A Non-Correlated Strategy Trading Journal That Shows Profit
- Thread starter raVar
- Start date
Wow by Page 5 all the suckers are reeled in. Am I the only one here seeing a lot of crap and very little of follow through? A Journal of a trading strategy? Well, when will it get started? Let's get the car rolling, Mr. Tennessee.
No, you just haven't been blocked yet.
So the first is upon us. The account starts with just $5,000.00.
We're going to take $1,200.00 away from that, as we will be selling call spreads in the Q's, and we need a bit of cash for that.
So, taking $3,800, and purchasing the SPY at this level? Would be purchasing the SPY at $305.63 as I look over at the mark, or 12 shares of SPY at $305.63
Now for this next part? I could get into gamma risk with short-data option spreads. How Vega and Theta interact in the last 7 days of a strike.
But I'm not. Folks who are new to options, get lost easily in the beginning. I'm convinced, because Option Traders love lingo.
I'm going to keep this super, super simple.
All you need to do, is go to an option Chain for November 8th, for QQQ. Go to the Call side. Make sure the Option Chain displays two things. Delta. And Probability of Touching. What we'll be looking to do, each week, is sell (in the beginning) one call of QQQ at around 15 Deltas. That should be around a 29% to 30% Probability of Touching. We're going to sell a "spread" or "Vertical" by selling one of those, and immediately buying 1 QQQ Call $6.00 a way. Most platforms have a way, that you can just enter this as one order of "Selling a Vertical" or "Selling a Spread", or similar language. Regardless, that's all you do.
So this week, we're going to sell a spread, by selling 1 8 November QQQ 202 Call, buying the 8 November QQQ 208 Call Spread. At the moment? That's netting 0.23, or $23.00, minus commissions.
That's it. We're long 12 SPY at $305.63
We're short One of the 8 November 202 Call / Long the 8 November 208 Call, as a spread, netting 0.22, or $22.00 that goes into the account immediately.
I'll update that in the spreadsheet, in just a bit, with those moves.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
We're going to take $1,200.00 away from that, as we will be selling call spreads in the Q's, and we need a bit of cash for that.
So, taking $3,800, and purchasing the SPY at this level? Would be purchasing the SPY at $305.63 as I look over at the mark, or 12 shares of SPY at $305.63
Now for this next part? I could get into gamma risk with short-data option spreads. How Vega and Theta interact in the last 7 days of a strike.
But I'm not. Folks who are new to options, get lost easily in the beginning. I'm convinced, because Option Traders love lingo.
I'm going to keep this super, super simple.
All you need to do, is go to an option Chain for November 8th, for QQQ. Go to the Call side. Make sure the Option Chain displays two things. Delta. And Probability of Touching. What we'll be looking to do, each week, is sell (in the beginning) one call of QQQ at around 15 Deltas. That should be around a 29% to 30% Probability of Touching. We're going to sell a "spread" or "Vertical" by selling one of those, and immediately buying 1 QQQ Call $6.00 a way. Most platforms have a way, that you can just enter this as one order of "Selling a Vertical" or "Selling a Spread", or similar language. Regardless, that's all you do.
So this week, we're going to sell a spread, by selling 1 8 November QQQ 202 Call, buying the 8 November QQQ 208 Call Spread. At the moment? That's netting 0.23, or $23.00, minus commissions.
That's it. We're long 12 SPY at $305.63
We're short One of the 8 November 202 Call / Long the 8 November 208 Call, as a spread, netting 0.22, or $22.00 that goes into the account immediately.
I'll update that in the spreadsheet, in just a bit, with those moves.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
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One other point to this thread?
Each week, $25.00 is going to be added to the account in cash capital contributions to this model. Not much. just the price of a pizza, and some beer. For no other reason, that to illustrate to traders who are in the smaller account position? Why they should routinely be adding capital, so as to compound their gains.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
Each week, $25.00 is going to be added to the account in cash capital contributions to this model. Not much. just the price of a pizza, and some beer. For no other reason, that to illustrate to traders who are in the smaller account position? Why they should routinely be adding capital, so as to compound their gains.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
I legged into flies in the 30Y back in 1996 and had a $900K Summer, short deltas from Jan. I was paying $10 per with RJO, upstairs. Gave back $350K in 1997 and could barely cover the taxes. Max allocation was probably $60K.
Ok, I'm going to try to keep this super simplistic for those that have admitted to difficulties with Options.
That spread is going to expire, in 7 Days.
Metaphorically speaking? What we did, is sold a lottery ticket to someone. A lottery ticket, that is burning up every day. Those 202 Calls. Next Friday? If we're not to 202? That "lottery ticket" ... so to speak, will have burned up completely. Then we can keep the full credit. It's basically taking advantage of people who buy OTM, near data options (also known as a 'sucker bet', mathematically speaking)
Now they might get that lottery ticket to the "cashier" in time ... so to speak ... to cash in.
It's not statistically probable? Only about a 30% chance (and thus 30% 'Probability of Touching'). But it could happen. So here's what we do to manage that trade. Remember how earlier we stated that we only need to keep an eye on "Delta" and "Probability of Touching" ... right?
Well ... if that "Probability of Touching" hits 70%, or near 38'ish deltas ... we will demonstrate "defending" the position.
But at the moment, we sold that, we received the $22.00 Credit into the account. Now, it's a matter of seeing if you get to "keep" that credit.
