and there is no sign of life, I would probably begin to look for an exit. Maybe a litlte bounce in my favour I could be out, but any case not exceeding the end of day. But if there is material information/news I was not aware of on entry I would probably exit immediately I discover.
 
Neke, did I read that right? You went long 15,000 FNSR puts. Did you have any liquidity concerns? I'd be interested to see you break that trade down a bit if you would be willing to do so.

You have the capital to short ample stock, what advantage did you see using an option over an outright short?

TIA
 
Quote from rallydog:

Neke, did I read that right? You went long 15,000 FNSR puts. Did you have any liquidity concerns? I'd be interested to see you break that trade down a bit if you would be willing to do so.

You have the capital to short ample stock, what advantage did you see using an option over an outright short?

TIA
More...

No, that was 150 contracts (representing 15,000 shares). I wouldn't short 15000 shares of FNSR when it was already down more than 35% - the risk would be way too much. It is better done with options (max risk limited to premium paid).
 
Okay, thanks for clarifying that. I pulled up last weeks chart on FNSR, looks like you may have put that position on following Wednesday's gap down. I'm not trying to "Monday morning quarterback" here, but have to wonder about taking the short side following a megagap down.

The volatility in those puts must have been through the roof and the probability of a volatility collapse in the option pricing would be my biggest concern.

I don't know who you use as your broker, but with accounts over 100k it's generally no problem to get a level five option approval (naked selling).
Typically, I like to sell high IV not buy it.

Bottom line, congratulations on another good week. A couple more like that and you'll be back in black for the year.
 
Quote from 007Arb:

neke, congrats on your honesty here. It's rare on these trading boards that anyone ever admits to losing or having drawdown. I always wondered if yours was a real money account or hypothetical/simulated where no real money is on the line. You appear to be the real deal.

You and I are like night and day. I have traded a $2300 account to $2.2 million but it has taken me 26 years! That's because I focus more on risk than reward and until 2008 my largest drawdown was under 5%. In 2008 it hit 12.8%. I also primarily trade mutual funds and junk bond funds (love those junk bonds) because I found the ride much smoother which allows me to trade much larger size. I trade individual equities but they haven't contributed near as much to my bottom line as the funds. In fact, at the present time, my largest stock holding is my only stock holding - QCOM.

Good luck in your trading endeavors.

Edit: I should probably add as a matter of disclosure that due to withdrawals for living expenses since 1996 when I went full time, a divorce settlement, real estate purchases, and taxes on my taxable account that my account now stands at $1.24 million. The smartest thing I ever did was to open up an IRA account, in addition to my taxable one, and place as many trades as possible in the IRA.
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IRAs don't allow margin or shorting of stocks so just what sort of trades can you do in an IRA? This is a serious question, I'm still trying to develop a trading system so right now my IRA is in stocks and a few bonds that just bounce up and down with the market (so the average return per year over the past decade is around 0%).
 
Quote from leonarda:

isn't this exactly why so many of us like watching Neke, that's the way he works and likes to trade. Most of us wouldn't trade like this as it's far too risky, but it's great to watch someone who does, he'll either be bust or a millionaire in a couple of years, either way we'll have had some great entertainment...
More...

I agree. I'd have a heart attack taking the sort of draw downs that neke does. But, damn, it's interesting to see how his account bounces up and down.
 
How to get a symbol of FNSR and other options?
[

QUOTE]Quote from neke:

No, that was 150 contracts (representing 15,000 shares). I wouldn't short 15000 shares of FNSR when it was already down more than 35% - the risk would be way too much. It is better done with options (max risk limited to premium paid). [/QUOTE]
 
Weekly Update for week 10/50 ended 3/19/2011

Another nice week, up 23K (7.5%).

It was a week of "shoulda coulda". Just failed to benefit much from the volatility, instead had quite another scare on Wed when I was too quick to call over-extension in moves, and went long (stock and options) too many names. Ended the day just a tard lower, the big loser being SPY calls (7K). Thur saw nice action with LULU put after their earnings. Fading NKE on friday however was unsuccessful.

Still working hard to define rules for managing correlated risk (too many positions in same direction) where market is throwing up so many trades at the same time.


Code: 
Opening Balance:                	309,205
Net gain for the week 		         23,305
------------------------------------------------
Net Balance:                   		332,510

Number of Trades	            	 22
Number of Profitable Trades    	    	 13


Since Inception of Thread   01/8/2011 - 3/19/2011

Opening Balance:                   	335,899
Net loss(Less Margin Interest)		  3,389 (Down 1%)
------------------------------------------------
Net Balance				332,510

Number of Trades	           	 166
Number of Profitable Trades        	 94


TOP/BOTTOM DISCRETIONARY TRADES

TICKER			ENTRY DATE/TIME		EXIT DATE/TIME		QTY	PURCHASE AMT	SOLD AMT	GAIN/LOSS	TYPE

LULUMAR19201180.0PUT	2011-03-17-09-32-50	2011-03-17-10-40-34	10000	30000		48420		18268		LULU put
FSLRMAR192011160.0PUT	2011-03-15-09-41-43	2011-03-15-10-50-38	5000	35000		47125		12038		FSLR put
----------------------------------------------------------------------------------
SPYMAR192011126.0CALL	2011-03-16-09-40-51	2011-03-16-15-12-15	10000	23980		18000		-6131		SPY call
NKEMAR19201175.0CALL	2011-03-18-09-31-51	2011-03-18-10-36-45	10000	29000		22000		-7144		NKE call

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