HowardCohodas Index Options Credit Spread Trading Journal

Status
Not open for further replies.
Quote from eudaemon:

Just let the guy post. He may have something interesting to say. Just beware that permanently taking 40% risk, will eventually result in a 40%+ hit. To risk 40% requires a huge edge, which I do not yet see.:confused:

To risk 40% requires a lot of cohodas.:D
More...
Keep in mind that most traders view their risk from where their stop is set. For me, it is 20% on an individual spread basis. The 40% number comes from the account risk from a black swan day.

There is no question that this trading strategy has risk characteristics that may be outside the comfort zone of many.

BTW, I don't mind questions, respectfully stated skepticism, and attempts to educate me. One of the reasons I post this journal is that I get additional insight into what I am doing. That insight comes primarily from the questions as I reexamine my assumptions to provide the answers.
 
Howard

Where do you get that graph in TOS? I had tried around, but never found such a thing. On the other hand, I´m a little afraid of messing up on that thing, so don´t do too much experimenting with TOS. I prefer the web based. Maybe because I´ve got used to it over the past year?

A different question is: has anybody ever figured out how to trade using point and figure charts in the short term? I haven´t run across any on the web. Most people say just use it for support points. I´ve tried different time scales and that is illuminating, but I tried to trade it this past two weeks in funny money and lost $500, which wasn´t any kind of way to do it apparently. Then I got to thinking about six month options and how they might work for monthly bar gyrations, but haven't done more than lightly contemplate the idea. Perhaps somebody has already done it?
 
I'm going to pack up for the day. Nothing happening at the opening.

Go do some errands into the nearby town.

Thankyou for the tip on the GOOGLE search for IRON CONDOR CALCULATOR. A wealth of websites on there. Why I didn´t think of those keywords i don´t know?

Appreciate it.
 
Quote from HowardCohodas:

Journal entry under Trials and Tribulations

THIS ACCOUNT HAS NO AVAILABLE BUYING POWER

This status came about because one of the spreads I opened yesterday had a leg adjacent to another spread in the same series. Their quarantined funds calculator thinks I was trying to form a butterfly rather than completing an Iron Condor. Software bug!

I was trying to complete my roll so I called the trading desk and they executed it for me, including several tries at limit orders until a fill was obtained.
More...
They have temporarily fudged by making a buying power adjustment to my account, so I'm open for business this morning.
 
2011-01-13_p_journal.png


13 JAN 2011 Trading Summary

Iron Condor #30
Today was the last day of trading for the NDX weekly.

Spread #76 was showing a 30% probability of touching so it was closed to avoid market gap risk. It yielded 78% of its potential for a money at risk yield of 2.7%.

Spread #75 was allowed to expire for a money at risk yield of 7.3%

Yield as an Iron Condor is 10.4% of money at risk in four days.

Iron Condor #15
Spread #74 was closed after four days with 82% of its potential profit.

The Iron Condor was reestablished by adding contracts to spread #78. The credit received was adjusted to reflect the different amount of credit for the added contracts.

The first spread in this Iron Condor was entered on 11/19/10. The yield as an Iron Condor is now at 46.7% excluding commissions.
 
Quote from falconview:

Howard

Where do you get that graph in TOS? I had tried around, but never found such a thing. On the other hand, I´m a little afraid of messing up on that thing, so don´t do too much experimenting with TOS. I prefer the web based. Maybe because I´ve got used to it over the past year?

A different question is: has anybody ever figured out how to trade using point and figure charts in the short term? I haven´t run across any on the web. Most people say just use it for support points. I´ve tried different time scales and that is illuminating, but I tried to trade it this past two weeks in funny money and lost $500, which wasn´t any kind of way to do it apparently. Then I got to thinking about six month options and how they might work for monthly bar gyrations, but haven't done more than lightly contemplate the idea. Perhaps somebody has already done it?
More...

Don't see an answer to this, so: click on the Analyze tab on the desktop, not the web version, and then enter a symbol. You can then include or exclude options you own on that symbol to figure out the different ways it affects your risk.
Also, at their beta site, www.thinkorswimcom/ta, you'll get a very similar graph in the lower right on the account tab, for whichever symbol you open up to see detail on.
 
trefoil

Thankyou very much!
________________________________

I got out of credit spreads about 1 st December and went back to trading by buying straight options. Have developed three KISS trades based on expectation of thrust and velocity. They seem to be workig well. I used to trade this way 20 years ago so I´m not a newbie at it.

That said, I noticed here in January I lost $500 messing around with some P & F trade experiments in my account, which hurts my performance balances per month. I want one more trade this month and if the system is a go, will try to be in cash for $5000.
On review, I came to the conclusion I don´t want any LOSSES. So want to trade only winning system. This seems in the spirit of KISS and not a lot of technical jargon involved. I have three trading patterns. Two are more or less the same, except one cut off criteria is a weak rating and good for only a $1 a contract and the other is a stronger thrust and good for $2 a contract. There seems to be only one or two trades per month in this, so far.
I´m obviously planning to increase trade size. On $5000 the weak trade will get one or two contracts and the stronger thrust and velocity will get ALL the moola. The third trade will only get 10% to 20% invested as a risk control.
I´m tired of giving back money, so yesteday opened a second account in TOS for experimental trades, or unsure gambling style trades to see what will happen. Plan to keep my serious trading in the original account and will go to another seperate CASH account, if things stay the way they are.

The lessons I have learned, is that it is not winning that is a problem, it is controlling the losing. You can call it GREED, OVERTRADING, or any other name. The fact of the matter is, there is a challenge and it is hard not to resist a challenge. So will use my second account for the experimentation in paper money. Hopefully then I can make money by doing just my winning trade patterns. That is the theory, let us see how this works out this year?

I post this here, for you newbies and maybe old timers who are giving back the money you win every once in a while. Maybe you have the same problems?

This new era of electronic trading allows for some interesting ways of dealing with RISK, ADDICTION, GREED impulses. Not like the old days when you had to phone your broker and pay a fortune in commissions.
 
2011-01-14_a_Journal.png


14 JAN 2010 Trading Plan

The Dashboard above informs me as follows:
Opportunity - Takeoffs are optional
Spread #61 is unpaired. Opportunity to form an Iron Condor.

Spread #50, #77, #69 and #61 at more than 80% of capped profit. This is indicated by the cell in the Spread P/L column highlighted in yellow. Opportunity to roll.

Jeopardy - Landings are mandatory
None

Spread #63 and spread #72 show slightly negative return with 34 days until expiration. No action required.

New Opportunity
Yesterday I noted that weeklies would be available. Not correct for the week that the monthlies expire.

Patience will be rewarded.
 
Howard

Cute picture! Too true in my own experience. Still you have me mystified on how you are deciding when to rollover on a 60 day credit spread.

I haven´t got into it, just waiting for your simplied explanation. i can´t follow some of your charts. Certainly not figure out the why you are doing what you do, when you do it.

I was thinking of my own year´s experience. 3% deviation handles a lot of months quite handily in the weeklies. But you do get hit two or three times a year with a 4% deviation. In the weekly OEX it is hard to get a 4% deviation and get premiums. But a 5% deviation would be perfect. On the other hand, every two or three years, the market does a 10% deviation correction. Very rapidly in a week, or two. Great for a step ladder trade using overhead credit spreads, but certainly nothing you would want to get caught in with an Iron Condor.

I´m waiting for your posting, ¨Howard´s Iron Condor Credit Spread Trading for DUMMIES! ¨ Hope you have lots of cartoon characters in the margin.
 
Status
Not open for further replies.
Back
Top