So one day down? And the Deltas are still at 0.14, with a 27.9% Probablity of touching. We're more than fine at the moment, despite that rally. Which we benefited with, on a correlated instrument, with SPY.
If you do understand options? Yes, I know how the gamma's can get tricky w/ 7 days left, etc. Yes, we know regarding it not being a straight distribution on the probabilities, as well as the importance of IVR.
But I've found this is the best way to explain spreads to folks who are new to them though, and honestly curious about Options. Just give them two numbers to focus on, in the beginning. Just the Delta's and the PoT. If I try to explain why I'm selling a jade lizard, with one leg allowing some undefined risk because of an ivr Spike along with the huge run up in gamma? I have found that ones will generally have their eyes glaze over. So in the beginning I just keep it to the Deltas and the PoT. The rest can come later. But yes, I have my eyes on the rest of the Greeks, etc.
More than anything else though, I hope to demonstrate the power of two simple non-correlated strategies.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
That spread is going to expire, in 7 Days.
Metaphorically speaking? What we did, is sold a lottery ticket to someone. A lottery ticket, that is burning up every day. Those 202 Calls. Next Friday? If we're not to 202? That "lottery ticket" ... so to speak, will have burned up completely. Then we can keep the full credit. It's basically taking advantage of people who buy OTM, near data options (also known as a 'sucker bet', mathematically speaking)
Now they might get that lottery ticket to the "cashier" in time ... so to speak ... to cash in.
It's not statistically probable? Only about a 30% chance (and thus 30% 'Probability of Touching'). But it could happen. So here's what we do to manage that trade. Remember how earlier we stated that we only need to keep an eye on "Delta" and "Probability of Touching" ... right?
Well ... if that "Probability of Touching" hits 70%, or near 38'ish deltas ... we will demonstrate "defending" the position.
But at the moment, we sold that, we received the $22.00 Credit into the account. Now, it's a matter of seeing if you get to "keep" that credit.
So one day down? And the Deltas are still at 0.14, with a 27.9% Probablity of touching. We're more than fine at the moment, despite that rally. Which we benefited with, on a correlated instrument, with SPY.
If you do understand options? Yes, I know how the gamma's can get tricky w/ 7 days left, etc. Yes, we know regarding it not being a straight distribution on the probabilities, as well as the importance of IVR.
But I've found this is the best way to explain spreads to folks who are new to them though, and honestly curious about Options. Just give them two numbers to focus on, in the beginning. Just the Delta's and the PoT. If I try to explain why I'm selling a jade lizard, with one leg allowing some undefined risk because of an ivr Spike along with the huge run up in gamma? I have found that ones will generally have their eyes glaze over. So in the beginning I just keep it to the Deltas and the PoT. The rest can come later. But yes, I have my eyes on the rest of the Greeks, etc.
More than anything else though, I hope to demonstrate the power of two simple non-correlated strategies.
As always, to see how we are doing on each process? Check out the tabs in the spreadsheet below. Thoughts, questions ... comments? Post 'em below!
_______________________________
Simple Longer-Term Hypothetical Non-Correlative Strategy Processes: https://www.elitetrader.com/et/thre...ournal-that-shows-profit.337303/#post-4951437
Spreadsheet: That keeps track of each trade, each process, and then everything together ...
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Yeah, this is painful to read. Agree that diversification is good but will put my own humble word of caution in for any new guys reading beyond that for insights.
Short dated otm index calls are the cheapest vol you can find in a normal market regime. Furthest thing from a sucker’s bet imo. Strategies often offer compensation for meeting the needs of the market and there’s a huge offer in this space from all the CC writing.
Also you’re buying a long wing despite practically being long spot, waste of commissions.. the long gamma is being unused and the risk control provided is meaningless here. And right when your short strike actually gets to decent vol space you’re rolling it back to a lower vol figure...
This is like BXY but way worse. Even the terminology.. “People won’t understand if I tell them I shorted options because there was a huge run-up in gamma.”
raVar, if you were just starting to put together the pieces and open to constructive criticism with this journal, that would be worlds different. But coming in here with insufficient knowledge, affecting a teaching posture, and then dismissing all of the real talent on this site is not going to be welcomed by the genuine regulars.
I’m sure you will go about your business regardless. I’m a pretty ambivalent guy but felt compelled to caution new guys and lurkers from getting sucked in. This stuff is hard enough to learn without getting sucked into rabbit holes. I myself got started on the wrong foot so I know what that’s like first-hand.
Short dated otm index calls are the cheapest vol you can find in a normal market regime. Furthest thing from a sucker’s bet imo. Strategies often offer compensation for meeting the needs of the market and there’s a huge offer in this space from all the CC writing.
Also you’re buying a long wing despite practically being long spot, waste of commissions.. the long gamma is being unused and the risk control provided is meaningless here. And right when your short strike actually gets to decent vol space you’re rolling it back to a lower vol figure...
This is like BXY but way worse. Even the terminology.. “People won’t understand if I tell them I shorted options because there was a huge run-up in gamma.”
raVar, if you were just starting to put together the pieces and open to constructive criticism with this journal, that would be worlds different. But coming in here with insufficient knowledge, affecting a teaching posture, and then dismissing all of the real talent on this site is not going to be welcomed by the genuine regulars.
I’m sure you will go about your business regardless. I’m a pretty ambivalent guy but felt compelled to caution new guys and lurkers from getting sucked in. This stuff is hard enough to learn without getting sucked into rabbit holes. I myself got started on the wrong foot so I know what that’s like first-hand.